Ohio bill would grant permanent subsidies to coal-fired power plants

Coal, by Flicker user oatsy40 (Used Under CC License)

Coal, by Flicker user oatsy40 (Used Under CC License)

Enlarge Photo

It’s now widely acknowledged that the energy and electricity-generation landscape is changing rapidly.

The U.S. has vastly increased its oil and gas production, driving down prices of fossil fuels globally.

At the same time, ever-cheaper renewable energy—not only solar, but surprisingly fast-growing wind generation—is now cost-competitive in some cases with fossil fuels for generating electricity.

DON’T MISS: From coal miner to wind-farm worker: Wyoming retraining program

Add to that the growing number of homes with photovoltaic solar panels that feed electricity back into grid at times, known as “reverse metering.”

Then there’s the increasing focus on climate change, and the need to reduce emissions of carbon dioxide from all sectors as fast as possible without dramatically cutting citizens’ standard of living.

The increasing mobility of electric supply allows utilities to sell excess power moment by moment to other utilities, allowing them to lower costs in some cases.

Coal-fired Nanticoke Generating Station, Ontario, Canada, now being converted to 44-MW solar farm

Coal-fired Nanticoke Generating Station, Ontario, Canada, now being converted to 44-MW solar farm

Enlarge Photo

It’s a world in which electric utilities, accustomed to 50-year planning cycles for major power plants, are challenged in ways they’ve never been challenged before.

One upshot of this is that coal has fallen out of favor as a fuel for electric generation. In the U.S., it has fallen from 50 percent of the grid mix to 30 percent in just 10 years, and continues to decline.

Even in coal country, utilities are choosing to retire coal plants and replace them either with the most modern and efficient natural-gas generation or renewables. Not surprisingly, this affects the balance sheets and long-term planning of electric utilities across the country and the globe.

READ THIS: The day without coal: Britain’s first one since 1882

One example of the strains this produces is a bill now pending in the Ohio legislature that would enact permanent subsidies to keep a pair of coal-fired generating plants operating indefinitely.

As reported by The Columbus Dispatch three weeks ago, the legislation—HB239—calls for the state to guarantee a minimum level of income to Ohio Valley Electric at times when the market price of electricity falls below its cost to produce electricity from its coal plants.

That money would come from charges to consumers. If the market price rose enough to make those plants profitable, they would receive rebates.

The plan is similar to one already approved by the state’s Public Utilities Commission for a different utility, AEP, which now levies an average monthly charge of $2 per household to support its coal plants.

The new bill, however, would remove a  PUC requirement that the surcharges be reapproved every few years for these two plants.

Instead, it woudl enact them for the life of the two coal plants affected.

CHECK OUT: Coal-country voters laugh at politicians who deny climate change

Opposition to these subsidies has come from environmental groups, consumer advocates, and others, who note that they distort the free market and eliminate any economic incentive to retire the plants, possibly for decades to come.

The two plants came online in 1955 to provide electricity for a uranium-enrichment facility that has since closed.

The Ohio Consumers’ Council noted that Ohio residents already pay more their electricity than residents of 33 other states.

In the end, this small battle demonstrates the fast-changing nature of the electric power industry—and one way of responding to the new challenges it faces.

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