COLUMBUS, Ohio -- FirstEnergy needs more money to keep its two Ohio nuclear power plants operating and, according to a Cincinnati Republican lawmaker who broke the news to the public this morning, is proposing new charges called "zero emission credits."
"FirstEnergy is in substantial financial trouble," Rep. William Seitz told a crowd of about 500 attending the opening session of the annual energy conference sponsored by the Manufacturers' Education Council, FirstEnergy, American Electric Power and independent power companies.
Seitz, who spent the first 10 minutes of his remarks lambasting the state's renewable energy mandates, which include "Renewable Energy Credits, or RECs, said FirstEnergy is proposing a "nuclear form of a REC."
"I don't know where we are going to come out on this. It's a very difficult issue, particularly for those of us whose natural inclination is to support free markets, recognizing that people have the right to succeed and people have the right to fail," Seitz said.
Lobbyists in earlier background interviews about the proposal said the Ohio ZEC program would be patterned after one adopted earlier in Illinois. Opponents have challenged that as an anti-competitive subsidy in a federal court.
Lobbyists said each Zero Emission Credit, or ZEC, in Ohio would be worth about $17, giving a dollar value to the fact that nuclear reactors generate electricity without producing CO2 and other combustion pollutants.
They said the ZEC program would be designed to allow FirstEnergy to collect an additional $300 million annually, in perpetuity. That total figure was based on the output over the last two years of the Davis-Besse nuclear power plant, east of Toledo, and the Perry nuclear power plant, east of Cleveland.
Consumers would see monthly power bills rise by about 5 percent, in this scenario, while commercial and industrial customers could see increases between 5 percent and 9 percent.
Seitz said he had been told the increase would be 5 percent across all customer groups, would only be charged in FirstEnergy's delivery area and would be "non-bypassable," meaning buying power from another company would not enable a customer to avoid the ZEC charges.
Todd Schneider, spokesman for FirstEnergy, said the company could not confirm the monthly bill increases because a final draft of the legislation has not been completed.
FirstEnergy, which has previously confirmed it was considering asking for ZECs to support Davis-Besse and Perry, did confirm that the legislation is being drafted.
In a prepared statement the company said it expects "legislation that recognizes the value of the nuclear power to be introduced in Ohio soon and will work closely with stakeholders to ensure the right benefits for our customers and state."
The statement also said that Davis-Besse and Perry produce "approximately 90 percent of Ohio's carbon-free electricity and 11 percent of the power consumed in Ohio" annually.
And it included mention of the jobs, tax benefits and economic development the two power plants provide -- all data points collected to use in a campaign at some point in the future.
Seitz said the threat gas poses against older technologies is very real.
"The biggest single reason why coal and nuclear are no longer very competitive in the PJM market is that natural gas has become the electricity fuel of choice that is setting the price in the PJM Market [which includes Ohio] for electricity.
Seitz said private companies are planning to build as many as 10 gas turbine plants in Ohio because the state has plenty of low-cost gas. He noted that the U.S. Energy Information Administration has projeced gas prices will stay low for 40 year, longer than the remaining useful life of Davis-Besse and Perry.
The idea is sure to be opposed by the developers of the gas turbine plants already under construction and opposed by the independent power companies that now own coal-fired power plants in and near Ohio, plants that in fact have been able to compete successfully against gas.
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