Ohio budget amendments: another utility ‘bailout’ and a rollback of wind setbacks

Ohio’s budget bill reported out of the Senate Finance Committee Tuesday comes with an amendment that would expressly authorize extra charges to ratepayers to support utilities’ financial health. Meanwhile, another amendment would relax the tripled wind turbine setbacks that were included at the last minute in a 2014 budget bill.

Ohio House Bill 49 could head to the Ohio Senate floor as early as today. The amendment to bolster utilities’ credit ratings has gotten a chorus of criticism from groups that have opposed various other “bailout” proposals.

“This proposal is bad for Ohioans,” said Joe Nichols of the Buckeye Institute, a free-market think tank group in Columbus. “It would give utilities one more way to raise consumers’ electricity rates…. Ohio lawmakers should reject this last-minute budget gimmick.”

‘The ultimate special treatment’

The credit rating amendment, SC-5466, would let the Public Utilities Commission of Ohio impose charges to help utilities maintain at least an investment grade credit rating.

The charges would be part of a utility’s so-called “electric security plan.” Those plans have already been sharply criticized by Ohio Consumers’ Counsel Bruce Weston and others for imposing higher-than-market electricity charges on ratepayers and making it possible for companies to shift costs to regulated monopolies for recovery.

“Electric security plans…are already unfair to Ohio families and businesses (and we support House Bill 247 to rescind authority for the electric security plans),” Weston and Ryan Augsberger of the Ohio Manufacturers’ Association wrote in a joint letter sent to members of the Ohio Senate yesterday afternoon. “Today’s legislation would only worsen Ohioans’ predicament with their already rising electric bills and charges above market prices.”

Nichols agreed that the state “should be outlawing [electric security plans] altogether.”

The credit rating provision is the latest in a stream of plans to prop up the financial health of Ohio’s electric utilities and their parent corporations. Other bills pending before Ohio lawmakers aim to subsidize FirstEnergy’s nuclear power plants, as well as two 1950s-era coal plants.

Since 2014, companies have also asked regulators to allow charges to subsidize generation from unregulated affiliates. Millions of FirstEnergy ratepayers are already subject to a rider aimed to prop up the parent’s credit rating. Other requested charges for different utilities are pending before the PUCO.

Opponents have previously criticized credit rating riders because they could help offset losses from affiliated generation plants and because they do not provide any tangible benefits to ratepayers. Legislative authorization for the charges could be an attempt to survive potential state court challenges to the charges on those grounds.

It’s unclear, however, whether a legislative provision would avoid scrutiny by federal regulators or courts for potential market distortion effects for indirect subsidies to generation affiliates.

Nor does the amendment seem to resolve opponents’ objections that subsidy charges for utilities are unreasonable or unconscionable — and thus inappropriate under Ohio law. Moreover, as critics see it, nothing in the amendment or various other subsidy proposals would prevent ongoing poor decisions by utilities or their parent companies.

“If my credit score goes down, I have no one to blame but myself, and have to make tough choices to get my credit up,” explained Trent Dougherty of the Ohio Environmental Council. “A utility giant should not get the ultimate special treatment in the same scenario — to blame its customers for its bad credit ratings, take their money, and continue making poor decisions.”

“Outrageous,” said Dick Munson of the Environmental Defense Fund. “Ohio’s subsidy-seeking utilities never give up, and the new provision in the state budget bill is just another backdoor effort to secure additional profits.”

Spokespeople for American Electric Power and FirstEnergy did not take a position on the amendment and referred questions to Dayton Power & Light.

DP&L spokesperson Mary Ann Kabel confirmed her company had pushed for the credit support amendment.

“DP&L made the request for language to address an electric distribution company’s creditworthiness,” Kabel said via email. “However, the request is only to add the option for the PUCO to be able to consider this among its many criteria. It simply gives the PUCO an optional ‘tool in their toolbox’ on how they can balance the needs of the utilities and customers to insure reliability. There is not a subsidy or bailout and all parties will still have their opportunity to weigh in on rate cases just like today.”

Rolling back the setback

Meanwhile, a separate amendment reported out of committee, SC-4927-1, would undo most of the changes made three years ago when a last-minute budget bill amendment tripled the property line setbacks for wind turbines on commercial wind farms.

The amendment would drop the 2014 provision requiring measurement of the longest setback from the property line, which, in Ohio, is often a farm field.

Instead, the property line setback would now be 120 percent of the wind turbine height. Before 2014, the property line setback was just 110 percent of the turbine height. And the required setback to the nearest habitable, residential structure would now be 1,225 feet, instead of 1,125 feet.

The amendment would also drop a provision requiring all adjoining property owners to agree to any waiver, regardless of whether the waiver affected any holdout’s property.

Industry representatives had previously said that the 2014 law made it practically impossible to site and develop new windfarms in Ohio that weren’t already “grandfathered” in under the prior law. However, various companies, such as Amazon, have expressed an interest in having access to more renewable energy.

If the budget bill passes in the Ohio Senate, the wind farm amendment and other provisions could still face opposition in the Ohio House during any conference committee debates.

Editor’s note: This story has been updated to include comment from Dayton Power & Light.

Update: Both the utility credit support amendment and the rollback of the wind setbacks were dropped from the budget bill during Conference Committee deliberations. Thus, they were not part of the budget bill that Gov. John Kasich signed, with some line item vetoes, on June 30.

One thought on “Ohio budget amendments: another utility ‘bailout’ and a rollback of wind setbacks

  1. As usual, this news is disturbing! Consumers can only hope these subsidies do not go through!! What a backdoor scam!