Contentious Ohio Nuke Subsidy Bill Heads to Governor’s Desk

(Bloomberg) -- Ohio’s controversial bill to trim support for renewable energy and instead aid two struggling nuclear power plants is heading to the governor, who said he would sign it.

The state’s House of Representatives voted 51 to 38 Tuesday to approve a version of the measure passed by the Ohio Senate last week. It carves out $150 million a year to keep the reactors owned by FirstEnergy Solutions running while reducing support for wind, solar and energy efficiency.

Groups as diverse as the Sierra Club and Americans for Prosperity, the political organization backed by billionaire Charles Koch, have blasted the measure as a corporate “bailout.”

Ohio is the latest state to seek a way to support reactors battling to remain competitive as a flood of cheap natural gas drives down power prices. While New York, New Jersey and others are subsidizing nuclear power as part of strategies to fight climate change, Ohio would be the first to do so by directly yanking support from other environmental measures.

“If this bill passes, the solar and wind footprint in this state will shrivel,” Representative Sedrick Denson, a Democrat, said on the House floor before the vote.

The legislation would support FirstEnergy’s Davis-Besse and Perry plants through a fee added to customer bills beginning in 2021. It would be offset by reducing Ohio’s clean-energy goals, requiring utilities to get 8.5% of their power from renewables instead of the 12.5% target now. The measure would also eliminate monthly surcharges to support energy efficiency measures.

FirstEnergy Solutions, which filed for bankruptcy last year, has said it would close the two power plants if the state didn’t provide aid. They employ about 2,200 people.

Shares of the company’s parent, FirstEnergy Corp., slipped less than 1% to $43.37 at 11:58 a.m. in New York.

The measure is expected to lower the average residential electric bill by $2.82 a month, starting in 2021, according to data prepared by the Ohio Legislative Service Commission.

In the long run, however, “keeping more expensive nuclear power units on line will increase wholesale electricity rates," said Josh Price, a senior analyst for Height Capital Markets.

The bill also provides about $50 million a year to support two coal plants operated by the Ohio Valley Electric Corp. and generate about $20 million a year for solar projects.

“The bottom line is this bill saves money, preserves jobs and protects Ohio’s environment,” Representative Jamie Callender, a Republican, said during a speech before the vote.

--With assistance from Millicent Dent.

To contact the reporter on this story: Will Wade in New York at wwade4@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Joe Ryan, Pratish Narayanan

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