Ohio Electricity Regulators Reject Bailout for Uneconomic Power Plants

OLYMPUS DIGITAL CAMERAOhio’s clean energy economy celebrated a big win this week. The Public Utilities Commission of Ohio (PUCO) denied American Electric Power Company’s (AEP) request for guaranteed profits to operate its aging, uneconomic coal power plants. EDF, along with many other parties, opposed AEP’s proposal.

EDF applauds the Commission for recognizing AEP’s proposal would not benefit Ohio residents and businesses. These old coal plants cost more to operate than the value of power they generate. Plus, they produce harmful greenhouse gas emissions which, if the plants continue to operate, would make it more difficult for Ohio to comply with the Environmental Protection Agency’s (EPA) proposed Clean Power Plan, which would set the first-ever limits on carbon emissions from existing power plants.

The Public Utilities Commission’s decision sends a clear message: power companies can no longer rest on their laurels. Clean energy businesses, entrepreneurs, investors, and Ohioans are ready for a new era – one in which utility profits are not placed ahead of Ohio’s best interests.

With gas prices low, an increased use of renewable energy, and weak demand resulting from customer energy efficiency improvements, some utilities like AEP are now burdened by their heavy reliance on coal – and looking to their customers to bail out their uneconomic power plants. Thankfully, yesterday’s decision assures that the market will remain competitive, giving clean energy resources an equal opportunity to compete with legacy fossil fuel plants.

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AEP’s proposed plan would have guaranteed income for two of its oldest coal plants – Kyger Creek and Clifty Creek. AEP testified that the plants, built in the 1950’s, are currently operating at a loss and might need to be closed because the economics are not penciling out. This news also came prior to EPA’s announcement about the proposed Clean Power Plan, which will make the plants even more costly to operate.

The company claimed that, over the long term, the plants will become economic, and keeping the plants open could provide Ohioans a net benefit of $8.4 million. However, other parties challenged AEP’s calculations and showed the plants could cost Ohio residents and businesses over $100 million.

EDF has been vocal about AEP’s efforts to make Ohioans foot the bill for keeping these uneconomic power plants running. We also added our voice to those challenging AEP by joining a coalition to highlight how the utility’s proposal ran counter to market principles.

The PUCO’s ruling is particularly significant because Duke Energy and FirstEnergy also have pending similar proposals for guaranteed cost recovery for their coal plants. Yesterday’s decision shows the PUCO will do a reasonable review of the costs and benefits of keeping these old coal plants open, rather than simply accepting the utilities’ unsupported claims that their coal plants benefit Ohioans. EDF will continue to push for more transparency from Ohio power companies and work to ensure electricity is clean, reliable, and affordable for all.

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