Ohio Has Another Subsidy-Seeking Utility on its Hands

Another year, and another Ohio utility is sidling up to the trough for a bailout.

Dayton Power & Light (DP&L) is asking for $1 billion over seven years, and the Public Utilities Commission of Ohio (PUCO) will soon hold a hearing on the application. And like its fellow Ohio subsidy-seeker, FirstEnergy, DP&L is veiling its billion-dollar request with talk of making the grid smarter and more modern.

No doubt grid modernization is a worthy investment. The only problem is, DP&L will not commit to spending any of the requested funding on grid modernization, but only offers that it may do so. Since DP&L won’t commit to modernizing the grid, it’s more likely the utility wants to spend the funds for other purposes, such as shoring up its balance sheet, paying off old debt, and operating its old power plants.

Although Environmental Defense Fund (EDF) supports grid modernization, we do not support DP&L’s proposal because the utility could divert the funding for these other purposes, which would be harmful for customers and the environment.

Ohio bailout background

As noted, DP&L is not alone in its efforts to obtain subsidies from Ohio regulators.

Last year, the PUCO approved bailouts totaling $6 billion for FirstEnergy and AEP’s old, uneconomic power plants. EDF and other parties have consistently opposed these bailouts because they force customers to pay higher prices, and interfere with market forces that allow new wind and solar plants to compete and provide power.

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Fortunately, the Federal Energy Regulatory Commission (FERC) recognized the affront to competitive markets and overturned FirstEnergy and AEP’s bailout plans. The PUCO later approved much smaller bailouts for both companies.

A third player

DP&L’s original 10-year bailout plan would have forced all customers to pay for the utility’s old, high-cost coal plants. That’s because utilities still have a monopoly on service territories, so DP&L will deliver your electricity if you live in their territory – even if you buy your electricity from another provider.

Yet FERC’s ruling deemed that type of request unlawful. So, DP&L revised its proposal to seek $1 billion over seven years for grid modernization.

The request is closer to a no-strings-attached subsidy. DP&L could easily spend the money on paying off old debt, for example, without the need to show any connection to grid-modernization efforts.

As evidenced by the ongoing bailout battles, Ohio is serving as ground zero for electricity market debates. The state’s renewable and energy efficiency standards recently came back into effect, a positive sign for a future in which clean energy powers Ohio’s economy reliably and affordably. Yet coal-heavy utilities will continue to fight progress, and EDF will continue to work to ensure harmful subsidies, like the ones DP&L is requesting, do not get in the way of building a cleaner, healthier energy system.