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Ohio nuclear power plants in danger of closing

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The two nuclear plants produce 14 percent of Ohio’s electricity. Nearly 90 percent of Ohio’s carbon-free electricity comes from the two nuclear plants. 

FirstEnergy Corp.’s Davis-Besse nuclear power plant is in danger of closing before the end of its federal contract due to its inability to generate sufficient revenue and its subsidy’s looming $100 million loan payment.

James Pearson, chief financial officer of FirstEnergy Corp., said the outlook for its Perry nuclear plant is just as bleak. Both plants are located along Lake Erie near Toledo.

Representatives from the corporation appealed to the Ohio Senate on Thursday to garner support on Senate Bill 128.

The bill, sponsored by Sens. John Eklund and Frank LaRose, would raise residential bills by $2.50 and would require commercial and industrial consumers to pay either $3,500 or 5 percent increase in charges, which will gives FirstEnergy an additional $180 million a year for 12 years to support its plants.

While the bill would raise residential bills by $2.50, the increase would only apply to Toledo and Cleveland.

The bill’s primary intent is to preserve Lake Erie’s nuclear power facilities in order to maintain the reliability and resiliency of the power system, Eklund said. Should these plants shut down, the remaining 14 percent of Ohio’s energy would be imported until new plants could be built.

According to Eklund, California imports most of its energy, resulting in higher energy prices. It is because of this that Eklund believes the same can be expected for Ohio should the Lake Erie nuclear plants close.

“When any market becomes over-reliant upon one type of product, in this case, natural gas-generated electricity, almost inevitably, when you have fewer suppliers, prices in market will go up, and I expect that to go up in the long term,” Eklund said.

FirstEnergy Corp. is in favor of SB 128 because it would generate enough revenue to keep their nuclear plants in operation. In his testimony to the Ohio Public Utilities Committee, Sam Belcher, the chief nuclear officer of FirstEnergy Nuclear Operating Co., said the two plants have fallen victim to a federal competitive market design that “places value on short-term costs and ignores attributes such as environmental impact,” making nuclear plants operating within the market unprofitable.

Belcher said it would be easy to reduce the discretionary costs of the landscaping and housekeeping for the plants by reducing the frequency of the services. However, reducing the fixed costs of labor, equipment maintenance and regulatory expenses is not as simple.

“The challenges facing our plants is a top line issue,” Belcher said. “They simply do not generate the revenue necessary to cover the expenses associated with safely operating the facilities. Ohio’s annual gross domestic product receives a more than $500 million annual boost from nuclear operations in the state, and millions in tax dollars are generated each year to fund schools, police and fire departments and other public services.”

The two nuclear plants produce 14 percent of Ohio’s electricity and nearly 90 percent of Ohio’s carbon-free electricity comes from the two nuclear plants, according to Belcher.

The American Petroleum Institute is strongly opposed to SB 128.

In a June 2017 testimony to the Ohio Senate Public Utilities Committee, the API said “natural gas-fired power plants have been the most cost-effective form of generation to build and operate. Nuclear generation has become less competitive because of its higher operational costs.”

“FirstEnergy is spreading misleading information to Ohioans about the benefits of natural gas in order to distract from the fact that they want Ohio families to bail out their corporation for bad business decisions”, API said in response to FirstEnergy Corp.’s Thursday testimony.

“Hardworking Ohioans shouldn’t have to foot the bill for corporate failures and voters across the state reject the misguided, half-baked legislative efforts to bailout FirstEnergy.”

Sen. Eklund responded Thursday to API’s comment.

“I think you have to take it from its source,” he said. “The API makes it their business to represent the gas interests. And naturally, the gas interests would like to see these plants close, because in the long run, they believe the generating capacity would be replaced with gas fired power plants, and that makes the gas interests very happy because then they sell more gas.

“The bill is not intended to, nor would it, bail out FirstEnergy.”

Ohio Public Utilities Chair, Sen. Bill Beagle, told The Associated Press he does not believe the bill will be voted out of committee.

FirstEnergy Corp. is expected to appear in bankruptcy court in the spring.

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