PA G E 10
|
M AY 6 - 12 , 2 019
|
CRAIN’S CLEVELAND BUSINESS
Opinion Personal View
Bailing out FE’s failed nukes harms Ohio’s economic future By Ned Hill
Editorial
DeWine at 100+ Ohio Gov. Mike DeWine passed the 100-days-in-office milestone late last month. By this well-established marker of a political executive’s progress, the new governor is doing pretty well. He has substantive and stylistic accomplishments already — offset, though, by unwelcome detours into social issues. We did not endorse DeWine last fall, but even in backing Democrat Richard Cordray for governor, we noted that both candidates had the intelligence and temperament to “approach the job with a seriousness of purpose that members of the Legislature would do well to follow.” DeWine, whose experience in Ohio political life includes serving as attorney general, lieutenant governor and a member of the state Legislature and the U.S. House and Senate, so far has lived up to that expectation. Members of both parties have given him high marks for working productively within the legislative process. While it might not be the highest bar to clear, they note he is easier to work with than his predecessor, John Kasich. That’s useful. For instance, in the face of a genuine need, DeWine did something no politician — especially a Republican — likes to do: He proposed a tax hike. In this case, an increase in Ohio’s gas tax to address a deficit in the state transportation budget. A DeWine-appointed commission that studied the issue recommended an 18-cent gas tax increase. The governor and legislative leaders ultimately settled on a lower figure, 10.5 cents, for regular gas, and 20 cents for diesel. It was the type of reasonable compromise we don’t see enough of anymore to address a problem without rancor. On the state budget, too, DeWine has been solid. His two-year, $69 billion budget proposal introduced in March was filled with centrist priorities that address important issues for Ohio’s future, including support for early-childhood education; increased resources to local communities to fight addiction, including greater treatment capacity and a new public health fund; and the protection of Lake Erie and other bodies of water through a new H2-Ohio Fund. The budget process still has a way to go, but DeWine is showing a welcome flexibil-
ity in setting priorities geared to helping all Ohioans. We’re not entirely surprised by, but still are disappointed in, the governor’s steps into hard-right politics. Most prominent: his signing of the Heartbeat Bill, which bans all abortions once a fetal heartbeat is detected and makes Ohio one of the most restrictive states in the nation. DeWine’s support for the anti-abortion bill was expected, as is a potentially expensive legal fight that could reach the U.S. Supreme Court. DeWine also has signaled support for a House bill that would end training and permit requirements for those 21 or older, without disqualifying convictions, who want to legally carry a concealed weapon in Ohio. Those requirements have been in place for 15 years. This isn’t a tough one: Anyone who wants to carry a concealed firearm should have training. Ohio has trouble attracting and retaining talented workers for knowledge industries. An agenda emphasizing abortion and guns doesn’t help.
To the future
“BW is not changing. We are a campus where all people are welcome, all are valued, all are given the same opportunities and all are supported.” That statement, from Baldwin Wallace University president Bob Helmer, is a clear articulation of values for the future as the university breaks with the past. BW’s board on April 26 voted to end the university’s affiliation with the United Methodist Church and operate as an independent university, a move that came in response to the church’s recent decision to strengthen prohibitions on samesex marriage and LGBTQ people in the clergy. It’s not easy, even when the cause is just, for big institutions to make meaningful change. BW sought input from all its constituents and laid down a marker for where it’s going. We wish the university the best in establishing new traditions.
Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)
CLEVELAND BUSINESS
CLEVELAND BUSINESS P010_CL_20190506.indd 10
Managing Editor:
Scott Suttell (ssuttell@crain.com)
Contact Crain’s:
216-522-1383
Read Crain’s online: crainscleveland.com
FirstEnergy is pushing Ohio House Bill 6 to bail out its multibillion-dollar obligations to close and clean up its failing nuclear and coal-fired power plants. In addition to the bailout money, disguised as clean-air tax credits, H.B. 6 will result in higher electricity generating and capacity charges for all Ohioans, deter investment in electricity generation not controlled by Ohio’s investor-owned utilities (IOUs), lower the reliability of the state’s electric system (known as reserve capacity) and hurt economic development prospects. There is so much wrong with the bill that Hill legislative horse-trading on its minor provisions will not remove the harm. And there is so little known about FirstEnergy’s legal obligations on plant closing and cleanup, how the hedge funds that invested in FirstEnergy last year will benefit, and the rewards promised to FirstEnergy’s senior management for bringing home the pork that supporting or voting for H.B. 6 is irresponsible. Ohio’s Consumers Counsel and the Legislative Service Commission put the direct cost of the bill at $300 million a year. RunnerStone, an independent energy-efficiency consulting firm, estimates the direct cost at $310 million. But that is just the start. RunnerStone states that H.B. 6 will trigger additional new capacity charges amounting to $80 million per year or more. Another $88 million per year in profit currently received by the IOUs for energy-efficiency services will not be eliminated, as implied by the bill’s supporters. Instead, it becomes a new unearned revenue stream. H.B. 6 is a bailout without an end date. The charges will go on for as long as the nuclear plants operate. The real increase in electricity charges will be about a half-billion dollars a year (conservatively $468 million, plus the increased cost in electricity generation charges), which will be adjusted to offset the impact of inflation. The cost to electricity users is underestimated. H.B. 6 forces all of Ohio’s electricity users to pay for the bailout, not just those in FirstEnergy’s service territory. The bill orders residential customers to pay $2.50 a month, commercial businesses $20 a month, industrial customers that use fewer than 45 megawatts (MW) of electricity a year $250 a month, and large industrial users $2,500 a month. Most assume that “customer” means a residence or a business at a specific address, but in electricity-world, this is expensively incorrect. A customer is an account, and each account is an electric meter. If your business has multiple meters, multiply the bailout tax by the number of meters. For an eight-person manufacturing business with four electric meters and a $803 monthly bill, or an annual bill of $9,636, the proposed law will increase the total monthly bill to $1,785: (4 meters x $250 from the clean-air rider) + ($803 in existing charges) – (4 x $4.39 from the eliminated energy-efficiency rider). The annual bill nearly doubles to $21,420. The nearly $12,000 increase is a 122% jump. Companies in older buildings that have expanded over time are likely to have multiple meters. Those that metered specific locations or machines to track usage accurately will face much higher bills. SEE FIRSTENERGY, PAGE 11
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes. Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.
5/2/19 4:33 PM