What Does the Supreme Court EPA Stay Mean for Ohio?

Energy analyst Cathy Kunkle and Daniel Sawmiller of Sierra Club analyze the $7 billion utility hike and regulatory challenges facing Ohio residents

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Story Transcript

SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to the Real News Network. I’m Sharmini Peries coming to you from Baltimore.

The U.S. Supreme Court on Tuesday delivered a major blow to President Barack Obama’s Clean Energy Plan by putting a hold on federal regulations to curb carbon dioxide emissions, mainly from coal-fired power plants. According to the EPA, power plants are the single largest source of greenhouse gas emissions in the United States. So this legislation was supposed to be the centerpiece of President Obama’s efforts to combat climate change, but it was challenged by corporations and 29 states at the Supreme Court. The charge was led by coal-producing West Virginia, and major utility giants.

But how does a decision like this practically manifest itself? Here is an example we’re going to take up. The power giant First Energy Corp, based in Akron, Ohio, is proposing to keep four aging electricity generation plants working. A study conducted by the Institute for Energy Economics and Financial Analysis says they plan to not only keep the plants running, but also transfer the cost of keeping them running to Ohio utility rate payers, at the cost of $4 billion over eight years.

With us to discuss all of this I’m joined by two guests, Cathy Kunkle and Daniel Sawmiller. Cathy Kunkle is one of the co-authors of the study I just mentioned, and is an energy analyst for the Institute for Energy Economics and Financial Analysis. And Daniel Sawmiller is a senior campaign representative with the Sierra Club in Columbus, Ohio. Prior to this he was a senior regulatory analyst at the Ohio Consumers Council. I thank you both for joining us today.

CATHY KUNKLE: Thanks for having me.

DANIEL SAWMILLER: Yeah, glad to be here.

KUNKLE: So Dan, let me begin with you. Give me a take on the Supreme Court’s decision, and how you are receiving that in Ohio.

SAWMILLER: Well, obviously it’s not what we had hoped for, but I want to make sure that we’re clear about what this does. I think some of the, those out there attacking this plan would lead you to believe this has stopped the Clean Power Plan. That’s just not the case. This is merely a stay of the plan until the legal merits are considered. There’s a case moving through the U.S. District Court of Appeals that they’re reviewing on an expedited basis to measure the way in which we are implementing the plan, not whether the EPA has the ability to regulate carbon as a greenhouse gas. That’s already been decided, and they are well within their authority.

The Clean Power Plan enjoys overwhelming support in states like Ohio, and we’re confident that as the court reviews this that the Clean Power Plan will get back on track. States like Ohio should continue to develop their state implementation plans. We’re hopeful that the Ohio EPA will stay on course. There’s a lot of good work going on right now to make sure that we’re ready for this, and there’s nothing in this recent Supreme Court decision that should alter that path.

PERIES: So Cathy, let me ask you about the study you’ve just conducted, why you did it, and what are its key findings?

KUNKLE: Yes. So, First Energy, which is a utility company in Ohio, is faced with the, a challenge that’s confronting a lot of utilities around the country, which is that coal-fired power generation is struggling to compete in deregulated states where there are competitive markets. Coal is losing out to natural gas, natural gas prices are cheap, and it’s also losing out as the price of renewables continues to come down, and more and more renewable energy and energy efficiency sources come online in those states.

And so what we’re seeing is coal plants being closed around the country, and we’re also seeing efforts like this one from First Energy, where, you know, they have plants that are struggling to compete, and so they’re coming up with this plan to try to have the rate payers of Ohio basically bail them out, to let these plants keep operating for the next eight years.

PERIES: All right. Daniel, you’ve been a part of regulating this kind of work within the state. Give us a take on what’s exactly going on with this decision.

SAWMILLER: Yeah. Well, we’re still waiting on a decision. The case has been delayed multiple times. It’s a, quite the controversial case. I want to call attention to a word that Cathy used, which is ‘rate payer’. It’s a term that I don’t like to use in Ohio. We’re customers. We’re a deregulated state. Customers of the electric companies are supposed to have a choice of where they get their power. And in this case what you have is First Energy’s regulated company that has a captive customer base trying to force those customers to pay for a failing set of generating assets in their supposedly competitive generation affiliate.

And so what the commission is forced with deciding here is, are they going to allow a non-competitive dealing between a regulated and unregulated affiliate company that would put, to Cathy’s estimate, $4 billion on the backs of these electricity customers and eliminate a significant ability of their ability to choose who provides their power?

PERIES: And what is the fight back looking like? Are there, are there citizens rallying around this issue? And is there a critical mass of people wanting to halt this decision?

SAWMILLER: Of course. We’ve seen more opposition to this than, than what I’ve seen in my years working at the Public Utility Commission. I mean, there’s over 10,000 public comments filed on the docket from concerned citizens. There have been rallies, there have been public hearings. You know, there’s, there’s been–there was a TV documentary series that came to the first day of First Energy’s hearing and was recording this to try to help get the word out. There was a book written that covered this story. It’s been in magazines and national coverage all over the country. And so there’s a lot of people really watching this, and the commission is faced with a very, very difficult decision here.

PERIES: Now–.

KUNKLE: And it’s not just–.

PERIES: Go ahead, Cathy, respond to him.

KUNKLE: Yeah, I was going to say it’s not just citizen opposition, too. I mean, some of the largest industrial customers in Ohio are saying we don’t want to have to bail out First Energy, either. [Inaud.], which is a major steel producer in Ohio, recently filed a letter with the Public Utilities Commission estimating that this deal would cost them $20 million over the next eight years, and you know, sort of broadly hinting that that puts at risk the 3,000 jobs of people that they employ in Ohio.

PERIES: Cathy, what alternatives does the state have, or the utility company have, in terms of delivering the energy that is needed, but doing it in a clean way?

KUNKLE: Yeah. Well, I mean, there’s no, there’s no need for continuing to subsidize the operation of an economic plant. I mean, this is about First Energy’s financial position, it’s not about providing reliable power for Ohio. Ohio is part of a multi-state regional market that has plenty of power generation capacity for the foreseeable future. And as I’ve mentioned before, more and more renewable energy and natural gas capacity is coming online in that region. So there’s really, you know, no need to keep these plants operating for reasons of, of reliability or anything else.

PERIES: Cathy, Ohio has been rolling back its clean energy plans and developments. When did that start to take place, and what kind of rollback is going on right now?

KUNKLE: Yeah, that was a couple years ago. There was a bill passed by the Ohio legislature to freeze Ohio’s renewable energy and energy efficiency standards. So not eliminate them, but not have them continue ramping up in the way that they otherwise would have. And that was a law that was passed through the pressure from utilities, including, I think led by First Energy, which his the same utility that now wants this bailout.

So you know, it’s a continuation of the same strategy and pattern for First Energy. They want to try to, you know, eliminate competition from other sources of generation, and make sure that their own power plants are subsidized to keep running.

PERIES: Daniel, what’s your take on the First Energy’s proposal? And also I guess I should add the American Electricity Power company’s, in terms of Sierra Club? Where do you stand on this?

SAWMILLER: Well, in terms of the proposals, you know, we have been calling this a bailout since they filed it to commission and I first read the application. That’s clearly what this is. It’s a, you know, in the case of First Energy, it’s a failing couple of generating assets that they’re asking customers to foot the bill for. And so we do this very much as a customer-funded bailout that’s being requested, and we are very aggressively opposed. We have been, and we will continue to be.

The case of First Energy, though, looks very different than what we’re seeing right now from American Electric Power. As you may know, Sierra Club signed on to a stipulation with American Electric Power that significantly altered their original plan. And so what we see there is a real opportunity for transition for Appalachia. Looking for ways to help the workers in these coal facilities, the communities that have depended on them for so long. And we’re looking to try to build a solar manufacturing hub in Appalachia. This could put 700-800 permanent, well-paying jobs into the area of our state and of our country that’s most significantly hit by coal’s decline. And in addition, they’ve agreed to give preference to those jobs to Ohio’s military veterans. We have a high unemployment rate in the state of Ohio that’s been declining for military veterans, and this is another way that the company’s looking to give back.

When you compare that to First Energy, you don’t see any transition plan. You see them asking for a bailout that, at the end of its term, seems it would be needed again. There’s no plan for the interim, while they’re asking customers to foot their bill, to address the problem that got them here to begin with.

PERIES: And obviously the workers will also be taking up cleaner and healthier jobs by way of their own health, because working in coal plants, I’m sure, is not very good for your lungs. Cathy, let me switch over to you. Can you tell me a little bit more about why this particular example in Ohio has ripple effects in the rest of the country?

KUNKLE: Sure. I mean, I think what’s going on in Ohio kind of highlights the problems facing utilities that are overly-reliant on coal generation. And we’re, we’re seeing that around the country, like I was saying before, of coal power plants being uneconomic and being shut down because they can’t compete. Or we’re seeing utilities try to find innovative new ways to stick rate payers with the cost of these plants so that they can continue to operate them, you know, long past the time when they should be retired for economic reasons.

And I think we’re, we’re seeing other states, and utilities and other states looking at Ohio with interest to see what the Public Utility Commission there decides, to see whether, you know, something like this might be something that the utility would pursue in Indiana or Illinois, or you know, other states.

PERIES: All right. Cathy and Daniel Sawmiller, thank you so much for joining us today, and we will continue to watch this story as it evolves, and we hope you can join us again.

SAWMILLER: Great. Thank you.

KUNKLE: Thank you.

PERIES: And thank you for joining us on the Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.