Ohio lawmakers strike down extension of massive coal bailout, funded via electric bills

COLUMBUS, Ohio – In a vote that split House Republicans, a bipartisan majority on a legislative committee rejected a last-ditch effort to delay the death of a coal subsidy that cost Ohio electric customers $174 million last year alone.

 
From there, the sweeping energy legislation passed on a near unanimous basis through both the committee and on the House floor. Should the House and Senate manage to agree on competing versions of their similar bills, the legislation would go to Gov. Mike DeWine for his signature.

 
 
Under the bill, the subsidy would end 90 days after the governor approves it.

 
The vote Wednesday dealt a major blow to the utility companies that have collected $679 million through customers’ electric bills since 2016 – companies that were, but perhaps are no longer, a dominant force in Statehouse politics. It could also mark the end of a major provision within 2019 legislation at the epicenter of what federal prosecutors called the biggest public corruption scandal in state history. 

Both chambers of the Ohio General Assembly have advanced dueling, though substantively similar, pieces of legislation to fundamentally reshape Ohio’s electricity markets.

 
Both bills call for repeals of subsidies to the two coal plants (one of which is in Indiana) owned by the Ohio Valley Electric Corp. Under current law, the subsidies are set to run through 2030. 

While state utility regulators had previously allowed the subsidies on a more limited basis, legislation passed in 2019 codified the payments in state law, broadened the base of who pays them, and extended their life by several years. That 2019 legislation now sits in the middle of a slow-burning corruption scandal that has yielded a 20-year prison sentence for the then-House Speaker and indictments of the former chief executive and top lobbyist of FirstEnergy Corp., a Fortune 500 utility company based in Akron.

Residential customers’ payments to OVEC are capped at $1.50 per month. Despite the small dollar figure on a per-customer basis, the subsidies add up to hundreds of millions of dollars transferred from electric customers to their utilities.

A surprise amendment Wednesday morning would have continued the subsidies to the Ohio utility companies that own OVEC – American Electric Power (with a 44% equity stake), Duke Energy (9%), and AES Ohio (5%) – through the end of 2026. State Rep. Monica Robb Blasdel, a Columbiana County Republican who offered the amendment, described it as a “reasonable and responsible course of action preserving Ohio’s reputation as a trustworthy and stable place to do business.”

 
State Rep. Andrea White, a Dayton area Republican, called the amendment an “off ramp” for the utility companies to adjust their businesses accordingly. For an individual, she said in aggregate it’s just a $27 difference per customer through the end of 2026, and it will signal to the business community and investors that the state won’t just “pull the rug out from under you.”

 
Plus, the sudden removal of the support risks a downgrade in the companies’ credit rating, which could lead to higher electric rates, she argued.

 
House Energy Chairman Adam Holmes told reporters the OVEC amendment emerged only “recently.” He said the subsidies violated basic principles of free market economics; delivered no added benefit to ratepayers; and the money flowed to plants that face no imminent risks of closure without the financial support. And that’s to say nothing of the “dark past” of utility politics in Ohio.

 
And $27, he said, means a lot to some people.

 
“That money is not spent on improving the OVEC plants, it goes to the bottom line of the companies for their multi-state business,” said the Muskingum County Republican.

 
Parma Democratic state Rep. Sean Brennan has pushed for years to end the bailouts. The effort has only recently started to bear fruit. He said he learned Wednesday morning that an OVEC extension amendment would emerge. He’s glad to see people come around to what he calls the “cost of corruption” and that this is the first time he’s been on the winning side of a controversial vote.

 
“This is what we all ran on, that we were going to do what we could for consumers who are hurting out there right now,” he said. “And $27 might not sound a lot to someone who’s living kind of comfortably, but when you talk to residents who live in the Educator apartments in Parma Heights, whose rents just went up and that’s one of the lower rents in my district and their next option is potential homelessness, $27 could make or break somebody.”

Americans for Prosperity, a free market think tank founded by heirs of the Koch family and its oil refinery enterprise, opposed House Bill 6 in 2019 and later joined the lobbying push against the bailout. To state director Donovan O’Neill, Wednesday’s vote captured the end of an era.

 
“I think the vote this morning is a key indicator of change,” he said in an interview. “That page is turning here in the state. They’ve been trying to eliminate OVEC since [ex-Ohio House Speaker] Larry Householder was indicted.”

 
State Rep. Tristan Rader, a Lakewood Democrat in his first term, wasn’t serving when House Bill 6 passed in 2019. That loosened political grip from utilities is probably why the recent energy bills have managed to pass in the first place, he said.

 
“Because of the House Bill 6 scandal that happened, FirstEnergy noticeably wasn’t here, were they?” he said. “They didn’t show up to testify on this bill because they know they have such a negative reputation here, still. So when you see that utilities don’t carry that kind of sway, especially with new members, since then.”

 
Despite the sweeping nature of the bill, most of the debate on the House floor was limited to the OVEC subsidies and how long to let them run.

 
A few supporters framed support for the subsidies as support for coal. State Rep. Don Jones, a Harrison County Republican, said he voted against the bill because he couldn’t go home and face the miners who extract the coal that powers the plants. State Rep. Jason Stephens, a Lawrence County Republican who has one of the plants in his district, invoked the plants’ history in powering a uranium enrichment facility during the Cold War for the federal government.

 
State Rep. Brian Stewart, a de facto member of Republican leadership, said he has spent his entire legislative career living in the shadow of 2019’s House Bill 6. It’s time, he said, to put “this entire ridiculous episode” behind us.

 
“A tax on Ohioans to bail out a utility company is still a tax,” he said.