Testimony submitted on SB 117


By Beth Sergent - bsergent@aimmediamidwest.com



COLUMBUS, Ohio — Proposed legislation currently in an Ohio Senate Committee, could affect the Kyger Creek Power Plant located in Gallia County, and, as both supporters and critics argue, consumers.

Senate Bill 117 (SB 117) states its a bill to “amend section 4928.01 and to repeal section 4928.148 of the Revised Code to repeal the legacy generation resource provisions of H.B. 6 of the 133rd General Assembly and provide customers refunds.”

According to documents filed via the senate’s committee, the legislation’s primary sponsors, Sen. Mark Romanchuk (R-Ontario from District 22) and Sen. Hearcel Craig (D-Columbus from District 15), wrote, in part:

“Senate Bill 117 repeals the subsidy for two coal-fired plants owned by the Ohio Valley Electric Corporation (OVEC)” — this is in reference to the Kyger Creek plant and an OVEC plant in Indiana.

More of the statement from Romanchuk and Craig included:

“The Ohio Valley Electric Corporation is an entity comprised of several Ohio utilities that entered into an agreement to serve a Department of Energy uranium enrichment plant. OVEC owns two coal plants –one in Indiana and one in Ohio–that date back to the 1950s. While the Department of Energy plant is no longer operating, the OVEC coal plants still are…

“This bipartisan legislation will stop the subsidies of OVEC and will refund the charges ratepayers have been paying since H.B. 6’s OVEC provisions went into effect.”

As reported by multiple media outlets, HB 6 has been at the center of a controversy allegedly involving the former speaker of the Ohio House, Larry Householder, and some associates.

In testimony submitted to the senate committee, Justin Cooper, vice president, chief operating officer and chief financial officer of OVEC states, in part:

“OVEC understands the concerns this Committee has about the public allegations regarding HB 6. Let me assure you, OVEC was not a party to any of the alleged conduct. OVEC does not make political contributions of any kind and did not participate in lobbying activities regarding HB 6.”

Cooper’s testimony included the following remarks on the history of OVEC:

“For 50 years, OVEC reliably met the DOE’s electricity needs in Piketon. OVEC operated then, like it does today, under an Inter-Company Power Agreement (ICPA) which provides the rights and responsibilities of OVEC’s counterparties. During this time, the DOE bought most of OVEC’s electricity, while covering the operating costs of OVEC. In 2003, the Cold War had ended, and the DOE had ceased uranium enrichment at the Piketon Ohio facility and ended its exclusive arrangement with OVEC, leaving OVEC’s generation to be used exclusively by the counterparties to the ICPA on a cost-based basis.

“Today, OVEC continues to manage the facilities to produce and sell at cost, safe and reliable energy to its counterparties under the ICPA,” Cooper stated.

Cooper reported the parties to the ICPA include AES Ohio, Duke Energy Ohio and AEP Ohio, which together have a 33.83% share of the power and energy from the OVEC-owned generating units under the ICPA. He said another 18% of the ICPA is dedicated to Buckeye Power Generating, with OVEC’s other counterparties under the ICPA mostly comprised of utilities and another electric cooperative in the surrounding Ohio Valley region – namely, Appalachian Power Company, Indiana Michigan Power Company, Kentucky Utilities Company, Louisville Gas and Electric Company, Monongahela Power, Southern Indiana Gas and Electric, and Peninsula Power Cooperative (a subsidiary of Wolverine Power Supply Cooperative).

Cooper’s testimony also stated OVEC annually pays approximately $5 million in taxes to the state of Ohio and local communities; provided economic benefits to the state of Ohio with over $50 million in payments to Ohio business for services and products, including local union tradesmen and local business that support OVEC’s operations; supports the Ohio coal mines and “our state’s miners” with payments of approximately $100 million for coal purchases in 2020.

“OVEC’s generating and transmission facilities remain a key part of Ohio’s energy resources,” Cooper said.

Cooper further noted OVEC owns and maintains 705 circuit-miles of high-voltage 345 kV transmission lines, 414 miles of which are in Ohio.

“OVEC’s transmission system forms part of the bulk electric transmission system that is the backbone of the region’s power supply, helping to ensure safe and reliable electricity to the eastern half of the United States,” he said.

Cooper’s statement concluded: “Pursuant to the terms of the ICPA, OVEC is entitled to recover its costs from the counterparties under the ICPA. The PUCO had already approved rider mechanisms under which counterparties’ revenues and costs related to the ICPA were netted, and the resulting charge or credit could be passed through to customers. The Legacy Generation Rider codified the consistent past (and then-current) utility-customer mechanisms. OVEC’s relationship with the counterparties under the ICPA is separate and distinct from any relationship that an Ohio electric distribution utility company enjoys with its customers. The provisions within H.B. 6 related to the Legacy Generation Rider do not provide any direct benefit to OVEC. However, the Legacy Generation Rider provided greater certainty and predictability to OVEC’s credit rating agencies of OVEC’s cost recovery. The Legacy Generation Rider bolstered OVEC’s credit profile and resulted in OVEC’s being able to refinance debt obligations at significantly lower costs, which reduces costs allocated under the ICPA.”

Marc Reitter, vice president of regulatory and finance for AEP Ohio, also provided a statement against the proposed legislation.

“As the committee is aware, OVEC’s structure is complex and requires unanimity amongst owners seeking to modify its contractural obligations and structure. AEP Ohio and other Ohio utilities have long been obligated to purchase OVEC’s output, which has benefited Ohio customers over time. The money recovered by the LGR is used only to cover OVEC’s costs and not to profit the OVEC shareholders…

“Additionally, OVEC’s value as a financial hedge against extreme weather events was highlighted during this past winter when over 90 percent of OVEC’s units were available at a time of volatile weather and extremely high power prices in regions throughout the country.

“SB 117 would increase uncertainty for AEP’s customers, the employees of OVEC and regional fuel diversity.”

Speaking to Ohio Valley Publishing, Gallia County Board of Commissioners President Harold Montgomery said he felt SB 117 is “reaching beyond House Bill 6, repealing regulations prior to it.” H.B. 6 was passed in 2019.

Montgomery, along with fellow Commissioners M. Eugene Greene and Q. Jay Stapleton, recently submitted a letter as witness testimony in opposition to SB 117. The letter was sent to members of the Senate Energy and Public Utilities Committee.

The full letter states the following:

“The Gallia County Board of Commissioners writes in strong opposition to Senate Bill 117 (SB 117) and its provisions relating to the Ohio Valley Electric Corporation (OVEC). OVEC owns and operates the Kyger Creek Power Plant located in Gallia County. This plant has a rich history in our community and was constructed to provide critically needed power for historical national security projects. Today, the plant continues to generate electricity that benefits Ohioans while providing well-paying jobs and a solid tax base for our region.

“Being a small rural county in Southeast Ohio with a population of 30,000, Gallia County has a vested interest in the outcome of Senate Bill 117. OVEC has a significant economic impact in Gallia County and surrounding communities, providing nearly 250 high-paying positions and an additional 50-200 contracting jobs at the Kyger Creek Plant. The aggregate income supported by the plant is nearly $32 million and provides a total income effect and economic activity of nearly $40 million region-wide. As one of the largest tax generators for Gallia County, providing $2.7 million in tax revenue, the loss of tax revenue to the Gallia County Local School District would be crippling to the community.

“The OVEC plants were built when electricity was needed for uranium enrichment during the Cold War. At that time, the Ohio utilities did not hesitate to support national security at a critical time in our nation’s history. In February 2021 the state of Texas suffered a catastrophic power crisis and electricity generation failure. Ohioans deserve to have affordable, clean and reliable energy readily available, however, legislative actions causing financial hardship to essential power generating facilities, such as OVEC, will cause risk and instability during increasingly volatile times. OVEC’s commitment to environmental stewardship and power plant improvements is evident with nearly $1 billion invested at the Kyger Creek Power Plant in the last 15 years. By opposing SB 117, OVEC will continue to provide clean, reliable, base load generation to customers in Ohio.

“The continued and successful operation of the Kyger Creek Power Plant is essential to the ongoing economic stability of Gallia County and our surrounding communities. For the reasons listed above, the Gallia County Commissioners strongly urge your to oppose SB 117 and provide Ohioans with ongoing economic and energy solutions.”

When asked if he felt fighting the legislation was an uphill battle, Montgomery said: “I don’t feel it’s an uphill battle but it’s a battle we should all be concerned with. Folks on the (Senate) committee need to realize, Southern Ohio is at stake here.”

Also noted as opposing SB 117 via the committee documents were Amy Spiller representing Duke Energy; Dave Crusey representing AES Ohio; Patrick O’Loughlin representing Ohio’s Electric Cooperatives.

Some proponents of SB 117, as noted via committee documents, included representatives from the following: Americans For Prosperity – Ohio; Belden Brick Company and the Ohio Manufacturers’ Association; AARP – Ohio; Sierra Club – Ohio Chapter, Environmental Law and Policy Center; Ohio Citizen Action; Ohio Environmental Council Action Fund; Moms Clean Air Force in Ohio; Ohio Chemistry Technology Council; PJM Power Providers Group; Ohio Consumers Power Alliance; Retail Energy Supply Association; Northwest Ohio Aggregation Coalition; Citizens Utility Board of Ohio; Libertarian Party of Ohio; Office of the Ohio Consumers’ Counsel; and several individuals speaking on their own behalf.

The first hearing on SB 117 was held March 31; a second hearing was held on May 12 and June 15.

More on this proposed legislation in an upcoming edition.

Read full testimony as submitted to the senate committee, both for and against SB 117, here:

https://www.legislature.ohio.gov/legislation/legislation-committee-documents?id=GA134-SB-117

By Beth Sergent

bsergent@aimmediamidwest.com

Beth Sergent is editor of Ohio Valley Publishing.

Beth Sergent is editor of Ohio Valley Publishing.