Power struggle: Federal ruling calls into question Ohio's nuclear plant subsidies

Federal Energy Regulatory Commission

"'FERC's order is a direct response to a trend of state subsidization of uneconomical power plants, including those benefiting from the recently passed Ohio House Bill 6 (HB6),' the report reads. 'The FERC order is a giant stick against state subsidies, and tips HB6 on its head: Rather than improve the economic position of select Ohio (and Indiana) power plants, the HB6 subsidies now jeopardize these same power plants from competitively earned revenue in the wholesale electric capacity market. ... About $190 million in annual capacity revenue for these same generators is now at risk,' it adds.

While it says it's not telling Ohio or any other state whether to subsidize their power plants, FERC wants to make sure auctions for capacity power are fair and competitive. It's instructed the regional grid operator PJM to institute a minimum offer price rule (MOPR) for its capacity auctions, setting prices at which subsidized plants could bid in.

Capacity power is electricity the grid keeps on reserve to meet its maximum load requirements. It's tapped into when the grid exceeds its base load and needs more juice. Power companies bid to provide that power at a set price. When the grid needs it, PJM begins buying the lowest-priced power and keeps buying more expensive power from other bidders until it has enough. Then, all of the capacity power providers get that last and highest price for all of the capacity power they provided.

FERC says allowing nuclear plants supported by state subsidies to bid into these auctions at lower prices than other nuclear plants could support is not fair. So, it's ordered PJM to set a minimum price at which Davis-Besse, Perry and other subsidized plants can bid in."

-- Dan Shingler, Crain's Cleveland Business 

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