Ohio Energy Issues at the Statehouse: Old Coal Plant Bailouts, Electric Security Plans, Behind-the-Meter Power for Data Centers, Solar, Tax Cuts, and Refunds

     This post is a summary of an article in the Cleveland Plain Dealer by Jake Zuckerman about some Ohio energy issues being considered in the Ohio Senate and House. He notes that Senate Republicans are promoting natural gas as the solution to powering data centers and replacing retiring coal-fired plants.

 

Bailout Subsidies

 

“Under Senate Bill 2, utilities still would not be allowed to own both the means of generating electricity and its distribution. Their current businesses revolve around distributing power, not making it. That legal certainty – along with property tax breaks – will lure gas developers to invest in Ohio, said state Sen. Bill Reineke, a Tiffin Republican.”

“The legislation also eliminates two subsidies – about $1 billion for two coal plants and $140 million for six solar projects – written into state law by Ohio’s last major energy bill in 2019.”

These subsidies were enacted as a result of the largest bribery scandal in the state’s history perpetrated by then-House Speaker Larry Householder, executives at FirstEnergy, and the late PUCO chairman Sam Randazzo, who committed suicide, presumably due to his involvement. The legislators now want to eliminate the subsidies. As the graph below shows, Ohioans have paid $679 million over the past decade to bail out those energy sources, with higher costs in 2023 and 2024, and about $172 million in 2024. I definitely noticed those higher costs on my electric bill, and I wasn’t able to keep my home as warm as I would like in the winter. The proposal is to end the bailouts for the two coal plants and the six solar projects.

 

Electric Security Plans (ESPs)

 

     Since 2008, Ohio has allowed utilities to file “electric security plans” (ESPs), one-time requests for capital expenditure projects that get charged to electric bills as “riders.” These are mostly localized projects and include things like smart meter installations. The problem with them is that they are paid for entirely by ratepayers through the “riders” even as the utilities end up saving money after they are implemented – in the case of smart meters by eliminating the need for meter readers.

“The legislation would eliminate the use of riders. Instead, all utilities would need to undergo a full rate review every three years.”

"Some utilities, like FirstEnergy, have gone more than a decade without a rate review, instead relying on ESPs, which critics have cast as a telltale sign they’re charging customers too much.”

 

Behind-the-Meter Gas and Solar

     This issue concerns new data centers' desire to power themselves behind the meter with their own power generation facilities, rather than buying directly from the utilities. 

“SB2 would change the law to say utility companies can only “supply” such behind the meter service if the generator is “in operation” before the law takes effect. And it states utilities cannot recover any costs associated with a behind the meter project from anyone but the specific customer who asked for the service.”

Of concern is how much of these projects would end up being paid by ratepayers rather than the utilities and developers. Certainly, ratepayers should not have to foot any of these costs. 

 

Redistribution of the Solar Generation Fund

     This proposal involves the redistribution of a solar generation fund paid for by ratepayers that have not led to utility-scale solar projects as planned due to red tape and other factors.

“The 2019 energy bill forced Ohioans to pay about $20 million per year into a solar generation fund, to be distributed to six of the first utility-scale solar projects around the state. The subsidy acted as a bargaining chip for renewables, which won a pittance compared to sums handed over to coal and nuclear power.”

“Sluggish implementation and red tape have bottlenecked the fund, with only $8.5 million having gone out the door and about $54 million gathering dust in a state account.”

“The Senate’s legislation would take that money and allow the state to issue it as a low-interest (2% over no more than 10 years) loan to school districts to install solar panels on their roofs.”

 

Tax Cuts to Incentivize New Development, Particularly Natural Gas Plants

     The tax cut proposal aims to lure developers to build more natural gas generation.

 “The legislation would exempt electric generation sites built in 2026 or later from tangible property taxes and do the same for natural gas pipelines or electric utility infrastructure built after 2027.”

The tax cut savings are expected to be passed on to power consumers in the form of lower costs.

“The bill also allows governments with brownfields or former coal mining sites in their borders to create five-year property tax exemptions for electricity transmission infrastructure, and it speeds up the permitting process for new power projects in those areas.”

 

Possible Refunds to Customers Overcharged By ‘Riders’

     This issue involves riders paid by ratepayers who were later found to be overcharged. An example is the $456 million charged by FirstEnergy as a “distribution modernization rider” where the money collected was not confirmed to have been spent on distribution modernization. The proposed legislation:

“…forces utilities to pay refunds on all costs after the Supreme Court finds any charge to customers as “unreasonable, unlawful, or otherwise improper.” That would span the time between a Supreme Court ruling and the PUCO issuing a subsequent ruling detailing how to proceed.”

 

References:

 

More gas, fewer surcharges: Breaking apart the Senate’s plan to solve Ohio’s energy crisis. Jake Zuckerman. Cleveland Plain Dealer. March 18, 2025. More gas, fewer surcharges: Breaking apart the Senate’s plan to solve Ohio’s energy crisis