Major weather events accounted for more than a third of the time Ohio customers of regulated electric utilities went without power last year, according to an Energy News Network review of data filed with state regulators.

Utility reports filed at the end of March listed 16 calendar days in 2021 with major outage events linked to wind or thunderstorms. All told, more than 900,000 Ohio utility customers lost power during major weather-related outages last year.

Companies say they’re taking steps to prevent outages. Yet some critics question whether utilities are doing enough to prepare the state’s power grid for a warmer and wetter world. It’s unclear how climate change will affect the frequency or intensity of tornadoes and severe thunderstorms. However, climate experts predict Ohio will see more days with conditions that often set the stage for storms.

What utilities’ reports show

Utilities file outage reports each year so regulators can judge whether utilities are meeting reliability standards. State regulators can penalize utilities if outages exceed certain limits.

Outages that count toward companies’ performance result from things like equipment failure and damage to infrastructure due to animals, falling tree branches, traffic accidents and so on. Outages from less extensive weather interruptions are also included. Together, those outages generally make up the bulk of electric service interruptions.

When calculating utilities’ performance, the Public Utilities Commission of Ohio lets companies exclude major outage events. By definition, major outage events are outliers that last longer and don’t reflect the utilities’ normal performance.

Major weather-related outages account for most long-duration events, sometimes requiring several days to restore power for all customers. On Dec. 11, for example, the state was blasted with wind gusts over 50 mph and at least one tornado, leaving more than a quarter-million customers without power.

Energy News Network added up the customer minutes of service interruptions for major weather-related events noted on 2021 filings by AEP Ohio, AES Ohio, Duke Energy Ohio and FirstEnergy and compared the result to the total customer minutes of service interruptions for all four companies, before any exclusions. Major weather-related outages accounted for roughly 37% of the total.

Storms caused more than 89,000 of FirstEnergy’s CEI customers to lose power over two days last August for an average of nearly 20 hours. The outage lasted roughly three times longer for Bay Village resident Susan Murnane and her husband.

Hot temperatures with no air conditioning or fans made life uncomfortable for the two retired Ohioans. Murnane scrambled to find dry ice to minimize food loss from spoilage. The outage also interrupted other daily activities and caused anxiety because the couple didn’t know when the power would come back.

“For us, it’s an inconvenience and an expense,” Murnane said. But people with less time to make arrangements, no car to travel elsewhere, or fewer resources to replace spoiled food are worse off when the power goes out, she added. “For some people, it’s life and death.”

A changing climate

The threat of more frequent and longer-lasting power outages to a system already affected by extreme weather was a key message from the Fourth National Climate Assessment released in 2018. The United States already had seen a jump in nationwide outage reports during the 2000s, compared to the 1980s and early 1990s, researchers for Climate Central reported in 2014.

The Ohio utility reports don’t provide enough data to show whether power outages due to extreme weather are becoming more common. That’s partly because of the limited number of years available online and also because companies’ maintenance practices and infrastructure investments vary.

The U.S. Department of Energy also collects data on major outages. The data provided the basis for the 2014 Climate Central report, which showed an increase in weather-related outages in Ohio between 2003 and 2012. However, 2012 was an outlier in recent decades, as Superstorm Sandy and a derecho knocked out power to hundreds of thousands of customers, in some cases for more than a week.

Ohio’s climate is generally warmer and wetter now compared to the three decades from 1981 to 2010. Warmer air holds more moisture — roughly 7% more for each degree Celsius (1.8 degrees Fahrenheit), said Bryan Mark, a professor at Ohio State University and Ohio’s state climatologist.

It’s not clear whether a warmer and wetter climate will necessarily lead to more thunderstorms or high winds. Yet those phenomena often occur under conditions that lead to precipitation.

“In a warmer climate when you have more opportunity to heat the atmosphere, you may get in fact more summer thunderstorms,” said Peter Whiting, an environmental scientist at Case Western Reserve University in Cleveland. Thunderstorms form “when you have air that is forced to rise,” such as from a cold front, localized heating, or other conditions that make the air mass unstable.

Warming from climate change also varies by latitude, Mark said. A reduction in the temperature differential between northern latitudes and warmer, sub-tropical regions appears to have altered prevailing winds and may have shifted the storm tracks for mid-latitude regions.

Although research is ongoing, “it seems that we’re able to form deeper and wider convection cells that are more intense and therefore can have more destruction related to them,” Mark said.

What can be done?

Rebecca Mellino, a climate and energy policy expert with the Nature Conservancy in Ohio, is among those who think utilities should do more today to make sure the electric grid is ready for climate change. 

“I would want to see electric utilities plan for what we might have previously considered once-in-a-hundred–years events or considered out of the norm as being more regular,” Mellino said.

Updated rules for utilities’ reliability performance took effect last fall, but they don’t mention climate change. Nonetheless, utilities say they are working to improve reliability in the face of severe weather and other challenges.

FirstEnergy spokesperson Lauren Siburkis said the utility is adding power lines for added flexibility, plus installing automated reclosing equipment. Those devices work like a circuit breaker to shut off power when trouble happens, she said. Routine maintenance also includes tree trimming and vegetation management.

“Smart meters provide information not only to customers but to our crews, so outage areas can be defined and causes found more quickly,” AEP spokesperson Scott Blake said. The company also has been installing automated reclosers and pursuing tree trimming and vegetation management.

In addition, AEP is exploring the possibility of microgrids for places like fire stations and community shelters. “Outage restoration processes also prioritize restoring power to critical facilities and completing work that will restore power to the greatest number of customers,” Blake said.

Sturdier electric poles are part of AES Ohio’s strategy, its March 31 outage report said. The company also is adding automated reclosers and taking a more proactive approach to replacing cutouts and underground primary cables.

Funds from the Bipartisan Infrastructure Act could potentially help Ohio update its grid and make its electricity system more reliable. But critics want resilience efforts to focus on generation, too.

“We’re already behind the eight ball in planning what the electricity sector is going to look like in a new world,” said Sam Gomberg, an energy analyst with the Union of Concerned Scientists. In his view, “every ton of carbon matters at this point.”

Ohio’s proposed Energy Jobs and Justice Act, HB 429, calls for a 50% reduction in greenhouse gas emissions from electricity by 2030, with a 100% target by 2050. So, utilities would have to take some action on climate change. And the Public Utilities Commission would review utilities’ carbon reduction plans every two years.

The bill was referred to the House Public Utilities Committee in October, and Rep. Juanita Brent, D-Cleveland Heights, became a primary sponsor with Casey Weinstein, D-Hudson, in March. Hearings on the bill have not yet been scheduled.

“The cost to adapt to climate change is actually going to be more expensive than stopping the use of fossil fuels and transitioning to cleaner sources now,” said Miranda Leppla, who heads Case Western Reserve University’s Environmental Law Clinic.

Storms strain Ohio’s electric grid, and climate change could make it worse is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Ohio utility regulators have dismissed a plea from consumer advocates to suspend and investigate service disconnections in the wake of roughly 195,000 electricity shutoffs in the months after a pandemic moratorium was lifted.

The Office of the Ohio Consumers’ Counsel joined with Ohio Poverty Law Center, Legal Aid Society of Southwest Ohio, Advocates for Basic Legal Equity and Pro Seniors last July to seek relief, especially from AEP Ohio. The company accounted for nearly two-thirds of the electricity shutoffs despite serving less than a third of the state’s residential electricity customers.

The PUCO ruled against the groups on technical grounds, saying the purpose of the case was “merely to serve as a public receptacle for the disconnection reports.” Under state law, the regulators could open a new case to look into the issues. However, that seems unlikely in light of other language in the Dec. 1 order. The commission noted it had rejected similar pleas in other cases.

The commission also said that it didn’t see merit in the challenges because the advocates’ filing didn’t establish that the companies had acted unlawfully. However, the regulators also didn’t give the groups any chance for formal pre-hearing fact-finding, called discovery.

As a result, the commission basically ruled against the substance of the groups’ challenges. That rejection has left consumer advocates wondering when, if ever, there will be an opportunity to examine the impacts of utility shutoffs across the state in a systemic manner.

“As we enter the winter heating season with rising energy prices and a continuing pandemic, at-risk Ohioans need the PUCO to exercise its judgment in favor of more protection from the suffering of utility disconnections,” said Merrilee Embs, spokesperson for the Office of the Ohio Consumers’ Counsel.

The issue is especially pressing as the rate of AEP Ohio’s disconnections has surged to nearly pre-pandemic levels. The company shut off customers’ service more than 124,000 times from the time a pause was lifted in September 2020 through May 2021. That was 64% of the total disconnections by Ohio’s regulated electric utilities during that period.

All of Ohio’s regulated electric utilities temporarily suspended disconnections early in the COVID-19 pandemic, and a follow-up PUCO order forbade further shutoffs from March through August 2020. The PUCO then gave utilities the go-ahead to resume disconnections. By June 1, utilities had made 195,000 electricity disconnections.

Consumer advocates say the large number of disconnections, especially from AEP Ohio, warrants scrutiny from regulators. They also want data that could pinpoint where problems are greatest and allow an analysis of possible racial disparities.

An urgent need

There is a human toll to utility shutoffs, especially in the winter, especially in a pandemic.

“Ensuring access to vital utility service is especially important as Ohioans continue to cope with the pandemic,” said PUCO Chair Jenifer French in her 2021 end-of-year message. She referred to the PUCO’s winter reconnect order and newly improved low-income assistance programs as ways to “assist customers this winter heating season and year-round.”

Access to electricity is necessary to keep homes warm in the winter, because even natural gas heating typically uses electric blowers. Access to electricity also provides relief from extreme heat in the summer. And it’s a year-round necessity for lighting, food safety and preparation, medical equipment, education, communications, and other basic activities.

Ohioans in need may be eligible for assistance programs. However, navigating the application process for particular programs can be daunting for some people. Also, funds may be available to defray some costs, such as the $175 payment to resume service under Ohio’s current winter reconnection order. But accessing that money may be difficult.

“There’s such a backlog in the processing of that money through the community action agencies,” said attorney Melissa Linville at the Legal Aid Society of Columbus. Agencies may also consider utility assistance to be a lower priority than housing aid. Additionally, various agencies have been overwhelmed as they administer other aid programs during the COVID-19 pandemic.

“PIPP is great if you’re in it,” said attorney Peggy Lee at Southeast Ohio Legal Services, referring to percentage-of-income payment plans. Applicants whose income is low enough pay only a percentage of their income for utility service. If they pay on time, portions of their past-due amounts are forgiven.

But there are pitfalls. If someone misses payments, even inadvertently, they can have trouble getting back in the program, Lee said. People who get disconnected also can be at risk of losing subsidized housing, because timely payment of utility bills is often a condition of the lease.

Utility disconnections cause additional problems for people with low incomes. They may lose a refrigerator full of food, for example. Or, they could lose the ability to cook meals. Alternatives to buy meals or replace food are often miles away in the rural communities Lee’s organization serves. And public transportation can be very limited if people can’t afford a car, she said.

Families who lose utility service also risk being split up. “Someone could try to get children’s services involved, especially if there [are] cantankerous custody issues,” Lee said.

Linville sees racial disparities among those her organization helps in the Columbus area. “In 2020, our bankruptcy team served 327 African Americans and 155 people who identified as White,” she said.

Yet only 24% of Franklin County’s people are African American, according to U.S. Census data. Fossil fuel reliance intersects with other societal factors that continue to perpetuate systemic racism, including lower average earnings and higher energy burdens for people of color.

The Office of the Ohio Consumers’ Counsel, Lee’s and Linville’s groups, and other advocacy groups had wanted expanded dates for the reconnection order’s protection, lower limits on the level of PIPP payments and the number of customers who could be cut from the program, and personal notice before any electricity or gas disconnections.

Consumer groups in both the disconnections case and the winter reconnection proceeding also wanted the PUCO to collect shutoff data by zip code. Data on demographics could show where the biggest problems were and help with targeting resources for relief. The data also could allow groups to determine the extent of any racial disparities in utility disconnections. The PUCO denied the request.

“While the Commission is mindful that utility policy and procedures may be applied in a discriminatory manner, the Commission is not aware of and has no reason to believe that the utilities … have applied disconnection requirements, policies, or procedures in an unjust or discriminatory manner,” the regulators said in an October ruling. Very similar language appeared in a 2020 case involving Columbia Gas.

Questions of fairness

When the PUCO refused to freeze further shutoffs this fall, it opined that service disconnections can’t be “suspended repeatedly, year after year, without consequences to the utilities and their ratepayers.”

Critics note that the same pandemic is still going on. They also see other fairness problems, especially in the wake of House Bill 6. The consumer groups had asked that a chunk of FirstEnergy’s fines under its deferred prosecution agreement be set aside for utility customers in need. The PUCO responded that any use for those funds would be determined later.

Dave Anderson, policy and communications manager for the Energy and Policy Institute, also noted that regulators have yet to examine whether any of the millions of dollars that AEP spent on dark money groups might have come from ratepayers. Along with Duke and AES Ohio, AEP benefits from HB 6’s ongoing subsidies for two old coal plants, known as the OVEC plants. AEP had also lobbied against a national moratorium of utility shutoffs, he said.

“It’s a question of fairness of them turning off customers who have been affected by the pandemic, while on the other hand charging them money for these uneconomic coal plants,” Anderson said. Coal plant pollution is “especially not good during a pandemic,” he added. “It impacts the respiratory system specifically.”

The regulators’ rulings also feed into criticism about energy justice and the PUCO’s priorities.

“Utilities are public utilities for a reason,” Lee said. Electricity and gas service are not luxuries, but “a fundamental right for someone to have access to. And it would be humane to allow somebody to demonstrate whatever they could to keep those utilities before taking them away,” she said. “Right now, it’s seeming like it could be the other way around.”

“Our low-income clients are part of the public,” Lee added. “And the utility companies do have to answer to the public.”

Consumer groups in the PUCO disconnection case have until Jan. 31 to decide whether to appeal to the Ohio Supreme Court.

Ohio regulators dismiss pleas to investigate utility power shutoffs is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Ohio utilities are still backing candidates or lobbying for legislative actions that could subsidize fossil fuels or slow the growth of renewable energy, according to their latest filings.

Ohio’s energy companies have long been active in the political arena. And while non-election years tend to involve much lower levels of campaign contributions, lobbying nonetheless continues on multiple fronts.

Earlier this year, FirstEnergy President and CEO Steve Strah announced that the company’s “approach to political and legislative engagement and advocacy … will be much more limited than it has been in the past,” and that there would be “additional oversight and significantly more robust disclosure.”

Indeed, spending by the FirstEnergy Corp. Political Action Committee this year actually shows up as a negative number on Federal Election Commission filings. From January through May, FirstEnergy’s PAC voided multiple campaign donation checks from 2020. The committee’s campaign donations drew heightened attention last year after the federal government released its complaint alleging corruption at the heart of Ohio’s nuclear and coal bailout law, House Bill 6.

Nonetheless, FirstEnergy reported spending half a million dollars on congressional lobbying during the third quarter of 2021. And its year-to-date filings through Sept. 30 reveal congressional lobbying spending of roughly $1.5 million.

In many ways, FirstEnergy is still clinging to “the way they did business 50 years ago,“ said Ashley Brown, a former Ohio public utilities commissioner who now heads the Harvard Electricity Policy Group. “That’s part of why they’re just a lobbying firm with a utility sideline.”

“The reported expenses [for congressional lobbying] include a variety of items, including salaries for FirstEnergy employees that are registered lobbyists, leases for company offices in Washington, expenditures for outside firms and travel,” said company spokesperson Mark Durbin.

FirstEnergy’s lobbying is especially significant this year “because the company made a big deal about how it has dialed back its political spending, including a freeze on PAC contributions, in response to the U.S. Department of Justice’s bribery investigation,” said Dave Anderson, policy and communications manager for the Energy & Policy Institute.

So far, FirstEnergy’s congressional lobbying spending for 2021 appears to be on track with the $1.9 million spent for congressional lobbying in 2020 and the $1.8 million spent in 2019.

Amounts reported by FirstEnergy from 2011 through 2018 ranged from roughly $1.8 million to $2.8 million per year. Those numbers don’t reflect amounts reported by outside companies for FirstEnergy, in case the amounts had already been counted in FirstEnergy’s own reports.

Other utilities’ spending

While FirstEnergy’s PAC has dialed back campaign donations this year, political action committees for American Electric Power, Duke Energy and AES have donated to some Ohio candidates’ campaigns, albeit at much lower levels than would be expected in a major election year.

Filings for the Dayton Power and Light Company Responsible Citizenship Fund through June showed spending of $1,000 each on campaign funds for 10 Ohio lawmakers, all Republicans. Among them are Ohio Senate Energy and Public Utilities Committee members Rob McColley, Bill Reineke, Matt Dolan, Bob Peterson and Jerry Cirino. McColley and Reineke were primary sponsors of Senate Bill 52, which erects new siting hurdles for solar and wind projects.
Campaigns for Ohio Senate President Matt Huffman and his cousin, Agriculture and Natural Resources Committee Vice-Chair Stephen Huffman, also got support from the PAC.

In June, the political action committee for parent company AES Corporation gave $1,000 each to campaigns for U.S. Sen. Joe Manchin, D-W.Va., and Dayton-area congressional Rep. Mike Turner.

The Duke Energy Corporation Political Action Committee has made hundreds of expenditures across multiple states since January, including donations to campaigns for more than two dozen Ohioans. Among them are McColley, Sen. Matt Huffman, Ohio House Speaker Bob Cupp, and HB 6 co-sponsor Rep. Shane Wilkin. Wilkin is also the sponsor of HB 317, which would ax electric security plans but still allow bill riders, while keeping HB 6’s coal plant subsidies and removing authority for energy efficiency programs. Manchin’s campaign committee got a donation as well.

The American Electric Power Committee for Responsible Government spent money on congressional campaigns for longtime coal lobbyist Mike Carey and former clean-energy-freeze supporter Troy Balderson, both Republicans. Manchin’s campaign got money as well.

Manchin played a major role in the bipartisan infrastructure deal that was passed on Nov. 5. However, he has resisted more sweeping legislation to deal with climate change, while also thwarting efforts in Congress to guarantee voting rights.

Back in 2016, Manchin had also called federal regulators, urging them to reject challenges to coal and nuclear bailouts for AEP and FirstEnergy. Some of what the companies wanted at the time wound up in HB 6.

AEP and its affiliates reported spending more than $5.1 million on congressional lobbying this year through Sept. 30. The total for 2020 was more than $7.8 million, and the amount for 2019 was $8.1 million.

It’s unclear why AEP’s level of congressional lobbying has been consistently higher than FirstEnergy’s for the past decade.

Positions on clean energy?

Issues on which AEP engaged in lobbying during this year’s third quarter include bills for the American Rescue Plan Act of 2021 and the Infrastructure Investment and Jobs Act, budgeting and reconciliation legislation, and appropriations for the federal departments dealing with the environment and natural resources. Also on the list is funding for low- and zero-emission vehicles.

“AEP has a successful track record of reducing emissions and advancing clean energy, and we have made commitments to continue that progress,” said spokesperson Tammy Ridout. She noted the company’s commitment to increase renewable generation from 19% today to 50% of its total capacity by 2030. The company has also sold or retired nearly 13,500 MW of coal-fueled generation, she said. Those sales include some plants for which AEP sought bailouts less than a decade ago.

AEP has supported mandatory clean energy proposals in the Clean Energy Innovation and Deployment Act of 2021 and the Clean Energy Future Through Innovation Act of 2021, Ridout said.

“Our customers, investors and other stakeholders expect that we are moving as quickly as possible to a clean energy future, and we are pursuing that goal,” Ridout said. “It’s critical to our customers and the economy that we make this clean energy transition in a way that ensures electricity remains reliable and affordable.”

At the state level, though, AEP Ohio’s president and chief operating officer, Marc Reitter, testified before Ohio lawmakers last month, urging them to keep HB 6’s coal plant subsidies for two 1950s-era coal plants. Representatives of Duke Energy Ohio and AES Ohio offered similar testimony.

FirstEnergy’s lobbying in Congress has focused on the bipartisan infrastructure framework, grid modernization, clean energy issues, and other matters, including bills with provisions for both renewable energy and carbon capture technology from coal plants. 

Spokesperson Durbin did not detail FirstEnergy’s position on renewable energy and carbon capture provisions in specific bills.

“We continue to review and have discussions about the proposed federal infrastructure and energy legislation,” Durbin said. “While we support efforts to reduce GHG [greenhouse gas] emissions, we are analyzing how the various proposals could affect our customers and our operations, especially regarding affordability and reliability impacts.”

The $1 trillion infrastructure bill passed on Nov. 5 includes provisions for energy efficiency, electric vehicles, and grid modernization, which could advance a transition to clean energy, as well as funding for transportation and climate change resilience. Environment America, the United States Public Interest Research Group, the Reimagine Appalachia coalition and other environmental advocates have applauded those provisions.

But the bill also authorizes $6 billion for noncompetitive nuclear power plants. Other provisions provide funding for carbon capture technology from fossil fuels, with an eye toward its widespread adoption. The Nuclear Information and Resource Service and Friends of the Earth released a report this summer, showing that the then-proposed subsidies for nuclear power would be more expensive than renewable energy and could in fact delay the growth of renewable energy.

And an Oct. 7 report from the Ohio River Valley Institute concluded that widespread adoption of carbon capture would cost much more than other technologies, such as renewable energy and storage.

Not the whole story 

A review of PAC spending and congressional lobbyist filings doesn’t tell the whole story about utilities’ political spending, said Brown at the Harvard Electricity Policy Group. Specifically, “it doesn’t tell you the dark money contributions.”

Indeed, most money in the HB 6 scandal did not come directly from companies or their PACs. Rather, the bulk went to dark money groups from other organizations that got money directly or indirectly from FirstEnergy and its current or former affiliates. Additional money came to dark money groups from organizations that got funds from AEP, Murray Energy (now known as American Consolidated Natural Resources), and others.

FirstEnergy’s settlement with the federal government now calls for some disclosures of its giving to certain nonprofits and to entities “known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly.”

However, that might still leave some wiggle room, especially on issues-focused organizations. Those provisions also don’t apply to other utility companies.

Multiple layers of nonprofits and dark money organizations can work like Russian nesting dolls, hiding the ultimate source of money. Dark money groups also can be like whack-a-moles: Once the role of one is unveiled, it may wind down operations, letting another organization pop up.

For years, for example, AEP gave money to a nonprofit group called Empowering Ohio’s Economy, which in turn gave some money to Generation Now, a dark money group that has pled guilty in the HB 6 criminal case. AEP disclosed in June that it had gotten a subpoena from the Securities and Exchange Commission, even though the company said it believed its participation in the HB 6 process was ethical and lawful.

Late last year, Empowering Ohio’s Economy disclosed that it had begun winding down operations and had given $2 million to Open Road Path. That nonprofit group also operates under Section 501(c)(4) of the Internal Revenue Code. And both groups have very similar mission statements.

Whether AEP will support the new organization in the future is unclear, and groups like Open Road Path aren’t required to disclose their donors. Meanwhile, whatever Open Road Path may have done with the $2 million it got from Empowering Ohio’s Economy last year won’t be known for at least a month or more.

Ohio utilities FirstEnergy and AEP still spending big on lobbying is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Schools and governments in Southwest Virginia want solar policy to match new state law.

School districts in Virginia’s historic coal country aren’t teaching just their students this academic year.

They have realized that if they don’t offer lessons in civics, math and science to local decision-makers, their region will remain an afterthought in the state’s much-ballyhooed energy transition. Fears that solar arrays could be out of their financial reach spurred Wise and Tazewell counties to act.

The resolutions both school boards passed this month urge Appalachian Power and a local steering committee to negotiate a new contract allowing government entities in the region fair access to third-party power purchase agreements and net metering.

In theory, the state General Assembly granted such access this year when legislators passed the Virginia Clean Economy Act and the Solar Freedom Act. 

Not only do the new laws open power purchase agreements in Appalachian Power territory to both private, or jurisdictional, and public, or non-jurisdictional, customers, but they also boost the financing limit from a restrictive 7 megawatts to 40 MW. As well, they bump up net metering allowances significantly.

In practice, however, executing such expansions for public entities could be tricky. It all depends on the wording of the contract. It’s privately negotiated and its content supersedes state code.

For instance, a rider in the 2016 pact — which expired in June, but is in effect until a new one is signed — caps territory-wide, net-metered solar systems at a puny 3 MW for schools and other government entities. That limit was maxed out by 2019.

In tandem with the cap on net metering, the current contract is nebulous about power purchase agreements, saying public ratepayers must own and operate the solar array.

“We’re not on the cusp of starting a solar project, but we want to reserve the right to do a power purchase agreement,” said Chris Stacy, superintendent of the 5,300-student Tazewell County Public Schools. “The way it is now, doing it on our own isn’t fiscally viable. We would need a partner.”

Several years ago, a preliminary assessment estimated that Stacy’s district could save $2.7 million annually over 25 years with 2.5 megawatts of solar. His yearly budget is $60 million.

He supported his school board’s decision to pass a resolution at the behest of Appalachian Voices, a driving force behind including southwest Virginia in the state’s solar surge. The nonprofit advocacy group has joined with Solar United Neighbors, Generation 180 and others to educate area localities about why their input matters during the current negotiations.

That grouping includes at least 144 public authorities. Beyond governments and schools, the list includes jails, wastewater treatment plants, town halls, libraries, landfills and recreation centers.

“A lot of schools and local governments don’t realize these barriers to solar exist or how to change them,” said Chelsea Barnes, new economy program manager at Appalachian Voices. 

Plus, she said, it’s difficult for government leaders to focus on a utility contract when they are distracted by a coronavirus pandemic and a recession that is forcing them to redo their budgets.

“It’s complicated because governments don’t understand the process of solar. Power purchase agreements and net metering are very foreign to people,” Barnes said. “People care about solar energy, the environment and saving money on their electric bills. We have to help them understand what they need from the contract to meet those goals.”

Briefly, net metering allows customers to offset their electric bills by sending energy generated by their solar panels back to the grid.

Power purchase agreements allow a third party to own, operate and maintain solar arrays on behalf of a customer. They are especially crucial for tax-exempt and public entities that don’t have the upfront capital to invest in solar arrays or the ability to claim tax credits that make the projects more financially viable. Those customers usually pay a reduced price for electricity because the third party benefits financially from renewable energy tax credits.

Federal tax credits are scheduled to taper off gradually, and then more drastically, over the next several years.

The coalition’s efforts have also spurred letters calling for equal access to solar from the town of Blacksburg, the school board in Carroll County and leaders in Pulaski County, Barnes said.

Dotting i’s, crossing t’s on contract

C. James Ervin, Rocky Mount town manager, is leading the steering committee in the newest round of negotiations to ensure that Appalachian Power charges localities “rates that are fair, just and reasonable.” Its most recent virtual meeting was Oct. 14.

Rocky Mount, a Franklin County town of about 4,700, is about 25 miles south of Roanoke in the Blue Ridge Mountains. 

The latest four-year contract signed with Appalachian Power expired at the end of June. The Virginia Municipal League and the Virginia Association of Counties created the steering committee in 1978 to represent localities in contract negotiations with the utility. 

Ervin said he can’t yet comment on when a new contract will begin, how long it will last or its specifics.

“We have answers to all of those,” Ervin said in an interview. “But since it’s an ongoing chat, it’s best to keep it between the contract parties.”

Ervin noted that an agreement and an announcement hinge on the base rate case now before the State Corporation Commission for non-government customers. The steering committee can piggyback off that case as presented to utility regulators.

He also said he felt more confident than he did in April about Appalachian Power budging on caps on both power purchase agreements and net metering. The key, he added, is building a solid foundation that allows for flexibility. 

“Appalachian Power has signaled it will comply with the Virginia Clean Economy Act,” Ervin said. “Our intent is to fold that in. We’re trying to dot the i’s and cross the t’s.

“Now it’s gotten to where it’s somewhat economically fashionable to go down this road,” he said about how renewable energy and the tools to expand it are blending “in the perfect harmony of fiscal conservatism and environmental stewardship. They’re colliding in a happy outcome.”

Appalachian Power spokesperson Teresa Hamilton Hall said the utility extended an offer to Ervin’s committee in August that addresses the current solar cap.

The utility is “awaiting a response,” she said. “We are optimistic that an agreement can be reached that will meet the needs of our customers and our company.”

As part of the contract negotiations, Appalachian Power completed a cost-of-service study for its public authority customers at the end of last year. The technical study offers an analysis of how much it costs the utility to provide electricity to different customer groups. It doesn’t necessarily determine rates, but provides relevant discussion fodder for the steering committee.  

A public document isn’t available, Hamilton Hall said.

The utility has implied that raising the cap will lead to increases in kilowatt-hour costs because of expenditures to adjust and build infrastructure to accommodate more renewables.

Appalachian Power, part of the giant American Electric Power system based in Ohio, serves 531,677 customers in southwestern Virginia.

Members of the solar coalition noted that in Dominion Energy territory, negotiators have allowed public authorities to follow new net metering and power purchase agreement measures that apply to residential, commercial and other everyday customers. The power purchase agreement limit in Dominion’s service area is much higher. 

Richmond-based Dominion, the state’s largest electric utility, serves 2.5 million customers in the northern, central and southeastern regions of Virginia. 

‘Persistence and constant attention’

In a recent newspaper opinion piece, Sen. John Edwards, D-Roanoke, said that the General Assembly expanded the power purchase agreement program with the specific intent that it be available for tax-exempt entities.

As the distribution of solar energy by non-monopolistic private entities grows in Virginia, he said, local governments and schools should be able to benefit from less expensive solar energy and save taxpayer dollars on electric bills.

“The … Steering Committee should negotiate new contracts …. to reflect the changes in the new state law and allow an increase in the net metering cap and access to PPA financing so our local governments can take full advantage of the benefits and lower costs of renewable energy,” Edwards wrote in the Roanoke Times.

Appalachian Voices spearheaded the Solar Workgroup of Southwest Virginia five-plus years ago to try to smash what seemed intractable barriers to solar power in this mountainous region. While the workgroup is on the verge of multiple rooftop solar advances via a deal announced in September, Barnes is not about to set aside her advocacy hammer.

“This is not something that will resolve itself,” she said about the workgroup’s diligence on all fronts. “It’s frustrating, but not surprising, that we are working with utilities that aren’t very forward-thinking.”

Barnes, who lives in Norton, a city in Wise County, doesn’t want the job-starved region to miss out on the bounty of employment opportunities the solar industry can provide. Nor does she want residents to be stuck in a bygone era where too much of their paycheck goes toward a burdensome electric bill.

“Issues of energy inequity are embedded in policies, regulatory regimes and the way we do business,” she said. “You can’t just write a law that fixes all of that. These are complicated issues that require persistence and constant attention.”

As it stands now, just 22 kW of the nearly 21,000 kW of solar installed at K-12 schools across Virginia is in Appalachian Power territory. That’s one-tenth of 1% of the total, according to research conducted by Generation 180 through December.

Stacy, named school superintendent of Tazewell County last year, is eager to have a crack at Virginia’s solar revolution. As a teacher and principal in the same district for two dozen years, he has watched Tazewell’s 15 school buildings age.   

He wants options when the replacement of those facilities begins.

“Some people think that as soon as this [COVID-19] crisis is over, we’ll get back to normal,” Stacy said. “The news is that online learning is here to stay.

“It’s the same thing with solar energy. It’s evolving. And it’s one of the avenues we need to be able to explore.”

Appalachian schools seek solar reforms as region renegotiates utility contract is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

FirstEnergy and American Electric Power earn substantial revenues beyond base distribution rates for electricity use. 

Ohio utilities saw electricity sales drop this spring as the coronavirus pandemic prompted schools and businesses across the state to close.

The drop in energy use, however, did little to hurt profits as both FirstEnergy and American Electric Power shared positive results with investors.

The apparent disconnect can be explained by the complicated way in which utilities earn revenue, which largely comes from fees, riders, guaranteed returns on investments and other sources beyond base distribution charges for actual electricity use.

Critics say the utilities’ optimistic reports to shareholders recently highlight how policy provisions protect the companies from risk at the expense of ratepayers.

“This is a hard time for businesses large and small. But it strikes me that investor-owned utilities are faring comparatively well in the current situation,” said Sonia Aggarwal, vice president at Energy Innovation, a policy analysis firm in San Francisco. “Over the years they have negotiated riders and rate structures that insulate them somewhat from fluctuations in electricity demand due to economic and weather conditions, and those mechanisms are cushioning the blow to utilities right now, even given the substantial reduction in demand for electricity.”

Ohio’s investor-owned utilities this month each reported positive earnings per share (income divided by shares) for the first quarter. Ohio-based American Electric Power had earnings of $1.02 per share, while FirstEnergy announced quarterly earnings of $0.66 per share. Those figures compare with first-quarter earnings per share in 2019 of $1.16 for AEP and $0.59 for FirstEnergy. 

Duke Energy and AES Corporation, which owns DPL Inc. and Dayton Power & Light, also announced adjusted earnings per share of $1.14 and $0.29, respectively. In calls with investors, corporate leaders described shifts in demand from commercial and industrial customers toward the residential sector.

“Regardless of whether we forecast a V-shaped, a U-shaped or W-shaped COVID-19 recovery, we see our service territory as an arbitrage between residential load and commercial industrial load that is defined really by a pendulum between the financial characteristics of working from home versus the restart of commercial and industrial businesses,” AEP’s President and CEO Nick Akins said in his May 6 earnings call.

The company expects residential load to grow by 3% for the year while the commercial and industrial loads drop by 6% and 8%, respectively. But AEP still expects to meet its operating earnings guidance for the year of $4.25 to $4.45 per share.

Public ratemaking policies help insulate electric utilities from adverse economic consequences, especially in Ohio. Besides charges for transmission and distribution, Ohio utility bills include various riders. Some of those provide subsidies for utilities that continued to operate generation affiliates a decade ago when state after a competitive market began to develop in 2009. An analysis by Ohio State researchers last year shows that payments to subsidize non-regulated activities can range from around $26 to $52 on an average bill.

Beyond that, FirstEnergy and other utilities benefit from a “decoupling mechanism” authorized by last year’s House Bill 6, which provides subsidies for certain nuclear and coal plants and also gutted Ohio’s renewable energy and energy efficiency standards.

Yet while it scaled back energy efficiency standards and gets rid of a charge for the program, the law lets utilities peg distribution revenues to their 2018 distribution revenues plus amounts they collected for lost distribution revenue due to energy efficiency.

“Bizarrely, the [investor-owned utilities] will receive income from discontinued programs while not incurring the costs associated with service delivery,” said Ohio State economist Ned Hill in his testimony against HB 6 last year. “Being ordered by the legislature to not provide services while receiving the money that was once earned from providing those services from a de facto tax is a lobbyist’s dream come true.” Various other riders can also still be charged.

The Public Utilities Commission of Ohio approved that so-called decoupling mechanism for Ohio in January 2020 — a step that FirstEnergy President and CEO Chuck Jones had said would make the company’s utilities “recession-proof” when it applied for the rate adjustment last November.

Most of FirstEnergy’s distribution revenues from commercial and industrial customers come from fixed customer and demand charges, Jones said. And although a PUCO order in March pretty much halted utility disconnections for nonpayment, the commission has said it would entertain future rider requests to recover those funds from other customers.

Jones and Akins both also noted impacts on revenues from their utilities no longer collecting a credit support rider that the Ohio Supreme Court held unlawful last June. The utilities had collected those fees since 2017 but were not required to return or provide customer credits for any of the unlawful charges. By then FirstEnergy customers had shelled out around $440 million for the charges.

Ohio has begun to reopen some of its businesses, subject to physical distancing requirements and other restrictions. Yet it’s unclear how much life will get “back to normal” until a reliable vaccine is available for the virus that causes COVID-19. And it’s unclear how long it will take the economy the recover from the widespread shutdowns, disrupted supply chains, high unemployment and other impacts of the pandemic.

“I would remind you that prior to the pandemic we were already seeing reduced industrial sales due to the manufacturing recession,” Jones said in his April 23 earnings call. “However, our rate structures provide a measure of stability even in tumultuous times.”

Ohio policies cushion the pandemic’s impact on electric utilities is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.