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New nuke- and coal-friendly Ohio law said to disadvantage gas generation

Highlights

Bill also lowers standards for renewable energy

Foes of legislation say it picks winners, losers in energy competition

Houston — Opponents of a new law designed to prop up Ohio's imperiled nuclear and coal-fired power plants say it likely will slow construction of new natural gas-fired generation in the state.

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Representatives of Ohio's gas industry may be joining other groups opposed to the law, signed last week by Governor Mike DeWine, to launch a statewide referendum effort to reverse it.

A newly formed group, Ohioans Against Corporate Bailouts, will try to launch a statewide petition to get the new law overturned, Gene Pierce, a spokesman for OACB, said in an interview Monday. Pierce said he could not release the names of members of the group, but said it included energy companies, as well as numerous other organizations and individuals opposed to the new law.

"Many, many people testified against the bill," Pierce said. "It props up inefficient and expensive nuclear plants and undercuts Ohio's renewable energy industry." The law would slow the growth of gas-fired power generation in the state, to the detriment of ratepayers, he said. "Nuke plants are much more inefficient and expensive than natural gas," Pierce said.

The law financially supports two nuclear power plants owned by FirstEnergy Solutions -- the 908-MW Davis-Besse and 1,268-MW Perry plants -- as well as and two Ohio Valley Electric Corp. coal plants -- the 1,300-MW Clifty Creek Generating Station on the Ohio River in Jefferson County, Indiana, and the 1,086-MW Kyger Creek Generating Station in Gallia County, Ohio. The law also scales back the state's existing alternative energy portfolio standard.

Todd Snitchler, president and CEO of the Electric Power Supply Association, which advocates for renewable energy resources, said he expects many member companies to join the legislative recall effort.

"EPSA is not participating directly but our members are evaluating participation and evaluating what the next steps are going to be," Snitchler said Friday.

The American Petroleum Institute, which had opposed the passage of HB 6, has not committed to joining the effort to overturn the new law. However, in a statement following the bill's passage, API Ohio Executive Director Chris Zeigler said the organization was "disappointed in the legislature for passing this corporate bailout for nuclear and coal-burning power plants." He said the law would disadvantage "other electricity generation sources, particularly affordable natural gas."

Based on the assumption that 90% of the generation displaced/removed is substituted with gas-fired generation operating at a 7,500 Btu/kWh heat rate, S&P Global Platts Analytics finds the new law is likely to decrease the demand for new gas-fired power generation in Ohio, although the reduction of the renewable portfolio standards should mitigate the loss of gas-fired market share that likely would have been gained with the retirement of Davis Besse in 2020 and Perry in 2021.

In addition, Platts Analytics forecasts that the presence of subsidized baseload generation in Ohio will also make it more difficult for new gas-fired capacity to clear in the PJM capacity market.

-- Jim Magill, newsdesk@spglobal.com

-- Kieran Kemmerer, newsdesk@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com