This fall’s election for three seats on the Supreme Court of Ohio is expected to play a pivotal role in deciding the state’s direction on renewable energy, utility accountability and other energy issues.

In addition to deciding appeals from lower courts dealing with energy and other topics, the seven-member Supreme Court of Ohio hears all challenges to cases from the Public Utilities Commission of Ohio and Ohio Power Siting Board. The commission broadly decides what utilities can do and how much they can charge ratepayers, while the siting board approves where energy generation and other infrastructure get built.

Judicial candidates do not campaign on issues, so voters won’t have a full picture of how they are likely to rule on energy-related cases. However, endorsements, campaign contributions, and a handful of decisions by incumbents offer some clues. 

The Ohio Environmental Council Action Fund has endorsed all three Democratic candidates — Michael Donnelly, Melody Stewart, and Lisa Forbes. Donnelly and Stewart are incumbents seeking another six-year term. Forbes is an appellate judge in Cuyahoga County, which includes much of greater Cleveland.

Meanwhile, the Ohio Oil and Gas Association and NiSource have given money to the campaigns of all three Republicans —Joseph Deters, Dan Hawkins, and Megan Shanahan. American Electric Power also gave money for Shanahan’s and Deters’ campaigns, data compiled by Open Secrets show. 

Deters was appointed by Gov. Mike DeWine last year to fill a partial term and is challenging Stewart for a full term. Hawkins and Shanahan are trial court judges in Franklin and Hamilton Counties, respectively. 

Ideally, party jurisdiction should not matter when candidates run for judicial office, said Heidi Gorovitz Robertson, a law professor at Cleveland State University. And some past energy rulings have been unanimous, including a 2021 ruling reversing a PUCO decision favoring a FirstEnergy affiliate while Sam Randazzo was chair. 

Starting in 2022, however, a new state law added party affiliations on fall election ballots for appellate court judges. Republicans hold a 4-3 majority on the Ohio Supreme Court, but that balance could flip depending on the outcome of this election.

These are some of the energy issues the new court is likely to take up in the coming years:

Who gets the biggest say in where solar farms are built?

The Ohio Supreme Court still has to hear oral arguments and then decide solar farm siting cases for the Kingwood Solar and Birch Solar projects. Supporters of the projects argue the Ohio Power Siting Board acted unlawfully by treating the volume of local opposition as a deciding factor, rather than considering whether the substance of the objections outweighed other factors supporting the projects.

“How the judges approach those questions is going to have a big impact on how renewable energy projects move forward in this state into the future,” said Chris Tavenor, an attorney speaking on behalf of the Ohio Environmental Council Action Fund.

If the court sides with the siting board, it could give local opposition groups more sway in project siting than a 2021 law already grants to county governments. The result could further empower groups with links to fossil fuel interests, which sometimes stoke fears about renewable power to build opposition.

The Kingwood case docket includes a friend-of-the-court brief filed on behalf of the Ohio Senate’s Republican majority, which was written as if it came from the whole Ohio Senate. Ohio Attorney General Dave Yost then moved to strike a separate brief filed on behalf of the seven Democrats in support of the project. An August 7 ruling denied Yost’s motion, but Deters dissented and would have denied the Democratic Caucus a say in the case.

How long can regulators make developers wait for decisions?

Another case, Moraine, presents ongoing questions about the timing of Supreme Court appeals. In Moraine, the court let an energy consulting company appeal several PUCO decisions about out-of-state renewable energy credits, in essence taking the commission to task for delays in deciding the company’s request for it to reconsider the rulings. 

The court’s August 27 procedural ruling said the PUCO can’t avoid its legal duty to rule on rehearing requests within 30 days by giving itself more time. Donnelly agreed with the ruling, Stewart dissented, and Deters didn’t take part.

On one hand, the ruling should speed up renewable energy cases and maybe let developers get projects built more quickly. The ruling should also shorten how long consumers may have to pay contested charges that may ultimately be ruled unlawful.

On the other hand, the ruling on timing represents a shift in the law. The Ohio Power Siting Board’s arguments in an earlier Kingwood Solar appeal were very similar to those the PUCO made in the Moraine case. Yet in September 2023, six judges, including Donnelly, Stewart and Deters, agreed to dismiss the earlier Kingwood Solar case.

On September 4, the PUCO held the new Moraine ruling means rehearing requests in other cases were denied by law and suggested the time for any appeal has passed. An October 2 ruling repeated that position. 

“Instead of embracing the court’s pro-consumer ruling, the PUCO is undermining it,” said Ohio Consumers’ Counsel Maureen Willis.

Will utility customers ever get refunds for unlawful riders?

An AES Ohio case aims to block more than $150 million in refunds for allegedly unlawful “stability charges” that the PUCO said would be refundable “to the extent permitted by law.” The utility had gone back to the old subsidy rider after a later one was ruled unlawful. 

AES is also trying to use the August 27 Moraine ruling to say the Ohio Consumers’ Counsel missed its opportunity to appeal in any event. 

“AES’s latest move to avoid giving refunds to its 500,000 consumers should meet with sound defeat,” Willis said. “To protect consumers, the court should proceed to oral argument and allow justice to run its course.”

The case will test the limits of language about refunds in a 2019 case, which held FirstEnergy’s so-called distribution modernization rider was unlawful. Donnelly’s opinion there said no refund was available for the money already paid, because the PUCO hadn’t made the rider refundable. Stewart was among the judges who agreed.

What penalties will FirstEnergy face for its role in Ohio’s HB 6 scandal?

A review of those rider charges is now among four FirstEnergy cases before the PUCO relating to the ongoing House Bill 6 corruption scandal. An evidentiary hearing on another of the cases dealing with corporate separation is set to start this month. The rider review and the other three cases will likely have hearings next year.

Hundreds of millions of dollars are at stake. Charges in at least one case may be refundable through future bill adjustments. And even if consumers don’t get refunds in the other cases, FirstEnergy could be liable for penalties. So, some or all of the cases will likely end up at the Ohio Supreme Court.

Deters recused himself from a case last year in which the court let the Ohio Attorney General’s office seize assets of former PUCO chair Sam Randazzo. Although the notice didn’t say why, Deters previously worked with lobbyist Matt Borges, who was convicted last year on federal criminal charges related to HB 6. Deters also has sat out several appeals from the PUCO, where his brother is a commissioner. 

Will drilling continue to be allowed under state parks and wildlife areas?

Natural gas cases could also end up at the Ohio Supreme Court. One case challenges the constitutionality of a 2023 law that labeled natural gas “green energy” and jump started regulatory action to allow drilling and fracking under state parks and wildlife areas. Briefing ended last year. The trial court has not yet made its decision.

Another case seeks to challenge instances in which the Ohio Oil and Gas Land Management Commission decided to solicit bids to lease areas under specific state parks and wildlife areas for drilling and fracking. The trial court dismissed the appeals in February. The case is currently on appeal.

Whether either case goes to the Ohio Supreme Court isn’t a foregone conclusion. Much will depend on how the courts rule, said Megan Hunter, an attorney with Earthjustice who represents several environmental groups in the cases.

Judging the judges

Common Cause encourages voters to Judge the Ads for court candidates with a skeptical eye. Watch for emotional framing. And question claims that may be inaccurate or taken out of context. Also note which groups pay for those ads, Common Cause advises: Question who is behind those groups and what they may stand to gain.

Just as importantly, listen carefully to the candidates. “Focus on judges who are talking about principles of fairness and upholding our democracy as an important aspect of how our state works,” Tavenor said.

“And really just pay attention to whether or not the judges are talking in partisan language versus nonpartisan language,” he added. “Our judges really shouldn’t be focused on the goals of political parties.”

Ohio high court races will decide future of state’s energy transition and utility fairness 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.

The pair of 1950s-era coal plants bailed out under Ohio’s House Bill 6 law are likely to remain unprofitable even after a surge in grid operator payments to generators, experts say. 

The PJM Interconnection grid market makes capacity payments to line up power to meet expected demand in the years ahead. Aging, uneconomical coal plants are being retired at a time when data centers and manufacturers are starting to use more electricity, causing future power generation prices to rise.

But even record-high prices in PJM Interconnection’s recent capacity auction won’t cover the hundreds of millions of dollars in subsidies paid by ratepayers to cover Ohio utilities’ costs for the Ohio Valley Electric Corporation’s Kyger Creek and Clifty Creek power plants.

“Even with a super high price, OVEC is still going to be in the red,” said Neil Waggoner, Midwest manager for the Sierra Club’s Beyond Coal campaign.

The ratepayer subsidies are a result of HB 6, the 2019 state law at the heart of the largest corruption scheme in Ohio’s history. Republican legislative leaders have blocked all efforts to repeal the coal subsidies from coming to a floor vote.

This year alone, ratepayers are on track to pay nearly $200 million to prop up the two plants, one of which is in Indiana. By 2030, total ratepayer costs from the bailout could exceed $1 billion, according to RunnerStone, a consultant for the Ohio Manufacturers’ Association.

Starting next summer, the payments for generators to be ready to supply electricity when PJM Interconnection needs it will jump to about nine times the current rate for most of the grid operator’s service region. 

“Put simply, the market pays participants for the promise to produce electricity when called upon by PJM,” said Daniel Lockwood, a spokesperson for the regional grid operator. An auction sets the levels for each year’s capacity payments, and the payments go to generators that bid the clearing price or less.

A spokesperson for the power plants did not directly answer the Energy News Network’s question about whether both cleared the latest PJM auction, although he described the auction results as “positive.”

“The auction results were a positive development for the OVEC plants and are more broadly a signal to the market that additional generation resources are needed in the PJM region,” said Scott Blake, a spokesperson for American Electric Power and Ohio Valley Electric Corp. While the HB 6 rider charges depend on multiple factors, the impact of the 2025/2026 capacity pricing “is expected to be positive for customers,” he said.

AEP is OVEC’s largest shareholder, along with other utility companies in Ohio and other states.

HB 6’s OVEC subsidies currently require Ohio’s residential utility customers to pay between $1.30 and $1.50 per month, depending on whether their utility is owned by AEP, AES Ohio, Duke Energy or FirstEnergy, according to PUCO data from spokesperson Brittany Waugaman. Businesses pay for the rider, too. The HB 6 rider’s net total costs last year were more than $148 million.

Doing the math

While capacity payments will reduce the OVEC plants’ total costs to Ohio ratepayers, the revenue won’t, in itself, make the plants profitable.

Expert testimony from a Michigan case last year found the OVEC plants would need capacity payments averaging about $418/MW-day for several years to become economical. Last month’s record-high price that will take effect next summer was about $270/MW-day.

Economic analyst Devi Glick of Synapse Energy Economics testified in the case on behalf of the Sierra Club.

“To massively oversimplify the economics of the OVEC plants, there are two categories of costs and two categories of revenues,” Glick told Energy News Network. “Costs are on one side of the equation and revenues on the other.”

Based on then-current projections for costs and energy market revenue, Glick calculated what the plants’ capacity revenues would have to be for the equation to balance out.

Several caveats would apply, Waggoner acknowledged, including any differences from last year to this year that could affect projected energy revenues. Nonetheless, he noted, a significant gap would remain.

Glick’s estimate of about $418 as a break-even capacity price for the OVEC plants is realistic and may even be conservative now, said John Seryak, managing partner for RunnerStone.

“PJM is no longer paying for a coal plant’s full power capacity anymore under new rules it created just prior to this capacity auction,” Seryak explained. “That could mean that OVEC needs even higher-priced capacity and energy to be profitable.”

“Future energy market prices, OVEC’s future coal costs, and OVEC’s environmental compliance costs will also be important factors determining the extent of its losses or profitability,” Seryak continued. “All that said, we do not anticipate OVEC operating at a profit without further price increases.”

Meeting energy demand

Blake emphasized the OVEC plants’ role as a “reliable generation resource for our customers and for our region,” adding that the HB 6 rider “ensures that customers in Ohio receive electricity from OVEC for what it costs to produce it and the funds are used to pay down debt with no proceeds going to shareholders.”

That’s not exactly correct, said attorney Kimberly Bojko at Carpenter Lipps, who represents the Ohio Manufacturers’ Association in cases at the Public Utilities Commission of Ohio. “Customers pay the cost to operate and run OVEC and the power produced from OVEC is then sold into the wholesale electric market,” she said. Any revenue offsets the costs of HB 6’s coal subsidy.

The Ohio Manufacturers’ Association also has disputed the use of the HB 6 rider to pay down the OVEC plants’ debt in cases before the PUCO.

“By using ratepayer funds to pay down its debt, AEP Ohio is essentially shifting its bad debt to the Ohio ratepayers,” Seryak said. “It’s akin to if a person forced their neighbor to pay for their mortgage payment.”

“Customers pay for more than just OVEC’s debt, though,” Seryak added. “Customers also pay for losses in the energy market OVEC incurs. When this occurs, it means the electric grid does not need OVEC for reliability. Instead, OVEC is burning coal pointlessly at a loss and charging it to Ohio’s ratepayers.”

Ohio coal plant subsidies still a bad deal for ratepayers despite growing generation demand, experts say 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.