Is potential electricity shortfall in Ohio a looming crisis or a rate raising ruse?

Is there a looming electricity crisis ahead for Ohio? Or is the concern over an electricity shortfall an empty threat being used as an excuse to hit consumers and businesses with higher bills to keep the lights on and machines running?

Last week, a panel of Ohio and Pennsylvania legislators heard from experts warning of a potential shortage in coming years in those states and others served by PJM Interconnection, the agency that oversees the flow of electricity in all or parts of 13 states and the District of Columbia.

It followed a similar hearing that was held in Pennsylvania last year.

“These hearings are intended to elevate the urgency of lost generation through the early forced retirement of our existing fossil fuel fleet and the rapidly growing need for additional, affordable generation,” Rep. Dick Stein, R-Norwalk and chairman of the House Public Utilities committee, said as he led last week's hearing. “I hope that together, government at all levels will work to solve this upcoming crisis to avoid a life-threatening catastrophic failure to our grid.”

The hearing comes on the heels of a PJM report released a year ago that warns about potential shortages in the states it serves.

"For the first time in recent history, PJM could face decreasing reserve margins, ... should thesetrends – high load growth, increasing rates of generator retirements, and slower entry of new resources – continue," the report notes.

The report was issued just months after a brutal cold snap in which AEP Ohio and other utilities in the PJM region asked consumers to conserve power. That was preceded the summer before by storms so severe that PJM ordered AEP Ohio to shut down service to hundreds of thousands of customers in central Ohio to prevent outages from cascading.

Plant retirements, growing demand for power driving concerns

The report and the witnesses who testified at the hearing blamed the potential shortfall on the retirement of big plants, mostly coal fired, along with growing demand for power stemming from the surge in new manufacturing, electricity-hungry data centers and electric vehicles.

And as the region, like most of the country, moves away from coal, most of the new generation expected to come online in coming years in the PJM region and Ohio is solar power, an intermittent source and not enough to make up for what's being lost.

"The projections in this study indicate that the current pace of new (sources of electricity) would be insufficient to keep up with expected retirements and demand growth by 2030," the report said.

The report notes that about a fifth of the existing sources of power in PJM is expected to be retired by 2030, mostly from policies set by states and the federal government.

In Ohio, only a handful of big coal-fired plants continue to operate.

"If we’re trying to keep pace with these supply-demand fundamentals, we're going to continue see supply decrease and demand increase and there will be a mismatch eventually," Asim Haque, PJM's senior vice president for state and membership services and former chairman of the Public Utilities Commission of Ohio, told the panel. "When is that eventually? It’s very hard to pinpoint exactly.’’

Remember House Bill 6

The threat of a power shortage comes after Ohio went through House Bill 6 that led to the state's biggest public corruption scandal in decades and the conviction of former House speaker Larry Householder.

Ohio consumers were ordered to pay subsidies to shore up the state's two nuclear power plants along with two aging coal-fired plants, one of which is Indiana. It also gutted the state's energy efficiency programs.

While the subsidy for the nuclear plants was repealed as the scandal unfolded, the subsidy for the coal plants hasn't, and it's costing consumers $153,000 a day, a total of $225.6 million so far, according to the Ohio Consumers Counsel.

Also the legislature recently enacted House Bill 201, which allows natural gas companies to charge customers for more infrastructure upgrades, extensions and planning costs, including proposed projects that might never be built.

The charges will be limited to $1.50 per month for customers, but utilities could collect those fees for years to come.

Consumers, manufacturers see things differently

The Consumers Counsel and the Manufacturers Association were not invited to the legislative hearing and, instead, held their own event the day before to voice concerns about the tactics they say could be used to justify higher electric bills for the state's consumers and businesses.

"This is a push by PJM and others to scare lawmakers and other regulatory authorities into acting without considering the consequences of their actions or without knowing the cost to consumers," Consumers Counsel Maureen Willis said. "We all know it will be consumers that pick up the cost to that bill."

“Electric reliability is a top concern for Ohio manufacturers,” said Ryan Augsburger, the association president. “When the power is out, manufacturing stops."

The association, which represents 1,300 members, found flaws in the PJM report, noting that its focused on the worst-case scenario that may tempt some policymakers to abandon competitive electric markets.

"State by state action to counter PJM's worst-case scenario could thus create more problems than it solves, as out-of-market subsidies or other non-market solutions may be enacted, an issue PJM has struggled with in the past," according to a report prepared for the association. "Additionally, policymakers may conclude that 'baseload' coal and nuclear plants require assistance, whereas in contrast PJM is demonstrating that more renewable energy and natural gas meets the grid's power needs."

Manufacturers says there needs to be a formal investigation of the outages from the summer of 2022 and Christmas freeze that followed.

“In Ohio, the job of overseeing and ensuring reliable, competitive power generation and transmission is that of grid operator PJM Interconnection and utilities," Augsburger said. "In recent years, Ohio has experienced several high-profile electricity failures and near catastrophes. Simply put, Ohio manufacturers need to see measurable improvement in both of these areas."

Augsburger said manufacturers agree that future shortfall risks should be taken seriously, but the PJM report overstates the problem and caters to utilities to justify expensive new investments to be paid by ratepayers.

What is happening in Ohio?

Like most of the PJM area, most of the new projects planned in Ohio are solar power.

The state has more than 50 projects either complete, under construction, waiting to be building or awaiting approval.

There also has been a growth in natural gas-fired plants and two more are scheduled to open in the next two years.

For now, renewable energy makes up just a small part of the electricity produced in the state. Natural gas is the top source, followed by coal and nuclear power.

Renewable energy has brought its own set of issues as projects unfold. Neighbors of the projects, whether solar or wind, complain about how they change the countryside.

Legislators have made it more difficult to site wind farms and easier for local communities to stop renewable projects.

Lt. Gov. Jon Husted warned the legislative panel that without action, the goal of a reliable and affordable energy supply could be at risk.

"If we’re going to have an economic and national security that comes with a domestic supply chain of the most essential things that we need to live and thrive it’s going to have to be powered by electricity,’’ he said.

mawilliams@dispatch.com

@BizMarkWilliams

This article originally appeared on The Columbus Dispatch: Grid operator warns of potential electricity shortfall in years ahead