UPDATE July 23, 2019: Gov. Mike DeWine, R, signed HB 6 into law.

Dive Brief:

The Ohio House on Tuesday approved legislation creating a customer-paid $1.1 billion subsidy for two nuclear power plants in northern Ohio.

FirstEnergy Solutions, the owner of the two reactors, is now in line to receive an average of $150 million per year, beginning with quarterly payments in April 2021, and running through 2027. The company had said it needed the extra funding immediately.

The legislation also provides nearly $50 million per year in new customer-paid subsidies to the Ohio Valley Electric Corp., which operates two large coal-burning power plants, built in 1955. Owned by three investor-owned Ohio utilities, OVEC loses money selling into the PJM wholesale markets.

Dive Insight:

The passage of HB 6 caps a five-year drive to save the state's nuclear plants, initially by FirstEnergy Corp. and since April of 2018 by FirstEnergy Solutions, the subsidiary FE spun off immediately before FES filed for bankruptcy protection, owing more than $2 billion to its creditors.

FES more than a year ago announced it would close its nuclear plants in 2020 and 2021 without outside funding. The company has been preparing for post-shutdown operations as required by the Nuclear Regulatory Commission.

Top FES officers told Ohio lawmakers during the months of hearings on HB 6 that the company had to have the money by June 30 because it had to commit to purchasing fuel for the spring refueling of the Davis-Besse plant near Toledo.

When legislators were not able to agree on the legislation, the company said it could postpone the purchase for a few weeks, but would have to pay a surcharge.

An opposition witness, Paul Sotkiewicz, formerly the chief economist at PJM, testified in June before the Senate Energy and Public Utilities Committee that FirstEnergy's 2017 10-K fiscal filing with the Securities and Exchange Commission indicated the company had contracted for a portion of its uranium requirements through 2024 and fuel rod fabrication services for Davis-Besse through 2028.

FES did not return multiple requests for comment on Sotkiewicz's testimony.

The passage of the legislation also comes as critics of FES point to federal bankruptcy documents indicating that the two nuclear plants are profitable and that FES expects to emerge from bankruptcy later this year with ample cash on hand.

Some have argued FES will use the subsidy to repay its bondholders. The company's major creditors have proposed to own and operate FES when it emerges from bankruptcy protection.

The vote in the GOP-dominated, 99-seat House was 51 to 38, with 10 members missing and many Democrats urging rejection or sending the bill to a conference committee for further discussion as to whether the company actually needs the money.

HB 6 eliminates the state's renewable energy mandates in 2026 at 8.5% but provides about $20 million a year for a half dozen utility scale solar projects that have already been approved by state regulators.

HB6 does nothing to re-open the state for the development of utility-scale wind farms but does allow manufacturers to contract for on-site wind turbines generating up to 20 megawatts, providing the power is used on-site. GOP lawmakers in 2014 added restrictive setback provisions to unrelated legislation that has stymied wind projects ever since.

The Nature Conservancy said Ohio lawmakers missed an opportunity to develop a comprehensive energy policy.

"HB 6 is a step back from what we have currently in statute for the clean energy standards. This is not a comprehensive energy bill. Instead, this bill compromises successful policies that have supported renewable energy and energy efficiency to provide a legislative vehicle for a nuclear and coal bailout," the group said in a statement.

Nuclear advocates cheered the bill's passage.

"Today's decision echoes support we've seen in New Jersey, New York, Illinois and Connecticut and reaffirms the major role nuclear carbon free energy has in lowering carbon emissions," Maria Korsnick, president and CEO of the Nuclear Energy Institute, said in a statement.

The Ohio Consumers' Counsel and the Ohio Manufacturers' Association urged the governor for a veto last week. Today the Consumers' Counsel condemned the measure as "the latest and maybe the worst of the retreats from competitive markets undertaken by the Ohio legislature" in the 20 years since the state embarked on deregulation.

Other groups that opposed the bill continue to look for ways to reverse the governor's action.

"We are open to all options, including a voter referendum, to kill this costly bailout bill and get Ohio back on track as a clean energy leader," Dick Munson, director of regulatory and legislative affairs for the Environmental Defense Fund, told Utility Dive via email.