COLUMBUS (WCMH) — If a business told you it was not profitable and asked you for $150 annually so they could keep their business open and their workers employed; and then refused to prove to you they actually needed your money, because they didn’t have enough of their own, would you hand over the cash?
That’s pretty much what is happening with one company that is asking the State of Ohio for a massive bailout, only instead of asking for $150 they are asking for $150,000,000.
FirstEnergy Solutions (FES) is going through bankruptcy. For whatever reason their business decisions led them down a path of having too much debt and not enough money to cover it. So they are looking to get out from under that obligation.
Right now, FES owns two nuclear power plants in northern Ohio, the Davis-Besse plant and the Perry plant.
According to the people in the firm running the bankruptcy restructuring neither plant is profitable.
No matter how efficient they make the plant, and they say the plants are already in the top tier of efficiency for nuclear plants in the country, they can’t make a buck.
If the plants were somehow made to be profitable, through a bail out subsidy by the State Legislature, the owners of the debt attached to the plants would trade it in for equity shares in the power plants.
If the legislature doesn’t prop up the plants with a bail out, the investors are ready to shut the plant down and walk away.
That would mean around 2,700 people would lose their job, and the plants would stop operating forever.
The effort at the Statehouse is taking a multiprong approach to getting the bailout bill passed.
Some are using the loss of jobs as a pressure point, laying into what this would do to the community and those families; as if people haven’t lost their jobs before and plants haven’t closed as they have in Lordstown for instance.
Another tactic some are taking to apply pressure is to talk about how losing the nuclear power plants would make our air in Ohio dirtier because coal and natural gas plants would have to pick up the slack in their place. Nuclear plants provide 14% of the regional power.
Then, there is the other part of the bill that some have sought to push, claiming it will save you the ratepayer money on your electric bill. They say this particular part of the bill is necessary to pay for the bailout.
It would eliminate the renewable energy and energy efficiency standards fee on our bills, which is around $4.85 or so. It would be replaced with a lower fee.
What they don’t tell you is there is a provision that allows for that $4.85 fee to go right back on your bill if the money they legislation generates ever runs out, which is not impossible.
So, technically, yes this saves you money… for now, and maybe in the future, maybe.
And then there is the rush to get all of this done. Lawmakers have been told they have to make a decision by June 30th of this year or the plants are going to shutdown.
Here is how that would work.
Nuclear power plants purchase fuel every 18-24 months. It just so happens one of the two plants in question is about to reach that point.
The Davis-Besse plant is scheduled to make a purchase around July 1, 2019 because its fuel will run out in February 2020.
It takes roughly 8 months to build custom refueling materials. These materials are plant specific and cannot be used in any other plant, as they are unique.
The cost to refuel the plant is around $50,000,000.
The investors in the Davis-Besse plant don’t want to continue to take a loss, since the plant is supposedly a loser financially; and they don’t want to spend $50 million to run the plant at a loss for an additional 18 months if they don’t have to.
If they don’t get what they want, which is a commitment of at least $150 million in subsidies annually to make the plant profitable, they are simply not going to buy more fuel.
That means the plant will need to immediately begin the process of shutting down permanently.
Once a plant is shut down, by law, it cannot restart.
Davis-Besse would be shut down in 2020, and the Perry plant would follow the following year in 2021.
But the wrinkle is, some have reason to believe the plants themselves may be profitable already.
Now lawmakers are stuck with a choice to make, and some of them want to make sure the plants really are unprofitable before they start slashing the energy efficiency standards and bailing out nuclear power plants to the tune of $150 million.
The question some are asking themselves are should the rest of us pay for the bad decisions a company made, so that a group of unknown investors can make some money.
The investors care about a return on their investment, not what happens to the employees if they walk away. They are banking on the state, with its duty to protect and care for all Ohioans, to cave to their demands.
And at this point that is what they are.
When asked if they would be willing to continue to operate the plants and accept the bailout on the condition that an independent third-party verify they need the money first both now and in future years; they said that would not be something the investors would care to do.
State Senator Rob McColley sits on the committee that is hearing the bill in the Senate right now.
“It’s only right that we ask that we have an independent verification system for the actual need of this not just today but in the future out years and so I think there is something that we need to take a look at there, and if they’re not willing to submit to that, I think we need to ask why,” said McColley.