A bill that would raise utility rates to bail out two Ohio nuclear power plants while gutting renewable energy standards cleared the Ohio House this week. House Bill 6, the so-called “Clean Air” bill, was approved by a 53-43 vote in House following a week of extensive hearings and last-minute lobbying efforts. The bill now heads to the Senate.
Ohioans will pay for a “Clean Air Fund” to bail out FirstEnergy Solution’s Davis-Besse and Perry nuclear power plants through a $1 monthly surcharge on their electric bills. Backers of the bill argue that this fee will save consumers money as the bill repeals the current $4.68 monthly utility fee. While the bill takes aim at lowering electric rates and protecting jobs in the nuclear energy industry, it guts Ohio’s clean and renewable energy standards.
Ohio would be the first state to enact a measure that subsidizes nuclear energy for financial reasons while at the same time eliminating clean energy standards. Make no mistake – Ohio lawmakers are making a deliberate choice to go this route. As noted by Inside Climate News, Connecticut, Illinois, New Jersey, and New York have subsidized nuclear power plants recently, however, those measures bolstered support for clean and renewable energy.
With both parties split on this legislation in the House, it’s not so obvious what political motives are behind some lawmaker’s support for it. This has been sought out by FirstEnergy and its PAC for a while now. Campaign finance records indicate that thousands of dollars were donated by FirstEnergy and its executives to Speaker Larry Householder and his loyalists. The struggling utility company’s former CEO, Anthony Alexander, donated $5,000 each to Householder’s and Rep. Jamie Callender’s (HB6 primary sponsor) 2018 campaign, along with a maximum contribution of $12,707 to Mike DeWine’s campaign. The Governor has come out in support of this bill.
The Cleveland Plain Dealer’s Editorial Board voiced its opposition to the bailout Friday, calling HB6 “a platter of goodies for deep-pocketed special interests who spent liberally — not just in advocating for this legislation but also on Householder’s efforts to get his supporters elected or re-elected to the Ohio House, so they could choose him as speaker.”
One of the last-minute changes to House Bill 6 was to expand the bill to expand eligibility for the subsidies generated by the bill beyond the state’s two nuclear power plans to large solar facilities. According to the Ohio Power Siting Board, six facilities have been approved that would be eligible under the latest changes to HB6. A look at whose districts those facilities are located in suggests which lawmakers were targeted by the move:
On Thursday, State officials released the much anticipated 2012 Utica shale production report. Administration officials were quick to celebrate the findings of the report and heralded it as the beginning of a “new boom” in Ohio. Realistically though, this report includes information that should cause officials to temper their expectations – at least in the short term.
As we have written in the past, the Kasich administration and the oil and gas lobby both promised that shale exploration would bring a wave of new jobs to Ohio. While recent reports have noted that not only were these claims dubious to start with, in reality the job growth is not nearly as strong as they originally estimated. The report provides some clues on why that is. Only 87 horizontal wells were producing oil and gas last year at some point – most of them were only active for three months or less. And while officials expect that number to increase to 362 by the end of this year it is still unlikely that the increase will lead to the giant job expansion promised.
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If there was any question before Tuesday that the House Republican caucus was in the pocket of the oil and gas industry, the newest version of the state budget should put that issue to rest.
The substitute version of the state budget (Sub. H.B. 59) that House leadership put forward yesterday removes almost every substantial policy change in the budget that affected the oil and gas industry.
As introduced, Governor Kasich’s budget included multiple changes that addressed outstanding fiscal and regulatory concerns, including: [Read more…]
House leadership have spent their two-week spring recess reviewing over 800 amendments that legislators want to see included in the state budget. Many of them will be incorporated into a new version of the budget (House Bill 59) that is expected to be adopted by the Finance committee next Tuesday.
Below are three issues to keep an eye on next week as the budget process moves forward. [Read more…]
Governor Kasich’s budget raises the rate of Ohio’s severance tax, charged when drillers extract oil and natural gas from Ohio’s shale, but would preserve our tax rate as one of the lowest among all oil and gas producing states.
According to the administration, these changes will raise $200 million in new tax revenue over the next two years, but is dwarfed in comparison to the $2.9 billion in new sales taxes Ohioans are being asked to pay in the budget, resources that will support another income tax cut that will mostly benefit the wealthiest Ohioans.
It’s important for policymakers to consider whether the new tax rate is sufficient.Based on production estimates from the Ohio Department of Taxation, we attempted to compare the estimated revenue from Governor Kasich’s proposal to what Ohio could collect at varying tax rates, including those in place in other oil and gas states. [Read more…]
On Monday, Gov. John Kasich introduced hissecond operating budget which included sweeping reforms to Ohio’s tax structure. Included in those changes were modifications to how the state wants to tax oil and gas developers who are planning to extract vast quantities of resources in eastern Ohio via hydraulic fracturing. Unfortunately, these changes are inadequate and cause the state to rely upon other more regressive taxes that harm poor and middle income families.
The governor’s severance tax proposal this week was similar to legislation that he called for but failed to get through the Ohio General Assembly in 2012. This proposal increases severance tax rates that producers pay depending on the type of hydrocarbon they extract. Producers will pay 1 percent on the value of gas they extract, 4 percent on both natural gas and natural gas liquids with the caveat that producers only need to pay 1.5 percent during the first year to recover well production costs. According to the administration, these changes will collect an additional $200 million in tax revenue over the next two-year budget cycle and a total of $920.9 million by the end of fiscal year 2017.
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Oil and gas development in Ohio is once again going to be a major policy issue in 2013 and Gov. John Kasich intends to push for an increased severance tax on horizontal drilling in Ohio to help pay for a $500 million income tax cut.
While it’s true that the oil and gas industry is growing in Ohio at this time, is it possible that the administration is being overly optimistic in its projection of how many producing wells there will be in the near future? Proper forecasting of wells and production estimates are essential because the production from these new oil and gas wells will pay for Kasich’s income tax cut. That’s why Innovation Ohio was interested in seeing how close the Kasich administration well estimates were to reality in 2012.
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