William Malson, Associate Member, University of Cincinnati Law Review
Disclaimer: the author is employed by a group seeking to hold a referendum on H.B. 6.
In 1966, the Atomic Energy Commission discontinued operations of the Piqua Nuclear Power Facility just outside the southern city limits of Piqua, Ohio. Ohio would be without nuclear power for eleven years, until the licensing of the Davis-Besse Nuclear Power Station (“Davis-Besse”) in 1977 and the Perry Nuclear Power Plant in 1986. Today, these plants are at risk of being decommissioned by the owner of both plants—FirstEnergy Corp. (“FirstEnergy”)—citing financial inability to continue routine operations, such as the ability to purchase fuel for Davis-Besse. In response, the Ohio General Assembly passed Amended Substitute House Bill 6 (“H.B. 6”), providing for new charges for electricity customers that will ultimately be passed on to “qualifying nuclear resources” in Ohio—namely, FirstEnergy’s nuclear plants. But H.B. 6 is not without controversy. Groups as diverse as the Sierra Club and the American Petroleum Institute have condemned the bill, uniting in opposition to one of the key features of the law: the bailout of FirstEnergy’s nuclear plants.
What’s happening to nuclear power in Ohio?
Nationwide, nuclear power made up almost twenty percent of electricity generated in 2018. But that number will likely drop in the near future, as more than one-third of existing nuclear power plants, representing twenty-two percent of total U.S. nuclear capacity, are either unprofitable or scheduled to close. Ohio generates fifteen percent of its energy from nuclear power, less than the national average, and most at-risk nuclear plants are in the Midwest and Mid-Atlantic regions. Consistent with the national decline, on March 29, 2018, FirstEnergy Solutions, a subsidiary of FirstEnergy Corp., asked the U.S. Department of Energy to issue an emergency order to the regional transmission organization to compensate FirstEnergy’s at-risk plants “for the full benefits they provide to energy markets and the public at large.” No such order came, and FirstEnergy Solutions filed for chapter 11 bankruptcy on March 31, 2018.
Enter H.B. 6.
What is H.B. 6?
In the midst of FirstEnergy Solutions’s extended and contentious bankruptcy proceeding, the General Assembly conceived and passed House Bill 6, signed into law July 23, 2019, effective October 22, 2019. While H.B. 6 also includes large cuts in renewable energy requirements and deregulations of small wind farms, a key feature of the law is the establishment of the nuclear generation fund, out of which FirstEnergy’s plants will receive payments between April 2021 through January 2028. The nuclear fund will consist of a new charge levied on electricity customers in Ohio totaling $150,000,000 annually—or $1.05 billion over the next 7 years—up to 85 cents per month for residential customers, and $2,400 per month for certain industrial customers. H.B. 6 also requires the Ohio Public Utilities Commission to establish a non-bypassable, statewide cost-recovery charge between 2020 and 2030, capped at $1.50 per month for residential customers and $1,500 per month for all other customer classes. Together, the maximum annual charge for residential customers would be $28.20.
The noise generated by interest groups and news publications surrounding the law’s passage has been underscored by an attempt to overturn the law in its entirety. Under article II, section 1c of the Ohio Constitution, citizens have the power to overturn laws by referendum, applicable to any law except those providing for tax levies, appropriations for the current expenses of the state government and institutions, and emergency laws necessary for the immediate preservation of the public peace, health or safety, as provided in section 1d. If successful, the law would not go into effect unless it is approved by a majority of voters in the next election. In this case, that’s November 2020.
To appear on the ballot, the referendum must be signed by six percent of Ohio voters, determined by the total votes cast in the previous gubernatorial election. But before the constitutional process, there is a statutory process, requiring those seeking to utilize the referendum power to submit a summary of the law, signed by 1,000 Ohio voters, to the Ohio Attorney General and Ohio Secretary of State, who must approve the summary and verify the signatures before circulation. This referendum power, though originating with the Ohio Constitutional Convention of 1912, is not often used. Since 2006, only eight referendum petitions were approved out of ninety-five separate attempts to use the referendum or initiative powers to overturn laws or propose constitutional amendments or statutes. The last time a petition was approved for circulation was June 21, 2013, in an attempt to refer new restrictions on electronic gambling. But the power has again been used.
On August 29, 2019, Ohio Attorney General Dave Yost approved a summary petition to refer H.B. 6 in its entirety. The next day, Ohioans Against Corporate Bailouts (“OACB”), the group behind the referendum, announced that it had begun circulating petitions to put the law up for a general vote in the November 2020 election. In response, on September 4, 2019, FirstEnergy Solutions challenged OACB’s referendum petition in the Ohio Supreme Court, asking the Court to exempt H.B. 6 from referendum, contending that the “charge” applied to electricity customers is legally a “tax,” and therefore not subject to the referendum power under article II, section 1c. On September 10, 2019, the Court ordered OACB to answer or move to dismiss the complaint by October 1, 2019.
It is unclear whether FirstEnergy Solutions will be successful in its attempt to prevent referral of H.B. 6. In the past, the Court has held that the referendum power should be broadly construed “unless the act in question is plainly and persuasively included within one of the three classes excepted from the operation of the referendum.” But where the law in question clearly falls under the exceptions of article II, section 1d, the Court has not hesitated to allow its immediate effect. If FirstEnergy Solutions is unable to convince the Court to stop the referendum of H.B. 6 from going forward, voters are likely to overturn the law next year, perhaps ending the era of nuclear power in Ohio.
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In re FirstEnergy Sols. Corp., No. 18-50757, 2018 WL 2315916, at *1 (Bankr. N.D. Ohio May 18, 2018).
See Andrew Scurria, FirstEnergy’s Bankruptcy Deal With Power Units Collapses, Wall St. J.(Apr. 4, 2019, 6:42 PM), https://www.wsj.com/articles/firstenergys-bankruptcy-deal-with-power-units-collapses-11554409862 [https://perma.cc/Q43J-BCDK]; John Funk, FES and FE have created a ‘scheme’ that is an ‘abuse of the bankruptcy system’: Feds say, The Plain Dealer (updated Apr. 2, 2019), https://www.cleveland.com/business/2019/04/fes-and-fe-have-created-a-scheme-that-is-an-abuse-of-the-bankruptcy-system-feds-say.html [https://perma.cc/3AE2-9NF5].
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See Creates Ohio Clean Air Program, 2019, Am. Sub. H. B. No. 6, 2019, Ohio Laws File 12, §§ 4928.64, 4928.66; §§ 4906.13, 5727.75.
See id.§ 3706.49, §§ 3706.45, 3706.55.
Id. § 4928.148.
See David Roberts, Ohio just passed the worst energy bill of the 21st century, VOX(Jul. 27, 2019, 12:00 PM), https://www.vox.com/energy-and-environment/2019/7/27/8910804/ohio-gop-nuclear-coal-plants-renewables-efficiency-hb6 [https://perma.cc/HC9B-FWB6]; Don’t Be Fooled – HB 6 is a Bailout for First Energy, AARP, https://action.aarp.org/site/Advocacy?cmd=display&page=UserAction&id=7873 [https://perma.cc/29Z8-KVWT] (last visited Sept. 9, 2019); Steve Clemmer, 5 Reasons Why HB 6, Ohio’s Nuclear Plant Subsidy Proposal, Should Be Rejected, Union of Concerned Scientists: Blog (May 16, 2019, 10:38 AM), https://blog.ucsusa.org/steve-clemmer/5-reasons-why-hb6-should-be-rejected [https://perma.cc/24SK-QHD3]; HB 6, the Ohio nuclear bailout bill, is a bad bill, but it can be made better: editorial, The Plain Dealer(May 10, 2019), https://www.cleveland.com/opinion/2019/05/hb-6-the-ohio-nuclear-bailout-bill-is-a-bad-bill-but-it-can-be-made-better-editorial.html [https://perma.cc/2RTP-JNUQ]; Daniel Carson, HB 6 opponents make second effort to start referendum campaign, USA Today Network: Fremont News Messenger (Aug. 20, 2019, 6:29 PM), https://www.thenews-messenger.com/story/news/local/2019/08/20/nuclear-power-plant-bailout-house-bill-6-opponents-second-petition-for-referendum/2060840001/ [https://perma.cc/SJ8F-52ES].
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Dan Shingler, Referendum to defeat House Bill 6 begins to gather energy in state, Crain’s Cleveland Bus. (Aug. 4, 2019, 4:00 AM), https://www.crainscleveland.com/energy-and-environment/referendum-defeat-house-bill-6-begins-gather-energy-state [https://perma.cc/JG9V-P4EB].