You may have received the mailers. You may have seen the ads. If not, you've probably read about them. Scary images of Xi Jinping and the Chinese military, which has apparently decided to drop everything to focus on its highest priority: weighing in on Ohio energy policy.
Reasonable people can differ over whether or not it benefits consumers for Ohio to bail out its failing nuclear and coal plants, and whether or not to continue supporting renewable energy and energy efficiency programs. (Here at Donovan Energy, we have a strong opinion on this matter -- but we respect yours if you disagree.)
But these ads against the referendum are completely over the top. We know you are interested in understanding what's happening with the referendum. And while this may seem a little old-fashioned, we're not going to dumb it down. We believe our customers and partners are capable of consuming complex, nuanced information and making informed decisions for themselves.
So, what is the referendum about?
Nothing to do with China, actually.
Let's start with HB 6, which was passed this year by a thin margin of Ohio legislators beholden to FirstEnergy. Over the past two decades, FirstEnergy successfully advocated for Ohio to change its laws to allow its power plants to compete in a deregulated, competitive energy market. They were enthusiastic evangelists of Adam Smith’s Invisible Hand – let the markets operate in a free and unfettered manner, allowing the deregulation of Ohio’s power plants to drive down the price of electricity.
Well, this proved unwise. FirstEnergy's power plant business started circling the drain once those outdated power plants were actually exposed to fair competition. Alas, last year, FirstEnergy's power plant division filed for bankruptcy. Now FirstEnergy thinks Adam Smith apparently had it all wrong: it’s actually re-regulation that we now need. Hence the company fought hard for HB 6, which assesses a new charge on every utility bill in Ohio (yes – you read that correctly – it will be EVERY electric utility customer in Ohio that bears these costs, not just FirstEnergy customers) which will amount to hundreds of millions of dollars annually to nuclear and coal plants that are otherwise unprofitable. HB 6 also weakens Ohio's clean energy policies, which are required by law to save more money than they cost. Because of the pending referendum, HB 6 hasn't yet taken effect.
The referendum would exercise Ohio voters' rights to reverse HB 6 by popular vote, as long as the Attorney General approves the ballot language (which he now has) and as long as the referendum organizers are able to gather the necessary number of signatures from registered Ohio voters.
Who supports the referendum?
The same group of people and organizations who opposed HB 6 in the legislature -- a diverse coalition that included everyone from the Ohio Environmental Council to the American Petroleum Institute -- now support the referendum that would repeal it. The AARP also opposed HB 6 in the legislature. So did the Ohio Consumers' Counsel, the state agency whose job it is to protect Ohio's utility customers, though as a state agency it will likely be unable to take an official position on the referendum.
Who opposes the referendum?
The same organizations that supported HB 6 in the legislature now oppose the referendum that would block it. This includes all of Ohio's electric utilities, led by FirstEnergy, who would receive hundreds of millions of dollars in bailout money. It also includes some unions, particularly IBEW, that represent workers in FirstEnergy's nuclear plants.
What about China?
Some of the proposed new gas plants in Ohio -- which would be hurt by having to compete against subsidized coal and nuclear plants -- are seeking, or have obtained, debt financing from the Industrial and Commercial Bank of China, along with other capital providers in the U.S., U.K., France, Germany and Austria. This is not particularly surprising. Major construction projects like power plants tap into as many international capital markets as they can. (In fact, FirstEnergy itself obtains debt financing from the Industrial and Commercial Bank of China.)
The idea that this means China is taking over Ohio's energy market is absurd. You might as well say that American Express is taking control over the contents of your refrigerator, because you used your credit card at the grocery store.
What's the bottom line?
For more details about why HB 6 is bad policy that should be repealed, see our previous blog post -- or read this excellent in-depth piece by our friends at the Union of Concerned Scientists.
We hope you agree. But even if you don't, you should still sign the petition, if for no other reason than to protest the despicable tactics of the referendum's opponents. Those opposing the referendum are apparently desperate enough not only to lie, but to lie in the most xenophobic, divisive way possible. They are hoping to make it so hard to gather signatures that the referendum doesn't even make it onto the ballot. Failing that, they're hoping that Ohioans gain only a fuzzy understanding of the issue and cast an uninformed vote against those scary Chinese-sounding gas plants.
Those most affected by HB 6 -- small businesses, manufacturers, and millions of hard-working Ohioans who will experience cost increases if the bill is allowed to take effect -- should get a chance to weigh in at the ballot box.
Look for a petition gatherer next time you're at the mall or in the grocery store parking lot. And if you see someone nearby harassing that petition gatherer -- because yes, referendum opponents are now hiring people to follow petition gatherers around and scare potential signatures away -- take a moment to marvel at the level of desperation and entitlement that's required to conceive of such tactics.
