Power struggle rises over Valley

By KALEA HALL

khall@vindy.com

LORDSTOWN

It’s not every day that an investor walks into a small village and pitches a multimillion-dollar investment.

The investor is Bill Siderewicz, owner of Boston-based Clean Energy Future LLC.

His pitch: build an $890 million natural-gas power plant in Lordstown, which is known for its sprawling manufacturing plants.

“He explained all of the benefits,” Mayor Arno Hill said. “Next to General Motors, it will probably be the biggest investment [for Lordstown].”

In 2014, Clean Energy Future announced the natural-gas power plant for a 57-acre site on Salt Springs Road. After some community opposition, the project site was moved to the Lordstown Industrial Park on Henn Parkway.

“After I started knocking off the sites that came up short, there was only one town [left], and it was Lordstown,” Siderewicz said. “I looked over 12 counties and had over 15 sites.”

Clean Energy Future was given a 100 percent, 15-year tax abatement. The project will hire about 500 workers over a three-year construction period until it is completed in May 2018. The completed plant will have about 20 to 22 employees, generating $3.4 million in annual payroll. Workers will have full health and dental benefits.

In June 2016, Clean Energy Future broke ground on the site of the Lordstown Energy Center. Just last month, the company announced it would build a second power plant called the Trumbull Energy Center south of the first plant. Construction on the second plant will start in 2018 and finish in 2020. It will bring in the same number of construction and permanent workers.

The benefits include $92 million per plant in construction wages; Lordstown’s 1 percent income tax will generate about $920,000 in income taxes from each plant. When the plants are operating, each will generate about $1 million per year of income-tax revenue.

Warren will receive about $2 million per year of revenue per plant by providing water and $500,000 per year treating wastewater, according to The Vindicator files.

The tax abatement has Clean Energy Future paying $18 million to the school district over the first 15 years. A similar deal is being worked on for the second plant.

The first plant enabled the district to demolish a school building and to build a soccer/track complex. The district has said the second facility will provide “long-term budget stability.”

But now there’s a bit of concern for Clean Energy. The competition can’t compete, Siderewicz said, so FirstEnergy, American Electric Power and other utilities are trying to change state laws.

“If [they] are successful, [Clean Energy Future] would leave Ohio immediately, since non-utility projects would become illegal,” Siderewicz said. “Monopoly utilities would be the only option for future gas-fired projects. In effect, First Energy, AEP and [Dayton Power and Light] would chase free enterprise out of Ohio.”

THE COMPETITION’S SIDE

In 1999, Ohio restructured its energy laws and gave consumers a choice for their energy provider through Senate Bill 3. The law took effect in 2001.

Before then, Ohio’s major utility companies provided how energy was generated, transmitted and distributed. The Public Utilities Commission of Ohio regulated the generation of the electricity and set rates.

Ohio is now a part of the PJM Interconnection or a “regional transmission organization that coordinates the movement of wholesale electricity,” according to its website. Now, the market controls the rates and PUCO regulates the distribution side of the system.

FirstEnergy in Akron, American Electric Power in Columbus and other stakeholders hope to see the utility laws restructured.

“Ohio needs to map out a long-term energy policy to support economic development and spur more energy investment in the state,” AEP spokesman Scott Blake said in a statement sent to The Vindicator. “AEP Ohio is advocating for legislation that provides a clear path for investing in new, cleaner generation resources to help diversify the state’s energy mix while preserving customer choice and advancing economic development.”

AEP says the state’s laws are vague on criteria for approval and related cost recovery of new generation.

“AEP Ohio would like to see the legislation clarify these issues, and we have had ongoing discussions with legislators, other utility companies and stakeholders about these concerns. We hope that a bill can be debated this year,” Blake said.

FirstEnergy said it has had discussions with AEP, but no legislation has been introduced.

“The current arrangement has limited Ohio with the ability to control its energy supply,” said Doug Colafella, spokesman for FirstEnergy.

Colafella said what the state has adopted gives it “little control on what types of power plants serve customers.”

FirstEnergy and AEP want to protect their power plants by receiving a subsidy for their older plants. These subsidies would be paid for by the customers through their monthly electric bills.

“Those plants need to be able to cover their costs to be viable in the long term,” Colafella said. “We are having to make tough decisions on the future of those plants.”

FirstEnergy’s nuclear power plants Davis-Besse and Perry employ 1,400 employees combined.

“These are big economic drivers in the state,” Colafella said. “They have been in operation since the 1970s.”

The major utilities are seeking changes because of discovery of abundant supplies of natural gas and its effect on electricity prices.

“It’s driven those prices down,” Colafella said. “It’s a very cheap fuel source. It’s made it very difficult for all other types of generation to continue operating in the black. We are concerned that we will see additional plant retirements in years ahead.”

FirstEnergy is also concerned about the state having access to only one energy source: natural gas.

“We can’t just have one fuel source,” Colafella said. “That’s where we are heading. It’s a very volatile commodity.”

CLEAN ENERGY FUTURE’S SIDE

Siderewicz has been involved in energy since the energy crisis of the 1970s.

“I have developed over 35 of these power-plant projects around the country and internationally,” he said.

He watched as legislation in Ohio changed and it became possible for smaller companies to have a shot at producing energy for electricity.

“We have gone to a highly competitive, highly efficient free economic system,” he said.

Companies like FirstEnergy and AEP can’t compete now, Siderewicz says. So, they have to ask the public for help.

“They call it regulation or restructuring, but what it is, is re-monopolization,” he said. “This is a case of management incompetency.”

Siderewicz has a mission to meet with as many state senators and representatives as possible about this.

Meanwhile, his plants are under construction with massive turbines and other equipment being put in place.

The company decided to build a second power plant because of need in the region with the loss of other power plants, Siderewicz said.

Each plant has the capacity to serve 900,000 homes.

The electricity produced here will be sold through the PJM system.

“We are producer of electricity on a wholesale basis,” he said. “We are not allowed to go knock on doors.”

Here’s how the electricity is produced: natural gas from Ohio’s Utica Shale Play will go to the plant and a turbine extracts more than 60 percent of the energy in the gas and turns it into electricity.

“Each one of these plants in Lordstown will spend about $120 million a year to buy gas,” he said.

Each plant will produce 940 megawatts of electricity.

Ohio Senate Minority Leader Joe Schiavoni of Boardman, D-33rd, met with AEP, FirstEnergy and Dayton Light and Power in January and described the meetings as “very broad” discussions on relief they seek for plants to keep on running.

“They haven’t proposed any pieces of any legislation yet,” Schiavoni said. “I think we need something that everybody can tolerate and everybody can work with. Something that is fair to the consumers and make sure that we keep people working in both sectors.”

Schiavoni hopes whatever the legislation is that it isn’t pushed through quickly. He wants to hear testimony from companies and employees on both sides of the issue.

“My fear is that it does get rushed and gets jammed in somewhere,” he said.

Rep. John Boccieri of Poland, D-59th, who sits on the Public Utilities Committee, says there’s a real discussion on whether Ohio wants to be an energy producer.

“I think there’s an argument to be made about producing energy in the state of Ohio,” Boccieri said. “There’s a lot happening with producing and generating our own resources. Our drive for energy independence has allowed us to find those resources.”