Leadership Views

As published in the February 1, 2014 Toledo Business Journal

Linda Moss, Toledo Edison

Linda Moss
Toledo Edison

Major changes taking place in electric utility industry

Toledo Business Journal recently interviewed Linda Moss, regional president of Toledo Edison. She shared the following thoughts.

Toledo Business Journal: Historically, northwest Ohio has been a high cost area for industrial electricity users. Data shows that this situation has changed. Can you discuss?

Linda Moss: While the ratemaking process is exceedingly complex, we believe Toledo Edison’s rates continue to be competitive compared to other public utility companies in Ohio. It’s also important to note that, in a deregulated state like Ohio, all customers, including industrial, will see two parts to their bills: a charge for transmission and distribution – the delivery of electricity – and a charge for the actual amount of electricity they used. As a regulated public utility, Toledo Edison is responsible for only the transmission and distribution portion of customer bills. Toledo Edison customers are free to shop for their own electric generation service. Generation prices from all sources have been relatively low since the economic downturn in 2008 and remain low due to the availability of cheap natural gas, providing Toledo Edison customers with very attractive generation rates.

TBJ: How will the capacity situation of generating plants that have historically served the northwest Ohio region be impacted by proposed changes in EPA regulation of coal-fired facilities? If you can, also discuss operating levels at Davis-Besse and Bay Shore during the past year.

LM: Toledo Edison’s parent company, FirstEnergy, and its generation companies, have been leaders in reducing pollutants and emissions over the last two decades and have aggressive plans in place to further reduce emissions into the future. For example, we expect a 25% reduction below 2005 levels in our carbon dioxide emissions by 2015. This puts us on target to exceed the Obama Administration’s goal of a 17% reduction in greenhouse gas emissions by 2020. We have plans to invest approximately $465 million in new environmental controls at our fossil units over the next several years, resulting in further emissions reductions following those upgrades. In fact, FirstEnergy expects these upgrades to result in fleet-wide emissions reductions of nitrogen oxides by 84%, sulfur dioxide by 95%, and mercury by 91% below 1990 levels.

Our company has taken proactive steps to meet new rules as well. We have recently announced the closure of 11 coal-fired power plants in Ohio, Pennsylvania, West Virginia, and Maryland, totaling 5,429 megawatts (MW) of generating capacity. Nine of these 11 plants (including four in Ohio) are being closed as a result of the US EPA’s Mercury and Air Toxics Standards (MATS). Three of the Ohio plants are operating through early 2015 under reliability must-run (RMR) agreements with PJM Interconnection LLC, the regional grid operator. The fourth Ohio plant – Bay Shore Plant in Oregon – has closed three of its four units as a result of the MATS regulations. One 136MW unit at that plant remains in operation. FirstEnergy closed two additional plants in Pennsylvania due to poor economic conditions and ongoing uncertainly with regard to upcoming environmental regulations. PJM has determined that there will be no reliability impacts as a result of these closures.

The Davis-Besse Nuclear Power Station in Oak Harbor continues to play an important role in FirstEnergy’s diverse generation portfolio, producing 900MW of carbon-free electricity with no greenhouse gases or air pollutants. The plant also is an important contributor to the economy in northwest Ohio, providing more than 700 full-time jobs and local and state tax revenues of more than $13 million.

FirstEnergy continues to invest in Davis-Besse to ensure its safe, long-term operation. In 2011, the site installed a new reactor head that provides additional margins of safety and reliability. In February, a $600 million steam generator replacement project will begin in conjunction with the site’s scheduled refueling outage. These investments, along with the license renewal process that is under way to extend Davis-Besse’s 40-year operating license for an additional 20 years, supports the company’s commitment to remaining an important part of northwestern Ohio’s economy as a reliable, economical, and clean energy source for many decades ahead.

TBJ: Reserve capacity for electricity generation has historically been 15% or more above peak demand levels according to PJM. In 2013, this level dropped to 13% and in 2014, PJM data indicates it will drop to 9%. Can you discuss this issue?

LM: This is a competitive issue and we cannot discuss it. Please direct this question to PJM.

(TBJ note to readers: PJM Interconnection LLC is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in its geographical territory in the eastern US.)

TBJ: PJM is counting on demand response to assist in significantly reducing electricity usage. Can you discuss trends in demand response from major users in northwest Ohio?

LM: This is a question for PJM.

(TBJ note to readers: Demand response is defined as changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.)

TBJ: PJM is also expecting that generation capacity outside of its geographical area will be needed to supply demand as coal-fired plants are closed. What impact will this have on electricity rates in northwest Ohio and on reliability of service?

LM: This is a question for PJM.

(TBJ note to readers: PJM’s geographical area includes 13 states in the eastern US and it has indicated that generation capacity outside of these states will be needed as coal-fired plants are closed).

TBJ: FirstEnergy is making large investments to upgrade the utility grid in northwest Ohio. Can you discuss?

LM: Our ongoing investment in the grid across our service territories in Ohio, including Toledo, is designed to improve system reliability and durability. These efforts should result in reduced frequency and lengths of outages, as well as preparing the grid for future growth. In 2013, Toledo Edison and our American Transmission Systems Incorporated affiliate invested about $23 million in system maintenance and upgrades in the region, including an investment of approximately $12 million on the new Fulton transmission substation, which went online late last year. This substation will increase flexibility and allow us to reroute power around potential outages in the area, restoring both residential and industrial customers in the area as quickly as possible. We will soon announce our system upgrade investments for the coming year, and while details aren’t final, our investment will rise substantially for 2014.

TBJ: Senate Bill 58 was delayed. Can you discuss key issues concerning this legislation that will impact Ohio businesses?

LM: There are concerns that Ohio’s current energy efficiency law will require our customers to spend additional billions in the years ahead. Ohio Senator Bill Seitz’s reform bill would continue to offer energy-saving programs to businesses while limiting steep increases in monthly bill surcharges that cut into their bottom line. A number of organizations are supporting the bill, including the Ohio Industrial Energy Users, as well as numerous businesses in northwest Ohio.

TBJ: Can you discuss Toledo Edison’s role in regional economic development?

LM: Toledo Edison works hard to partner with State, regional, and local development groups to promote economic development and foster growth in the economy in northwest Ohio. This partnering may include working directly with manufacturers to find the ideal location for their new operations or analyzing electric costs for competitive business attraction, expansion, or retention projects. Recently, we were proud to assist Home Depot with locating their new $200 million warehouse and distribution center in northern Wood County.

We also are involved in helping shape policy and strategic initiatives with our support of many local development groups. For almost 70 years, Toledo Edison has been committed to assisting companies and communities to create employment and investment opportunities, and our work in this area continues.

TBJ: Are there any other issues that you would like to address?

LM: On a personal note, I was named regional president of Toledo Edison in May last year after 25 years with FirstEnergy and Allegheny Energy in Maryland and West Virginia. I have been overwhelmed with the people and the spirit of this community, and my family and I have been welcomed with open arms. We are very glad to be here, and I look forward to continuing Toledo Edison’s long history of community involvement.