This piece appeared on Watchdog.org.

Ohio lawmakers recently introduced legislation to subsidize the Davis-Besse and Perry nuclear power plants, reportedly to the tune of $150 million per year. Government subsidies and corporate bailouts interfere with free markets and allow governments – rather than consumers and competition – to pick the private sector’s “winners and losers.”

Subsidies and bailouts are part of a tried-and-failed scheme of corporate welfare that Ohio must end. And there is no time like the present.

In addition to the $150 million a year taxpayer stipend, the latest bailout bill also proposes a $150 million slush fund that could be used to subsidize other energy producers – all paid for, of course, by a new consumer surcharge that looks remarkably like a new energy tax.

Bill sponsors and subsidy advocates contend that the proposed bailout will save money today and thousands of quality jobs at the failing nuclear plants. But short-term savings are dubious because although the proposed legislation makes renewable energy mandates optional, it allows utilities to pass costs on to consumers for existing renewable energy contracts. Worse, whenever a new tax benefits a special interest, incentives to increase the tax to generate more special interest money often prove irresistible. Subsidies usually only go in one direction: Up.

And although job-loss is always a legitimate concern, especially for the workers and communities affected, Ohio will benefit from greater job creation in the long-run by keeping taxes and energy prices low, and keeping special interests out of the public trough.

Electricity policy and prices are critical for the Buckeye State. Ohio consistently ranks among the top five electricity-consuming states. Federal data show that the manufacturing sector provides about 15 percent of Ohio’s private-sector jobs and produces about one-fifth of Ohio’s private-sector economic output. Manufacturers use large quantities of electricity, making them especially sensitive to electricity prices. As The Buckeye Institute discovered, even small increases in energy rates can cost thousands of jobs and hundreds of millions of dollars in economic output.

Ohio currently benefits from state law that restructured the state’s electric utilities monopolies in 1999, creating a system that allows independent companies to build and own power plants, sell electricity competitively, and save Ohioans an estimated $3 billion per year. The proposed nuclear subsidy program puts those savings at risk. A vice president for PJM Interconnection LLC – the grid operator for Ohio and 12 other states – recently testified before the General Assembly that subsidizing unprofitable power plants will create inefficiencies and raise energy prices for all Ohioans.

Energy producers undoubtedly face regulatory challenges and stiff competition. But 15 of the 18 nuclear power plants in PJM’s regional power grid are profitable – with Ohio’s Davis-Besse and Perry powerhouses being two of the three unprofitable plants. Energy taxes and government subsidies are not the answer for unprofitable operations. Indeed, more than 11,000 megawatts of new electricity are coming to Ohio due to $11 billion in private investment, not government-backed subsidies, and some power plant developers have even warned that new energy subsidies will reduce further investment in Ohio.

Some supporters of the new legislation claim that saving the nuclear plants will ensure that our electricity supply remains reliable, recognizing that the Davis-Besse and Perry plants provide 11 percent of Ohio’s electricity. According to PJM, however, spending about $24 million to upgrade power lines and encourage other power plants to adjust their output would address reliability concerns– a far more efficient plan than spending at least $300 million of taxpayer money every year indefinitely.

The nuclear subsidy proposal would cost Ohio families and businesses hundreds of millions of dollars per year, impede job creation, and perpetuate government-funded corporate welfare rather than encourage efficiency and effectiveness. Rather than reward FirstEnergy with a $150 million a year subsidy for its $4 million lobbying campaign, policymakers should end all taxpayer subsidies for energy producers and let the good people of Ohio – rather than politicians – decide which companies and utilities provide the products and services they want to buy. The time has come.

Rea S. Hederman Jr. is vice president of policy and the executive director of the Economic Research Center at The Buckeye Institute in Columbus, Ohio.