A proposed freeze on Ohio’s renewable energy standards and energy efficiency benchmarks is dividing Ohio business groups and legislators and outraging environmentalists and advanced energy proponents who say it will cost Ohio jobs and put a chill on alternative energy projects.
“This (bill) will absolutely pull the plug on new jobs and investment and consumer savings on clean energy in Ohio,” said Jack Shaner, deputy of director of the Ohio Environmental Council, which opposes the freeze.
On May 7 the Ohio Senate approved SB 310, which freezes for two years the benchmarks for renewable energy like wind and solar, as well as energy efficiency standards. All are part of a 2008 bipartisan law that sets benchmarks through 2025.
The Ohio House is now considering the bill, which has garnered support from Ohio Gov. John Kasich after Republican senators backed off their original plan to scrap the rules entirely. The bill sets up a study committee to look at Ohio’s energy mandates and states that the General Assembly intends to eventually reduce the mandates.
Opponents argue that suspending the rules flies in the face of environmental and economic realities, including a recent U.S. Supreme Court ruling upholding anti-smog rules that will impact Ohio’s coal-dependent utilities and the increasing evidence of global warming’s damaging effects.
Freeze supporters say a “pause” in the rules is necessary as the state adjusts to the unexpected bonanza of shale oil and natural gas discoveries that were not evident when the 2008 law was passed and which have led to a plunge in natural gas prices. Some see the law as giving unfair advantage to wind and solar and other renewable advanced energy sources, which generate just 1.59 percent of the state’s electricity, according to the U.S. Energy Information Administration.
Coal accounts for nearly 70 percent, natural gas nearly 16 percent and nuclear almost 12 percent of electric generation.
State Sen. Shannon Jones, R-Clearcreek Twp., voted for the 2008 law but co-sponsored the freeze bill, saying energy benchmarks may not have been needed had legislators known that huge supplies of natural gas would be discovered in the state.
Freeze supporters say the rules are increasingly expensive for utilities to comply with and those costs are passed on to customers. They say a freeze will give lawmakers time to study the costs of the mandates.
“Our concern continues to be if the mandates go up, the cost of compliance will go up,” said Keith Lake, vice president of government affairs for the Ohio Chamber of Commerce.
Lake said energy efficiency is a laudable goal and but he questions whether it should be mandated by the government, rather than market driven.
Sam Randazzo, a Columbus attorney who serves as general counsel for Industrial Energy Users-Ohio, said companies will continue to reduce their energy usage to save money, but should be allowed to choose the cheapest energy alternative, such as natural gas. Natural gas burns cleaner than coal but is not renewable and involves drilling that has environmental consequences and so cannot be used to meet the benchmarks.
Supporters also include Dayton Power and Light and other utilities.
DP&L spokeswoman Mary Ann Kabel said the company has complied with benchmarks each year, offering residential energy efficiency programs like in-store discounts on efficient lighting, rebates for businesses using energy efficient products, and by purchasing renewable energy credits and constructing the 1.1 megawatt Yankee Solar Array.
Boon to manufacturers?
Freeze opponents say the energy efficiency advances made under the 2008 law are the least expensive way to save money on energy and have been a boon for manufacturers. They also say the freeze would hurt advanced energy companies that Ohio has encouraged and which are touted on the JobsOhio website in a 20-page document that cites the 2008 law as a reason Ohio is a good place for those companies to do business.
The Ohio Manufacturers Association opposes the freeze in part because the energy efficiency programs — including DP&L’s — have been so successful in making investments in efficiency worthwhile, said Eric Burkland, president of OMA.
“In general every study has shown the cost of energy efficiency standards programs are paid benefits of two to one,” he said.
Between 2008-2013, Ohio’s electricity sales declined 7 percent and coal consumption dropped 31 percent, according to the U.S. Energy Information Administration. During that same period consumption of natural gas increased by 561 percent.
The average monthly gas bill declined by more than a third for residential, commercial and industrial users between December 2008 and December 2013, according to the Public Utilities Commission of Ohio. Electric bills rose 23 percent for residential customers and 6 percent for commercial but declined 2 percent for industrial users during that period. Bills are impacted by many factors, including market forces and the regulatory environment.
State Sen. Bill Beagle, R-Tipp City, is one of three Senate Republicans who voted against the freeze. “There seems to be data that suggest a lot of money has been saved,” said Beagle, adding that he supports the study group idea.
State Rep. Fred Strahorn, D-Dayton, voted for the 2008 bill and says he will oppose the legislation proposing a freeze as currently written.
“I think it’s short-sighted,” said Strahorn. “The cost of fossil fuels is going to do nothing but go up.”
A ‘nuclear bomb’
If the bill becomes law, the state would be backing away from standards in place in more than two dozen states and reneging “on our collective responsibility to avoid cooking the planet,” said Kelly Kissock, who chairs the University of Dayton’s renewable and clean energy master’s degree program and the department of mechanical and aerospace engineering. He said his students, now being snapped up by Ohio green energy companies, will have to leave the state to find a job.
Opponents also included Public Citizen and the Ohio Consumers Council, and Honda of America and 16 other companies, which signed a letter in opposition to the freeze but suggesting a more gradual benchmarking schedule.
While the freeze is temporary, the bill contains a provision that wind energy executive Jereme Kent called “a nuclear bomb to renewable energy.”
“If that provision survives, there will not be another renewable energy project built in this state,” said Kent, general manager of One Energy LLC, a Findlay-based developer of wind turbines for industry.
The SB 310 “change of law” provision requires that any parties to future contracts signed by electric companies for renewable energy resources or credits be released from their obligations if the state changes renewable energy requirements. That will introduce a huge element of uncertainty for renewable energy projects and make it impossible to get financing, Kent said.
Mike Dittoe, spokesman for House Speaker William G. Batchelder III, R-Medina, said the speaker supports a “stable, long-term and diverse energy portfolio” in Ohio and wants to quickly have an amended bill back to the Senate .
“There have been some critics concerned that provisions would kill wind or solar, and that certainly is not the intent of the legislation at all,” Dittoe said.
|Ohio monthly average standard electric and gas bills* - December 2008 and December 2013|
|Ohio's renewable energy and energy efficiency standards took effect in 2009. Bills are impacted by a variety of factors, including plunging natural gas prices and other market forces, deregulation of public utilities in Ohio and state and federal regulations.|
|Customer type**||December 2008||December 2013||Change||% Change|
|* Averages are calculated using a constant average usage for each type of customer and do not reflect changes in consumption.|
|**PUCO uses 16 major Ohio cities for residential data and 8 for commercial and industrial data. Dayton is on both lists.|
|Source: Public Utilities Commission of Ohio|