Gas customers in Ohio could be on the hook for hundreds of millions of dollars if an industry-backed measure from the Ohio Senate makes it into law, according to the state’s watchdog for utility consumers.
An amendment inserted in the state budget last week would allow natural gas companies to pass along to customers any “prudently incurred” costs of cleaning up long-closed gas manufacturing sites, many of which have been abandoned for decades since the industry abandoned the practice of extracting gas from coal.
That’s opposed to current law, which only allows customers to ask to make companies pay to clean up sites that are currently “used and useful.” The Public Utilities Commission of Ohio uses that standard to help decide whether to approve companies’ requests to pass the costs along to customers.
The Ohio Consumers’ Counsel estimates the change could cost gas customers anything from tens of millions to hundreds of millions of dollars between now and 2025. There are 90 closed gas manufacturing plants across the state, although the Ohio Gas Association says only 20 are owned by gas companies.
“The way it will affect people will be in their pocketbook when they see their gas bills are going up,” said Marty Berkowitz, a spokesman for the OCC.
Energy companies that back the amendment say it will clarify the law and encourage redevelopment of contaminated sites, which would improve the environment and benefit the economy. Also, customers would receive rebates based on profits from re-selling the cleaned up site, “minus any reasonable expenses related to the sale,” according to the proposed law.
“We should all want these sites to be cleaned up, the land should be remediated and we should want the land put back to useful use,” said Sen. Bill Seitz, R-Cincinnati, one of the amendment’s sponsors. “I don’t see why anybody wouldn’t want that.”
Seitz said what he’s proposing is not that different from the CleanOhio program, which uses tax dollars to clean up and redevelop abandoned industrial sites.
“The reality of this is that it doesn’t mandate anything, it doesn’t require anything and there’s no guarantee the PUCO will approve a dime, let alone everything a utility would ask,” said Ohio Gas Association President Jimmy Stewart. “My expectation is they would give it a prudent review and consider it fairly.”
The change stems from cleanup that began in 2010 of two former gas manufacturing sites in Cincinnati owned by Duke Energy.
In that case, which is still open, Duke Energy asked the PUCO to charge customers for $62.8 million to clean the sites. But PUCO staff recommended in January to reduce the cost to $6.4 million, saying the sites were mostly not “used and useful.”
The Ohio Consumers’ Counsel said the proposed change would weaken the standard that caused staff to reduce the request, upon which PUCO still has not acted.
“Since 1911, an Ohio law has balanced the interests of consumers and utilities for setting rates,” said Ohio Consumers’ Counsel Bruce Weston in a statement. “The natural gas utilities want to tip the scale in their favor by changing the law and charging consumers for millions and millions of dollars in clean-up costs.”
The Ohio Senate last week approved the natural gas amendment, along with dozens of others contained within the two-year, $61.7 billion state budget. The budget is likely next headed to a committee of state senators and state representatives who will hash out a final version before it’s sent to Gov. John Kasich for his signature by the end of the month.