Race To Ohio’s Energy Past
by Mark Shanahan

Ohio’s clean energy future is in grave peril.  Senate Bill 310 as passed by the Senate now is scheduled to be voted out of the House and sent to Governor Kasich for signature. (Committee vote currently scheduled for Tuesday.)

What’s in the bill?  The main elements are:

  • “Freeze” the renewable energy and energy efficiency requirements for Ohio’s electric distribution companies at 2014 levels through 2016.  Theoretically, if the General Assembly does not act, the current standards then resume.
  • Sets up the Energy Mandates Study Committee to make recommendations to be implemented by 2017. The committee is made up of 12 legislators (8R, 4D) to be named by leadership and the (non-voting) chair of the PUCO.  It is to do a cost-benefit analysis of the mandates. The law states, however, “it is the intent of the General Assembly to enact legislation in the future…that will reduce the mandates…” (Not that the conclusions are pre-determined)
  • Requires future contracts for renewable energy to include a change of law clause that if there are any changes to the renewables law, the contract can be voided. (Would you invest $500 million with that clause?)
  • Requires utilities to list the individual cost of renewable energy and efficiency on each customer’s bill.  It does not require identification of any other riders. For example, it will not list the cost of the $104 million subsidy given to Timken through its special arrangement. Nor will it list any benefits achieved through the riders. Nor will it require utilities to report on the cost of different sources of electric generation.  For example, there are price spreads between older coal plants, new combined cycle gas plants and nuclear plants.  Apparently, even partial transparency only applies to renewables and efficiency.
  • Redefines how efficiency is counted and allows utilities to go back as far as 2006 and recalculate.  It allows the utilities to take credit for efficiency savings even if the utility played no part in achieving it. It allows the utility to count upgrades to transmission lines even though there is already regulated cost recovery for those upgrades.
  • Changes the definition of renewable energy resources that count for the electric mandate to say those resources “do not have to be converted to electricity” to earn renewable (electricity) energy credits (RECs).  So, for example, landfill gas captured and prepared to fuel CNG vehicles counts.
  •  Allows the largest customers (industrials and large commercial) to opt-out of the efficiency rider more easily. Unlike current law, those companies do not have to submit evidence they are achieving the same level of efficiency as required for the distribution company. They merely have to submit a report to PUCO that says they did what they could; there are no defined metrics. PUCO can ask for more information but the company does all verification.  All information submitted by the company is deemed to be proprietary and trade secret; the public will never know.
  • Any current efficiency plan in place can be continued or amended at the utility’s discretion and an amended plan can be in effect through 2016.  Any pending plan cannot be reviewed or approved or have action taken on it until 2016.

There are myriad other, even more technical changes.

What has the debate been like? In the Senate hearings, run by ALEC national board member Bill Seitz, no one can remember opposition witnesses being treated with such arrogance, condescension and disrespect.  This was balanced by almost fawning treatment of a string of “free market” acolytes.  Seitz enlivened the debate with repeated references to “enviro-socialist mandates,” “Stalinist planning,” and the “Bataan death march to renewables” sometimes delivered in either a German or Russian accent. Working through a number of same subject bills, the Senate spent almost18 months on the subject.

Supporters of the bill argued that government mandates never work and if there were any viable options out there for a clean energy economy the market would implement them.  A parade of witnesses representing large users of electricity argued the standards cost them too much and could threaten jobs.  Many chambers of commerce (mostly from FirstEnergy territory) toed the party line and testified the true cost of the standards was jobs in their areas. When asked, none could name a single company for which this was true.

Opponents presented significant data that the standards resulted in billions of dollars invested in Ohio, thousands of jobs created in Ohio and contributed to lower costs for electricity. A number of self-identified conservative Republican business owners testified that the standards helped them. Any business or trade association that dared to oppose the bill was dismissed as a self-interested “rent seeker.”

The House hearings, all three of them over two weeks, have been more staid.  The material presented to the committee was much the same.

Interestingly, no investor owned utility presented testimony to either committee.  The Senate’s chief legal counsel told the House committee that there was no way to tell what the utilities thought because they never testified! (Perhaps the utilities should request refunds from all their lobbyists who crowded the hearing rooms and hallways!)

It was only in the House hearings, after questions by Rep. Kevin Boyce, that the environmental impacts of the mandates were addressed in substance. Apparently, a large coalition of Ohio environmental groups were convinced by their leaders that only business based arguments had any hope of protecting the portfolio standards. In fact, they were specifically asked not to raise those environmental issues in testimony and, for the most part, did not.

The Kasich fig leaf.   For a Governor who kicked off his administration with an energy summit that produced a ten-pillar energy plan, Kasich was surprisingly silent through much of the debate.  Three of his pillars (renewables, efficiency, and combined heat and power) will be seriously damaged by the bill.  His silence led some to hope for a veto. At the last minute, according to Senate President Keith Faber, Kasich insisted that the bill “freeze” the standards through 2016 with the possibility to resume in 2017. This fig leaf allows Kasich to avoid the label of being the first Governor in the nation to repeal renewable requirements and efficiency requirements.  The label might not serve him well in the 2014 campaign or in the 2016 Presidential primaries.

What about a compromise?  That’s always the key question in any legislative debate.  The problem with SB 310 is that it is fatally flawed at its core.  It represents a “compromise” with the folks who wanted full and immediate repeal of the standards.  But its “freeze” combined with other language changes and the directed results of the study committee will halt investment in both renewable and efficiency; it will in effect kill the standards.

A number of groups (Ohio Advanced Energy Economy, the Ohio Manufacturers Association, the American Wind Energy Association, Ohio Consumers Counsel) proposed a compromise on May 21; it would limit the freeze to one year, modify the industrial efficiency opt out provisions and create an efficiency cost cap for other customers.  In the release, put out by Republican warhorse Curt Steiner’s PR firm, the group argues its compromise would “create less disruption” for Ohio’s clean energy industry.

The bottom line is that any version of SB310 that can pass and be signed will seriously damage Ohio’s progress on clean energy and turn us to the past rather than the future. The genesis of this bill was a template prepared by ALEC to launch an attack on renewable standards across the nation. ALEC board member Seitz was smart enough to avoid the template and work with key entrenched interests to craft it to Ohio.  A letter sent out last week by the other Koch Brothers supported entity, Americans for Prosperity, urging support of the bill, undercuts his recent scoffing at any role by ALEC.

Elections have consequences. The Kasich victory and overwhelming Republican majorities in the Ohio Senate and House make it very difficult to defend the leap forward Ohio made on clean energy under Ted Strickland.  There is no choice but to fight on.

——-

Mark Shanahan provides strategic advice on energy policy and clean energy technology deployment through New Morning Energy LLC. He served as Governor Stickland’s Energy Advisor.

Evangelize!
  • Print
  • email
  • Facebook
  • Twitter
 
  • stryx

    Don’t forget to include the state funding for the Ohio Coal Research and Development Program
    http://development.ohio.gov/bs/bs_ohiocoaldev.htm

  • Think.

    Call Gov. Kasich @ 614-466-3555 and tell him to please oppose SB 310 to protect good jobs, energy savings, and Ohio’s emerging clean energy economy.

  • Amy Hanauer

    thanks for this clear and depressing summary.

  • Clark

    I thought that fracking was going to bring cheap energy to all. My electric kWh cost has risen 14% since this time last year.

  • Kevon Martis

    hmmmm…not a single word about the fact that OH’s instate renewable energy mandate violates the commerce clause of the US Constitution nor that OH’s wind energy, according to NREL is selling for twice what it can be purchased for from Iowa. If wind energy is good at $70/MWh isn’t it better at $30/MWh?

  • Kevon Martis

    As Gov. Strickland’s energy advisor how on earth did the dormant commerce clause issues in SB221 escape your notice? Even the Clean Energy State’s Alliance shows instate requirements for RE are illegal.

    http://www.cesa.org/resource-library/resource/cesa-report-the-commerce-clause-and-implications-for-state-renewable-portfolio-standard-programs-pdf#.U4NtDvldV8E

    SB221 has illegally forced OH ratepayers to pay far more for wind energy than it is worth.

  • Mark Shanahan

    Kevon, a few points to make about your observations:
    1. No court has found in-state siting requirements to be a violation of the commerce clause of the Constitution. There are a number of cases in different districts now that raise questions related to the issue; there have been conflicting decisions. The conflicts revolves around the different fact patterns in the cases.
    2. No court challenge has been made to the Ohio standard.
    3. Despite your claim, the Clean Energy States Alliance report does not show “instate requirements for RE are illegal.” It points out that it is a complicated legal issue and there are various strategies to defend against the challenge.
    4. The issue was raised during the SB221 debate. It was the stated position of the Republican Senate President and the Republican House Speaker that the General Assembly enacted legislation and the courts ruled on constitutionality. Due to the fact that no court had made such a ruling, the bill moved forward.
    5. Finally, to your point about the price of wind (actually the price of Renewable Energy Credits for wind): a primary reason that Ohio wind RECs are more expensive is that there are not enough of them to drive down the price. Ironically, passing SB310 to drive away investment in Ohio wind will not bring the price down.

  • Kevon Martis

    1. Judge Posner was clear in dicta with respect to MI’s RPS. And the Transcanada case was settled out of court with MA surrendering.

    2. “Separate but equal” was not challenged until it was. That didn’t make it legal.

    3. No they said: “Statutes that discriminate on their face violate the Commerce Clause unless
    there is demonstrable justification for the discrimination unrelated to protectionism.

    “Barriers to the free flow of commerce based on point of origin or other geographic factors to benefit local interests are virtually per se invalid,”
    unless the state can identify a non-protectionist and compelling local interest that cannot be served by any other means. The exception for lack of alternatives is extremely narrow; only one
    facially discriminatory law has avoided invalidation on these grounds.” SB221 fails this test.

    4. Your attempt to bring partisanship into this matter is cute but irrelevant. At least Senator Seitz is repentant.

    5. You want to talk RECs but I clearly said PPA prices. But even using your argument that it is the lack of supply that keeps REC prices high, how does restricting the supply of RECs to only those generated in OH help? $30/MWh wind from IA is a much better deal than OH wind at 2-3 times the price. Heck, OSU has decided to not even retire the RECs they are buying and are just throwing them away. Maybe you should let them know that is hurting the entire state as well as leaving money on the table that should flow to tuition reduction?

  • Mark Shanahan

    Kevon, it’s pretty clear we’re not going to agree on this one. Identifying that the House and Senate were Republican was intended to point out that it was a bipartisan choice. Dicta is a decision is just that: an indication of how that jurist might rule if the case was heard; it has no binding power.
    At any rate, thanks for your comments and passion on the issue.

  • Think.

    Kevon Martis, director of the Interstate Informed Citizens Coalition (IICC), has multiple connections to known fossil fuel-funded front groups. IICC has become cozy with national fossil fuel-funded climate skeptics groups, such as the Koch brothers’ Americans for Prosperity, as it seeks to influence clean energy policy decisions in Michigan and other states, such as Ohio, and even at the Federal level.

  • Kevon Martis

    You do realize that ad hominem attacks are the shortest form of surrender?

    But if being affiliated with fossil fuel companies (I am not) diminishes one’s statements the statements of Iberdrola, NextEra and AWEA in support of SB221 can be dismissed out of hand.

  • Kevon Martis

    It is common to not be able to reach consensus when one side is right and the other wrong. :)

  • stryx

    Kevon Martis- Whenever an article about wind power shows up, so do you. Why is that? I mean you’ve commented all over the web. I guess that’s easier to do when you just copy and paste your comments over and over (I searched on “The reduction in CO2 emissions associated with the PTC/ITC is, however, small, amounting to about 0.3 percent of CO2 emissions from the energy sector” because it sounded famiuliar.) So just exactly why is it you feel so strongly about wind power regulation in Ohio? You’re from Michigan, right? I know folks have some unusual hobbies, but prolific regurgitator isn’t one I’m familiar with. Ones I am familiar with: troll, agent-provocateur, spreader of FUD. Well I guess shill is a hobby for some folks. But usually shills do it for money. You aren’t getting paid for commenting on news articles are you? http://wattsupwiththat.com/2012/03/03/why-william-d-nordhaus-is-wrong-about-global-warming-skeptics-being-wrong/

  • Kevon Martis

    No.

    Now did you have a substantive objection to the NAS quote?

    Does it not bother you that wind energy is regarded by NAS, Brookings and even James Hansen as an incredibly slow and expensive means of reducing emissions relative to other solutions?

    Now pardon me…my Koch Brothers check is late again this month so I think I will go back to my roofing job again today.

Looking for something?

Use the form below to search the site:


Still not finding what you're looking for? Drop a comment on a post or contact us so we can take care of it!