Debate Heats Up Over Freeze on Ohio’s Clean Energy Rules

By Mike Boyer

Ohio has a mixed bag of energy sources.

Coal fuels 59 percent of Ohio’s electricity, natural gas represents 23 percent and nuclear power another 14 percent, according to the U.S. Energy Information Administration.

But all that diversity hasn’t insulated the Buckeye state from a number of energy challenges.

One of the biggest, and most immediate, is the future of the freeze on the state’s renewable energy and energy efficiency standards, which expire at the end of the year.

In 2008 Ohio enacted clean energy rules requiring the state’s utilities to obtain 25 percent of the electricity from renewable and alternative energy sources such as solar and wind power, and implement energy efficiency steps such as insulation and efficient lighting programs to reduce overall energy demand.

istock_50144752_xxlargeBut two years ago, in the wake of the Great Recession, the legislature approved a two-year freeze on the standards and extended or reduced some of the requirements. That freeze expires Dec. 31, and is fueling debate on whether the state should extend the freeze, let the clean energy requirements resume or take another approach.

“The intent of these clean energy standards was to lower bills, clean up the air and to increase the diversity of our energy portfolio and they did just that,” says Trish Demeter, managing director of energy programs for the Ohio Environmental Council, which supports the standards.

“Bringing the standards back would resume those benefits and help us get back on track,” she says. “We are getting left behind because we have stalled our progress on clean energy in the state.’’

But the Ohio Chamber of Commerce, which represents about 8,000 businesses around the state, says the freeze should be extended for three more years in part because of uncertainly over the future of the U.S. Environmental Protection Agency’s Clean Power Plan. The plan aimed at reducing greenhouse gas emissions is currently on hold while a legal fight over its constitutionality works its way through the federal courts.

“There’s a lot of uncertainty right now in the energy arena and it’s definitely a significant concern for the Ohio chamber members that we will have these mandates go back into effect when we don’t have clarity if the Clean Power Plan survives and what compliance will look like,” says Zack Frymier, the chamber’s energy and environmental policy director.

Demeter argues that’s a misreading of the Clean Power Plan.istock_84544451_medium

“The Clean Power Plan sets goals for carbon pollution reductions and gives the states a tremendous amount of leeway in terms of how each state puts together their carbon reduction plan. Ohio would want to look at things like clean energy standards as a carbon-reducing strategy,” she says.

Last year, the Ohio Environmental Council estimated that restoring the renewal energy requirements and energy efficiency standards would have a big impact on public health in Ohio, avoiding 16,900 lost work days, more than 2,000 asthma attacks, 120 emergency room visits, more than 100 hospital emissions, 230 heart attacks and 140 premature deaths.

In addition, clean energy businesses employ more than 100,000 Ohioans, according to a study by Ohio Advanced Energy Economy, which represents some of the state’s advanced energy businesses.

Frymier at the Ohio Chamber says the market and not government should make decisions on whether to adopt clean energy. “It should be an individual business decision and not one mandated by a one-size-fits all approach,” he says.

State Sen. Bill Seitz (R-Cincinnati), chairman of the Senate public utilities committee, who proposed a three-year extension of the freeze in the spring that went nowhere in the legislature, says he’s prepared to offer a “skinnier” version of that bill when the legislature returns to Columbus for a brief session after the November election.

“The most significant point, where I think we might be able to compromise, is instead of extending the freeze for three years, as my bill called for, and instead of resuming our march up mandate mountain, which would happen if we do nothing, let’s make these [renewable energy] mandates into goals for the next three years. At the end of three years we’ll have a much better appreciation of where we’re going,’’ he says.

Gov. Kasich has said he’d veto any extension of the freeze on the clean air standards and appears to be at odds with the legislature, Demeter says.

At the same time, the growth of renewable energy and the rising cost of operating coal-fired generating plants is a challenge for some of Ohio investor-owned electric utilities, says Demeter.

The two largest, American Electric Power in Columbus and First Energy Corp. in Akron, had proposed so-called “purchase power” agreements which would require customers to absorb the costs of some of their older, de-regulated power plants in their monthly bills.

The plans, opposed by business and consumer groups, were approved by the Public Utilities Commission of Ohio, but were later withdrawn after the Federal Energy Regulatory Commission said the agreements required its review.

First Energy subsequently submitted a modified plan that’s awaiting a PUCO decision and AEP has agreed to sell four power plants, including three in Ohio.

Duke Energy, which has about 840,000 electric customers in southwest Ohio, sold off its non-regulated generating plants in Ohio last year to focus on its electric distribution operations.

Lee Barrett, Duke Energy Ohio’s vice president of community relations and government affairs, says the utility is committed to its distribution and transmission businesses in Ohio.

“Since Ohio is a de-regulated generation state, generation investment opportunities for regulated utilities are limited if not entirely prohibitive. As such, Duke Energy would welcome the opportunity to discuss regulatory policy changes that would attract new utility investments in electric generation located within Ohio and dedicated to serving Ohio customers and communities,” he says.

It’s not just the state’s electric utilities that are unhappy with Ohio’s 15-year-old partially de-regulated electric industry.

Earlier this year, Gene Krebs, chairman of the board of governors for Ohio Consumers’ Counsel, questioned the effectiveness of the legislation splitting electric generation from distribution.

Krebs, a former member of the General Assembly who voted for electric deregulation in 1999, says one of the main reasons was that 34 states had cheaper electric rates that Ohio.

“Now 32 states have cheaper electricity that we do,” he says. “Moving up two spots isn’t exactly a great [success].”

He has called on the legislature to do a full-scale review of the state’s electric industry and its regulation.

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