Ohio's efficiency and renewable standards would be kept in compromise

COLUMBUS -- A compromise emerged Monday in the standoff between Gov. John Kasich and Ohio Senate Republicans over energy efficiency and renewable energy rules.

Led by Sen. Frank LaRose of Copley Township, a moderate Republican, and with the support of at least three other Republican senators, the proposal would soften the impact on monthly bills for energy efficiency and renewable power.

The proposal would replace the more draconian three-year freeze on renewables and efficiency rules demanded by the Senate Republican leadership in legislation known as Senate Bill 310.  The GOP caucus are aiming for a vote on the legislation Wednesday. Modifications to the bill were due by close of business Monday.

And the proposal would allow Kasich to avoid following through on a threat to veto SB 310. Legislators also threatened to override any veto.

The proposal has the support of the Ohio Manufacturers' Association and the Ohio Consumers' Counsel. The OMA has fought to keep the efficiency programs on behalf of medium and smaller companies, and the support of energy efficiency industries and proponents.  The consumers' counsel and the OMA last week urged a more thoughtful and thorough review of the law, arguing that some provisions  "tilt the balance" away from customers and to electric utilities.

By the end of the day Monday, supporters of the compromise included a long list of businesses, many of which are involved in developing energy efficiency technologies or with manufacturing more energy efficient products.

Supporters included Cooper Tires, Honda Motor Co., Honeywell, Ingersoll Rand, Johnson Controls, Navistar, Owens Corning, PPG, Schnider Electric, Smardt Chiller Group, Steris Corp., United Technologies, Whirlpool Corp., Zone First, BASF SE, Dupont and the Husky Lima Refinery

Broad details of the proposed compromise include language that would:

* Reduce energy efficiency mandates. The proposal would lower the currently required 22 percent reduction in power consumption to 17.7 percent by 2025 through upgrades in energy efficiency. Utilities, led by FirstEnergy Corp. of Akron, have complained that the mandates have interfered with normal market growth, while some large industrial customers have argued the cost of the program is too high.

The proposal would allow large industrial companies to opt out of the efficiency programs if they commit to continuing efficiency upgrades on their own and if they agreed to bid the savings into annual auctions held by PJM Interconnection, the company that manages high-voltage power flows in Ohio and 12 other states. The efficiency bids tend to lower the cost of power set in the auctions.

* Lessen the impact of renewable energy projects on monthly bills by imposing a 2 percent cost cap. The proposal would impose a 2 percent cost cap on monthly electric bills to pay for power generated by wind farms and solar arrays.

In other words, a utility would not be forced to sell an annually increasing amount of renewable power if the addition of the renewable power would increase the monthly cost of electricity by more than 2 percent. The 2009 law requiring renewable power requires that by 2025 each utility must prove that 12.5 percent of the power it sells is generated by wind, solar or other renewable technologies. Existing law allows state regulators to grant exemptions if the cost of the renewable power would increase the cost of electricity by 3 percent, compared to power generated conventionally.

* Eliminate the "advanced energy" mandate. The proposal would delete language in existing law requiring that by 2025 utilities must prove that 12.5 percent of the power they sell is generate by advanced technologies such as fuel cells and new designs of nuclear power plants. There has been little argument, if any about this.

* Allow biodigesters, which make methane from food and animal waste, to qualify for renewable energy credits, even if they do not use the methane to generate electricity.

* Allow utilities to buy half of the wind and solar power annually required from wind farms and solar arrays anywhere in the 13 states where the high-voltage grid is managed by PJM Interconnection -- rather than just in nearby states.