Ohio green energy and efficiency mandates not needed, conservative lawmakers say

The conservative Republican effort to derail the state's five-year-old laws requiring electric utilities to champion energy efficiency and renewable power takes the gloves off today.

The Ohio Senate Public Utilities Committee will take testimony first today from Sen. Kris Jordan, a Republican from Ostrander, on a bill he introduced months ago that would eliminate all of the green requirements.

Ostrander is a village in Delaware County, about 35 miles northwest of Columbus. Jordan has previously made it clear that he is opposed to any government mandates or involvement of any kind on these issues. But his proposals have been ignored by the Senate.

Committee chairman William Seitz, a Republican from Cincinnati and author of a bill to modify the green rules, has scheduled Jordan ahead of a parade of opponents to his own legislation.

Jordan introduced his proposal (Senate bill 34) in February, but it has not been discussed. He introduced a similar measure in a previous session, but it failed to gain any traction.

For his part, Seitz believes the economics that convinced all but one lawmaker to approve the legislation five years ago have proved incorrect.

In a five-page, thoughtful and philosophically conservative document introduced into the record with the bill, Seitz argued that shale gas has not only lowered the cost of electricity but also has persuaded utilities not to build any more coal-fired power plants, which would require costly emission controls. He also noted that demand has not increased as most predicted.

"In short the assumptions upon which Senate Bill 221 (the 2008 law) were based have all turned out to be false," he wrote, "and it would be the height of foolishness to fail to account for these changed circumstances."

Warning that the cost of meeting the annually more stringent efficiency and green energy standards would "escalate dramatically" over the decade, Seitz also staked out a conservative position that "We generally do not believe in centralized government planning of the private economy, a lesson Soviet Russia learned all too well after a long experiment in central planning."
We do not believe in centralized government planning of the private economy, a lesson Soviet Russia learned all too well: Ohio Sen.William Seitz

But Seitz's decision to take testimony on the Jordan bill today ahead of opponents to his own bill is seen by Democratic critics as a maneuver to make Seitz's bill (Senate Bill 58) seem moderate.

It is anything but moderate, say opponents.

They charge that, under the system envisioned by Seitz, consumers will end up with skyrocketing electric rates but no efficiency programs and little if any new wind and solar power plants.

They say it will add more than $3.65 billion to ratepayers' utility bills over the coming decade - money the utilities will collect without having to support energy efficiency or buy green power from in-state wind farms and solar arrays.

The in-state requirement was to help solar and wind industries build here and buy parts from companies based here.

Robert Kelter, an attorney with the Environmental Law and Policy Center's Chicago office, hopes to testify against Seitz's bill today.

In an interview this week, Kelter said Seitz's bill looks like it leaves the skeleton of Ohio's efficiency rules in place. But it changes how the standards can be met.

For example, buried deep in the 89-page proposal are changes in the law allowing utilities to make normal upgrades to their transmission lines and local distribution wires - and count that as programs they designed to increase efficiency.

"Under existing law, the companies have had to demonstrate they were doing it for energy efficiency," said Kelter. "Now any improvement to transmission and distribution, if it makes the line more efficient, now counts."

The bill also allows utilities that have moved ownership of their power plants to unregulated subsidiaries to count all plant upgrades they have made since 2006 to meet the energy efficiency requirements, which were not enacted until 2008.

That provision would be a windfall for FirstEnergy, he said. The Akron-based company moved ownership of is fleet of power plants to the unregulated FirstEnergy Solutions in late 2005, just before the law allowing the move lapsed.

Because the power plants are no longer regulated, FirstEnergy has had to use shareholder money - not ratepayer money -- to pay for any power plant work.

FirstEnergy has regularly reported "uprates" to its power plants in the years since 2005, improvements that FES made as an unregulated company to produce more electricity at each plant without building a new power plant.

"Whatever energy savings come from the upgrades to the plants, they would now get to count them," said Kelter. "They have completely undermined the standards."

The 2008 law also ordered the power companies to help customers use less and less electricity over the next 17 years by increasing the efficiency of how they used the electricity. And it allowed the companies to temporarily increase delivery rates to pay for the programs.

Such programs include everything from compact fluorescent bulbs for residential customers to helping big industrial customers buy more efficient equipment.

In deals negotiated with environmental and efficiency advocates after the law was passed- and approved by the Public Utilities Commission - the power companies were allowed to further increase rates to reward themselves when the programs they developed improved efficiency beyond the annual benchmarks.

These deals were called "shared savings," and they meant if the savings because of energy efficiency upgrades surpassed an annual benchmark, the utilities could take up to 13 percent extra as an "incentive."

Now, under an arcane proviso in the Seitz bill, said Kelter, the bonuses for the utilities would begin immediately before the programs even meet the annual benchmarks.

And it's not 10 percent. It's 33 percent, said Kelter. "This is like calling catsup a vegetable," he said.