Thursday, November 28, 2013

Ohio energy bill getting a rewrite to include some compromises

Electrical lines from a power station on Lake Road in Avon Lake.
By John Funk, The Plain Dealer 
Ohio-based wind farms would get special treatment for another three years, heavy industry could opt out of state energy efficiency mandates and utilities would find it easier to meet ongoing state efficiency goals -- but be forbidden from giving themselves fat bonuses for obeying the law.

All of these changes are supposed to be contained in a rewrite of an 89-page Ohio Senate bill that has led to major lobbying and politicking since its introduction in late September.
The redraft could come as early as today, but even if it does, there is at least a week of additional wrangling and additional amendments, said the bill's sponsor, Ohio Senator William Seitz.

The proudly conservative Cincinnati Republican said he is giving in, for now, on some of his objectives to get rid of Ohio's five-year-old mandates on energy efficiency and the use of renewable energy.

"We are hoping we can get a substitute version of the bill as soon as humanly possible," he said in an interview this week, adding that a draft might even be released today.
The state's Legislative Service Commission is doing the work, he said, based on the suggested amendments offered publicly and the ongoing behind-the-scenes wrangling.
Seitz, who is chairman of the Senate Utilities Committee that has been hearing testimony on the legislation, denied that he caved to political pressure when he cancelled what was supposed to be the final hearing and a vote earlier this week.

"People scream and squeal about process a lot around here. I think this (bill) is difficult enough without incurring a lot of caterwauling about process," he said.

"So, really it was at the request of some of my committee members, and I agreed," he said of his decision to pull the bill and have it rewritten. "We don't want to make the same mistakes that were made (with the legislation five years ago) -- rushing it through with a limited number of eyes and then finding out to our chagrin that it really wasn't drafted the way it was explained to us.

"The principle here is that it is more important to do it right than to get it done quickly," he said. 
All of this new caution means that the bill will not show up in the utilities committee until Dec. 4 at the earliest.

And that means Seitz may not make his stated goal to get the legislation through the Senate before the end of the year. At this point, the full Senate has scheduled only six sessions in December.

And it also means the pitched battle waged by the power companies, environmentalists, energy efficiency advocates and consumer groups will probably continue unabated. 
"The risk is you are just giving the off-base opponents two more weeks to lobby and carp and  raise bugaboos about this," Seitz said of his opponents, reverting to his customary sarcastic description of them as "enviro-socialist rent seekers."

The delay also means consumers are in for a barrage of phone calls and front porch lobbyists letting them know what's at stake. 

The utilities, several environmental groups and consumer groups have already launched phone banks, say insiders, some of them offering to patch a customer through to selected lawmakers. 

Here are the main points of what Seitz sees as a reasonable compromise:

-- The requirement that by 2025 12.5 percent of the power utilities sell must be produced by renewable technologies remains in place, as it was written back in 2008. 

-- The requirement that half of that renewable power come from Ohio-based wind farms remains in place through December 2016. After that date, power from Ohio wind farms gets a slight preference under Ohio's Buy Ohio law, in which Ohio products are chosen over out-of-state if they are no more than 5 percent more costly.   

Seitz believes that the in-state requirement is unconstitutional, as do many regulators and legal experts. But at this point, the issue has not been addressed by the U.S. Supreme Court. 
-- The language that would have allowed Ohio utilities to meet the renewable energy mandates by purchasing Canadian hydro power is deleted and replaced with language allowing them to purchase wind power from anywhere within the power grid managed by Philadelphia-based PJM Interconnection, which includes more than a dozen states. Seitz said the idea is that the wind power from out of state has to be actually "deliverable" to the Ohio distributors.  

-- The solar "cut-out" for renewable energy, 0.5 percent of all power sold, remains in place.
-- Big power users such as Alcoa and Timken, both of which have publicly testified in favor of Seitz's initial bill, would get the option to opt out of the requirement that they meet state energy efficiency mandates and that they therefore don't pay the rate increases the utilities charge customers to pay for such programs. Nor would they take any money from utilities to help them pay for efficiency improvements.

-- The amount of money each utility spent this year assisting with customer energy efficiency programs would become the cap in future years. But because the huge power consumers who opted out would not get any additional dollars, the capped fund could be spread further to include smaller companies.  

The original bill's opponents can be expected to fight hard against the cap because they see it as a way to slowly strangle ongoing efficiency upgrades. Seitz sees it as keeping electric bills down, though he does not include the savings that using less electricity contributes to lower bills. 

Seitz also has included some fancy math in how the power used by the huge industries is counted in the future.  Once they have opted out of required efficiency programs, the prodigious amount of electricity consumed by these industries would not be counted in the total amount of power consumed in the state, said Seitz. 

The point? 

Not counting the power they use would make it easier for the electric utilities to reduce total consumption of power by 22 percent by 2025 as required by the laws now in place. Expect a fight over this. 

-- Utilities would not be permitted to give themselves outsized bonuses for obeying the efficiency mandates and assisting customers with energy efficiency products.  This has been a rallying point of opponents because the bill as originally written would have allowed a utility to increase rates so that it could pay itself a bonus of up to 33 percent of the value of the efficiency upgrades it helped customers put into place.

Seitz's answer to that is to cap future utility bonuses, called "shared savings in the bill,"  to whatever the utility managed to pay itself in 2013. So just as the legislation would limit future energy efficiency spending to this year's total, it would limit a utility's future savings awards to whatever it paid itself this year. Expect a fight about this cap as well.  

-- Utilities would get to count improvements in efficiency they made to their transmission and distribution lines -- and to their power plants -- under language Seitz wants to keep in the new bill. 

"And why not?" Seitz demanded rhetorically. "The objective is to reduce overall power demand by 22 percent by 2025. So, why shouldn't we count everything that contributes to that goal? 

Seitz has often said that he, like conservatives across the nation, opposed the very idea of requiring electric utilities to help customers embrace efficiency and use less electricity.
Proponents have argued successfully that it is good public policy because using less power means a reduction in power plant pollution, especially the emissions from coal-fired plants.  Besides, old-fashioned conservation, they have argued, leaves a better environment and more resources for future generations.

Seitz likened the public policy goal of having electric utilities sell less power with an imaginary law requiring a fast-food chain to sell fewer hamburgers and more salads. 
"It's the equivalent of telling McDonalds you will sell 22 percent fewer Happy Meals by 2025 and you will like it. And furthermore, telling McDonalds that because Michelle Obama doesn't like fat people, you will also have 25 percent of your menu consist of green leafy salads," he said. 

Syndicated from Cleveland

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