Ohio House plans 'significant changes' to energy bill 

The Ohio House of Representatives plans to revamp Gov. Ted Strickland’s comprehensive energy bill.

“There will be significant changes,” State Rep. John Hagan, Republican of Alliance, who chairs the House Public Utilities Committee, said Wednesday. “It’s a work in progress.”

The bill aims to end Ohio’s seven-year experiment deregulating the electric utility industry while simultaneously fostering the development of wind turbines, solar arrays and high-tech coal and nuclear plants over the next couple of decades. It would require the utilities to generate 25 percent of the power they sell by 2025 with such technologies.

In an interview during a break in hearings on the legislation, Hagan said the bill as written is unworkable.

Proposed as a “hybrid” by Strickland, the law would try to retain state regulatory control over electric rates while holding open the door that it might allow utilities in the future to set rates on wholesale prices instead – if a competitive wholesale market exists in the state’s opinion.

Utilities would have to file traditional rate cases or prove a competitive market actually existed.

“The bill has elements that stand in the way of going to market,” Hagan said. “In other words, the hybrid comment is more of a feel-good thing than reality.”

Among the changes the House is likely to insert into the bill:

The requirement that an objective standard be created to determine whether a competitive wholesale market exists rather than leaving it up to the Public Utilities Commission of Ohio.

FirstEnergy Corp. has lobbied for this standard. And Ohio Consumers’ Counsel Janine Migden-Ostrander has pushed lawmakers to test future rates set by the PUCO against rates based on wholesale prices, especially in FirstEnergy territory because its regulated rates are the highest in the state.

The Akron-based utility has also made it clear that it will challenge any law that forces it back into full regulation. The company moved legal ownership of its power plants to an unregulated subsidiary, FirstEnergy Solutions, as allowed by the existing 1999 deregulation law.

That threat, along with FirstEnergy’s rates, has given lawmakers the motivation to negotiate some sort of compromise.

“We have to go through in detail how we can achieve the objectives of protecting consumers and allowing a market – if a market exists,” Hagan said. “And it looks a lot like there is a market potential, if not today, then in the future.”

Setting periodic benchmark percentages for the amount of power utilities must generate with advanced-energy technologies. The benchmarks would be spread over the next 17 years rather than waiting until 2025 to see whether the utilities have made the 25 percent mandate. The administration deliberately did not include interim minimum benchmarks, even though the 25 other states that have renewable and advanced-energy standards have such interim requirements.

Most of these states have “escape clauses” in the benchmarks, Mark Shanahan, Strickland’s energy adviser, told the committee. The administration did not want to force utilities to build or buy such technologies until U.S. makers get established and ease current shortages, Shanahan said.

Wednesday’s four-plus hours of hearing consisted of a panel of experts – Shanahan; Migden-Ostrander; Craig Baker, vice president at American Electric Power; Dave Rinebolt, executive director of Ohio Partners for Affordable Energy, an advocacy group; and James Taylor, senior fellow with the Heartland Institute, a nonprofit group that favors free-market solutions to social and economic problems.

Taylor blasted the idea of requiring utilities to build or lease advanced-energy facilities, arguing that even if the entire nation adopted a rule to require 25 percent advanced-energy power by 2025, it would have no effect on global warming.

The administration did not make the proposal as an answer to climate change, Shanahan said, but rather as an economic development initiative to create jobs in Ohio.

Hearings are expected to continue through February, when the committee will allow public testimony. The Senate approved the measure Oct. 31 after a six-week whirlwind of hearings.

By John Funk
Plain Dealer Reporter

The Plain Dealer

10 January 2008