Who got what in the energy debate 

The Ohio Senate today unanimously approved Gov. Ted Strickland’s energy and utility bill, just 24 hours after the House vote.

The governor is expected to sign the 61-page document into law within a week – almost a year to the day since he announced the framework for the landmark legislation.

The bill was aimed at protecting consumers from skyrocketing electric bills when the state moved to full deregulation as planned on Jan. 1, 2009.

There are no clear winners. And it’s impossible to predict exactly how the law will be applied. The administrative rules that determine how the law will be applied must still be written.

But the governor, House Speaker Jon Husted and Senate President Bill Harris agree at this point that Ohio has headed off rate increases of up to 70 percent that occurred in other states when utilities were allowed to base retail rates on wholesale markets.

The law protects consumers and repairs Ohio’s national image as a state where electric rates could soar out of control.

The bill also lays the groundwork for the creation of a new manufacturing industry in Ohio – renewable energy. Wind turbine installers have all but promised to rush into the Buckeye state because utilities here will be required to begin generating a portion of their power with wind, solar and other renewable technologies.

Here’s a recap of what key players in this battle wanted, and what the got.

The governor

What he wanted:
Strickland vowed last May to protect consumers from rate spikes when the present rate plans – along with the state’s 1999 deregulation law – end on Dec. 31. He knew he could not order utilities to return to full regulation, so he called his plan to block them a hybrid. He also wanted to foster development of renewable energy in Ohio as a way to create jobs.

What he got:
Strickland has achieved his major goals, at least for now. He also has become a hero to some of the state’s most powerful manufacturers who wanted rates to be as predictable as they were under traditional regulation.

Consumers

What they wanted:
Most consumers want to pay less for energy than they now do. Ohio Consumers’ Counsel Janine Migden-Ostander pushed for the market option to be in the bill because she believes FirstEnergy’s current regulated rates are above wholesale market rates.

What they got:
You aren’t likely to pay less and could even pay more than currently because the prices of coal, uranium and natural gas – the fuels of power plants – are rising fast. If you live in a city that is part of the Northeast Ohio Public Energy Council, or NOPEC, you could see lower rates. NOPEC won a significant victory when executive director Leigh Herington persuaded lawmakers to include language eliminating FirstEnergy’s “standby charges” that it has billed NOPEC consumers buying power from outside suppliers for years.

The electric utilities

What they wanted:
All of them wanted the ability to base retail generation rates on wholesale markets if that would increase their profits.

What they got:
All utilities must first file traditional rate plans with the Public Utilities Commission of Ohio. FirstEnergy is the only utility that can then request a complete market rate because it has moved ownership of its power plants to an unregulated subsidiary. Downstate utilities can move to wholesale markets over the next 10 years, and only if the PUCO allows it.

If FirstEnergy chooses market rates, the PUCO will hold an auction or seek competitive bids from outside power companies – an inherent risk for the Akron-based utility. The PUCO will then choose the least-cost bidders, which might be from the FirstEnergy subsidiary, or not. Once a utility goes to market, it cannot return to regulated rates.

The industrials

What they wanted:
Some of the state’s largest manufacturers wanted a return to stable regulated rates. They also wanted to be able to keep negotiating discount prices and to “shop” – that is, buy power – from outside power companies.

What they got:
FirstEnergy’s ownership maneuver made a return to old-fashioned regulation impossible. But the manufactures can continue bargaining for discounts and can keep shopping if they want to. They also will have stable rates. The rate plans described in the bill are for three years at a time.

The greens

What they wanted:
Renewable energy advocates as well as manufacturers of wind turbines and solar equipment pushed Strickland to live up to his campaign rhetoric that such technologies could create a new industry in job-starved Ohio.

What they got:
The greens won a mandate requiring that 12.5 percent of the power sold in Ohio come from renewable technologies by 2025 and – thanks to the House – a year-by-year step-up or benchmark that must be met.

But that victory is diluted by language demanded by the Senate allowing the PUCO to give a utility a pass on the benchmarks and a pass on the goal itself if the wind farms and solar fields push up overall rates by more than 3 percent. The bill’s language on this topic is murky, and the PUCO will be the final arbiter.

The greens also won a “carve-out” for solar power. The bill requires 0.5 percent of the renewable power to come from solar systems. The House put that number at 1 percent but had to back it down at the request of the Senate.

The House did not back down on language creating energy efficiency mandates that will require each utility to show over the next 17 years that it has helped its customers reduce their power consumption by a total of 22 percent – reducing the need for a costly new power plant.

By John Funk

The Plain Dealer

23 April 2008