September 25, 2013

Energy bill to trim buy-Ohio provision; Mandates on renewables stay


COLUMBUS – It isn’t the wholesale repeal they feared, but environmental groups and some manufacturers contend a proposed law revamping renewable-energy and efficiency standards for electric utilities could damage Ohio’s fledgling alternative-energy industries.

A revised version of Senate Bill 58 to be unveiled today retains the broader mandates that utilities find at least 25 percent of their power from renewable and advanced technology sources and find 22 percent in energy-reducing efficiencies by 2025.

It also retains a 0.5 percent carve-out on the renewable side exclusively for solar power.

But it eliminates the existing requirement that half the renewable energy sources, including solar, must come from within Ohio.

A revised S.B. 58 also will make it easier for auto plants, steel mills, and other high-volume industrial-power users to make the case they’ve done as much as can be expected to do to reduce energy use on the efficiency side of the equation.

State Sen. Bill Seitz (R., Cincinnati) argued that the changes represent a tuneup of what is now five-year-law that plans out another dozen years into the future.

“Really, on the whole, this is a series of common-sense changes,” he said. “Left to my own decisions, I would have repealed both [standards], but I’m not doing that. We’re keeping the mandates.”

Under current law, half of the 25 percent renewable and advanced technology power in utility portfolios by 2025 must come from renewable energy sources such as wind, solar, hydro, and biomass. The rest can come from advanced sources such as nuclear, fuel cells, and cleaner coal technology. Most of Ohio’s power supply comes from coal.

The buy-Ohio requirement is critical, said Eric Thomma, director of policy and regulatory affairs at Iberdrola Renewables, LLC, the firm behind the huge Blue Creek Wind Farm straddling Van Wert and Paulding counties near U.S. 30.

“That provision was paramount or one of the leading factors in that investment,” he said at a Statehouse press conference Tuesday.

Mr. Seitz noted that the U.S. Supreme Court struck down, as a violation of the Constitution’s interstate commerce clause, a provision in Oklahoma that had a buy-Oklahoma provision for coal. A federal appeals-court ruling also has shed doubt on an in-state mandate included in Michigan’s renewable-energy standards.

So far, Ohio’s standard has not been legally challenged.

Ohio Environmental Council spokesman Jack Shaner said the proposed changes would send the wrong message to wind turbine and solar panel manufacturers and investors that their market here is not as assured as they once thought.

“This is the time that Governor [John] Kasich has to step up and reiterate his oft-stated strong support for renewables and efficiency,” Mr. Shaner said. “He has been true to his word so far. Now he needs to stand up and put down any radical retreat.”

Under current law, the requirement for renewable and advanced energy could be suspended once the cost to consumers increases by more than 3 percent. But no utility has invoked that cap and all are in compliance with the annual benchmarks.

On the efficiency side, Mr. Seitz noted current law already has a provision that would allow big energy users to argue they’ve done what they can to reduce energy use.

“It’s a tedious and long, drawn-out process,” he said. “The very largest industrial users, the most energy-sophisticated, have every motive to do anything within reason to achieve efficiencies. We’re going to streamline that opt-out provision.”

But Eric Burkland, president of the Ohio Manufacturers’ Association, urged caution.

“We have compelling research that shows the [efficiency] standards save consumers money…” he said. “We ran some numbers to look at small, medium, and large electricity-using manufacturers. That analysis showed that manufacturing customers of all sizes are getting price-suppression benefits that exceed the cost of the rider [for efficiency on their utility bills].”

But those benefits are smallest for the largest users, so some change addressing them may be warranted, Mr. Burkland said. He suggested that creating more variability in the amount of the utility bill riders for such power customers would be preferable to what Mr. Seitz is proposing.

“I don’t think we want to throw the baby out with the bath water,” he said.

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