If the legislature does not act before the end of this year, the state’s renewable energy and energy efficiency standards will kick back in, as revised in 2014. State Sen. Bill Seitz (R-Cincinnati), a longtime opponent of the standards, is circulating the new draft bill despite indications that Gov. John Kasich would not approve any plan to further weaken the policy.
Seitz’s bill would delay any enforcement of increases in renewable energy and energy efficiency for at least three years. It would also weaken the standards further, restrict Ohio’s ability to comply with federal regulations, increase utilities’ potential for profits, and blur the lines of corporate separation between utilities and their generation affiliates.
“It’s just more of the same from Sen. Seitz, and we don’t consider it a way forward,” said Ted Ford of Ohio Advanced Energy Economy. “We think the governor is right in saying we need to let the standards come back.”
‘An extension of the freeze’
As introduced by Seitz this spring, SB 320 would have maintained the current freeze on requirements for renewable energy and energy efficiency until 2022 and 2021, respectively. Final compliance would have been pushed out until 2029.
Under the draft bill, targets would resume next year. But companies that don’t comply would not face any penalties for several years – until 2020 for the energy efficiency provisions and until 2021 for the renewable energy provisions. After those dates, enforceable targets would only kick in every few years.
“There is no more freeze in the revised bill that I’m preparing,” Seitz said last week on WOSU radio. But, he admitted, utilities and generation suppliers will have no enforceable duty to meet any additional requirements for either renewable energy or energy efficiency. “We will have a goals-based plan for the next three years,” Seitz said.
As critics see it, the draft bill would effectively continue the current freeze.
“It doesn’t really preserve the standards when you make everything voluntary and you push out compliance dates,” Ford said.
“The latest version of SB 320 is nothing more than an extension of the freeze for another three years,” said Trish Demeter of the Ohio Environmental Council. “Instead of outright freezing the standards, the bill proposes to make the annual benchmarks voluntary.”
In her view, that would put Ohio at a competitive disadvantage compared to other states. “This would stall investments in clean energy and put Ohio even further behind while others charge ahead with creating jobs, reducing harmful air pollution and attracting new companies to their states,” Demeter said.
The 2014 law that imposed the current freeze had already weakened Ohio’s clean energy standards by enlarging the scope of what would count toward compliance. The draft bill goes even further. For example, water-saving measures and various wastewater treatment actions could count as energy efficiency. Similar provisions were in a 2013 bill sponsored by Seitz that garnered widespread criticism.
The draft bill is “a thinly-veiled attempt to water down the standards, render them unenforceable and throw them into limbo,” said .
Environmental advocates had previously said that Ohio was well on the way to compliance with the Environmental Protection Agency’s Clean Power Plan under the initial version of the state standards, although Seitz has warned about the risks of potentially conflicting requirements under state and federal rules.
However, weaker standards and delay in their enforcement would likely make it harder for Ohio to comply with the Clean Power Plan if it is upheld by the federal courts, advocates say.
“The fact is, the longer we sit around and allow clean energy investments to stall, the harder it will be for the state to craft a common-sense plan to reduce carbon pollution coming from the power sector,” Demeter said.
And if the federal rules are upheld, the draft bill would require the Ohio Environmental Protection Agency to get legislative approval before submitting a state plan to implement the rules. Last year Ohio EPA director Craig Butler voiced constitutional and practical concerns over similar requirements in another bill.
“The Clean Power Plan grants the state a wide berth on how to reduce carbon pollution, but this bill would limit that flexibility greatly,” Demeter said.
Any clean energy standard “needs to be fair to everyone,” said Teresa Ringenbach at independent energy company Direct Energy. The company is neutral on whether states have standards for renewable energy or energy efficiency. But if there are standards, she said, “the utilities shouldn’t get an advantage to comply that we don’t have.”
As she sees it, the draft bill falls short in that regard. For example, some language in the bill could be read to favor a utility’s energy efficiency programs over those of competitors, Ringenbach suggested.
The draft bill would also let utilities count and recover shared savings for certain measures that improve the efficiency of affiliates’ power plants.
“The provision that allows the distribution utility to claim energy savings that their sister companies realize through making power plants more efficient is bizarre,” noted Demeter. In addition, she said, it “blurs the line for what is appropriate, and would make Ohio the only state in the nation that permits such self-dealing.”
Language in the draft bill would also expressly let utilities collect profits in the form of shared savings for actions that they had nothing to do with performing. FirstEnergy is currently asking the Public Utilities Commission of Ohio to allow that under an ambiguity in current law.
“The original concept behind the shared savings was to ensure that the utilities were incented to keep real efficiency happening,” Ringenbach said. “However, taking credit for something that another customer is doing is probably not the best solution either.”
Potential utility profits could grow even more if enforceable milestones were spaced out as proposed by the draft bill. Utilities likely wouldn’t wait until the last minute to start meeting the upcoming deadlines, Sen. Seitz said on WOSU last week. Yet until each deadline, efforts by utilities or others would be considered above the law’s requirements — and thus eligible for profits as shared savings.
‘A difficult place’
In any case, said Ringenbach, the unsettled state of Ohio’s energy policy continues to frustrate business planning for her company and others. “Business certainty is a very important thing in any aspect of regulation,” she noted.
Failure to have strong clean energy standards can also hurt Ohio’s competitive position for keeping and attracting businesses, Ford stressed.
Especially for corporations with their own clean energy policies, “we appear to be a difficult place to acquire the kind of energy that they are increasingly demanding,” Ford said. “And that’s a problem, because there are other solutions or other options out there, as we saw with Facebook deciding to go to Texas instead of Ohio.”
“We’ve got to be a welcoming place,” Ford concluded. “We have to have a reputation for being forward-looking.”