Democrats criticize ‘one-sided’ testimony in Ohio energy committee

Ohio lawmakers charged with reviewing the costs and benefits of the state’s clean energy standards limited the testimony they received during hearings that were used to justify a two-year “freeze” on those standards.

The limitations raise questions about a forthcoming report due from a legislative committee by the end of the month and what action the full legislature is likely to take in response to it.

Meanwhile, environmental groups, industry groups and several Democratic lawmakers have called on Ohio to end the current freeze and reinstate the standards at significant levels.

However, Democrats make up a minority of both houses of Ohio’s General Assembly, as well the committee currently reviewing Ohio’s clean energy standards. Moreover, others on the committee appear loathe to let the standards take effect again.

If a majority of lawmakers agreed with them, Ohio could continue to find itself with no enforceable standards to increase renewable energy and energy efficiency beyond current levels.

By invitation only

Benchmarks under Ohio’s renewable energy and energy efficiency standards are currently frozen until 2017 as a result of Senate Bill 310, passed last year. The law also weakened the criteria for meeting the standards and set up an Energy Mandates Study Committee to review the costs and benefits of the law.

The committee met and received testimony from a variety of witnesses from November 2014 through July 2015.

“I think that the work was very extensive and spread over a long period of time,” said Rep. Christina Hagan (R-Alliance). “We heard from a lot of viable witnesses.”

“There were some things that I learned,” Hagan continued, referring to a “cultural shift” in the demand for renewable and advanced energy. She also noted a visit to a combined heat and power facility at Kent State University that led to significant cost savings.

Such projects can go forward even without clean energy standards “where the economics are feasible,” Hagan stressed. “That’s the power of the free market. People should be able to decide what’s best.”

Hagan noted that various utilities have continued at least some of their energy efficiency programs, which have been found to save customers about $2 for every $1 spent on the programs. However, FirstEnergy has discontinued most of its programs.

“They obviously have made a decision that they felt was best for them,” based on the detailed economics of the company’s situation, Hagan said when asked about FirstEnergy and its utilities’ regulated monopoly for distribution services in their territories.

“I’m not in government to pass judgment, but to learn and realize what is happening” in the markets, Hagan added.

“We did have some representation from the renewable side” among the witnesses who provided testimony, noted Sen. Capri Cafaro (D-Hubbard). But overall, she said, “It seemed as if much of the testimony was one-sided.”

For example, while 12 of the 20 witnesses represented utilities and other industry groups (including wind and solar), only one – Bruce Weston of the Ohio Consumers’ Council — spoke on behalf of ratepayers. Environmental and other public interest groups were also largely excluded.

And academic experts and “think tank” representatives “talked more about the concerns surrounding having mandates and retaining the renewable portfolio standards,” Cafaro said. “It would have been helpful to have more of a balance of testimony that would provide insight into the potential economic benefits” from the standards.

“We haven’t necessarily had enough time to see the potential impact of what SB 221 [the version of Ohio’s clean energy standards passed in 2008] would have done” to benefit the state, Cafaro added. “I would like to see SB 221 able to be implemented in its initial form,” she said.

Michael Stinziano (D-Columbus) said he would give the committee hearings a “‘C’ for confidence, but not comprehensiveness.

“I thought we did not have the diversity of opinions and a robust discussion that brought anything new to the forefront,” Stinziano said.

“We did hear a little diversity, but there were key stakeholders not at the table — either by choice or they weren’t invited” to give testimony, Stinziano noted. For example, there was no detailed discussion of health benefits the state might forego if the standards did not resume.

In fact, witnesses testified before the full committee only by invitation.

“I am always concerned when we don’t have an open public forum and any opportunity for any public comments,” Stinziano noted.

A few other groups have provided documents to co-chairs Troy Balderson (R-Zanesville) and Kristina Roegner (R-Hudson). They include, for example, industry supporters of demand response and a group of environmental advocates.

“The chairs have let [such] documents get to us after the fact, but not during any public presentation where we all could ask questions,” Stinziano said.

Moreover, Stinziano said, the hearings did not address what levels of renewable energy and energy efficiency might be appropriate for the state other than those spelled out in current law.

Just a freeze?

For now, required reductions in electricity usage from energy efficiency remain at their 2014 levels of 4.2 percent, and the final goal of 22 percent has been extended until 2027.

Required portfolio standards for renewable energy also remain at the 2014 levels, which were 0.12 percent for solar energy and 2.5 percent for renewable energy.

As originally introduced, SB 310 would have permanently frozen the standards at their current levels unless lawmakers acted again. After Gov. John Kasich threatened to veto the bill, a May 2014 compromise provided that, barring any future legislative action, the law’s benchmarks would kick in again in 2017. That’s what the law now provides.

This past May, Balderson characterized SB 310 this past May as “just a freeze.” He was the primary sponsor of SB 310 in Ohio’s General Assembly.

His bill had support from utilities and various large industrial companies. In 2014, for example, Terri Flora of American Electric Power said SB 310 was a chance for the state “to simply hit the pause button as the legislature studies the issues surrounding the mandates.”

Similarly, Keith Lake of the Ohio Chamber of Commerce described SB 310 as “hitting the pause button and taking the time to consider the impact of Ohio’s energy mandates.”

Yet now it’s unclear whether a majority of the state’s lawmakers will let the standards play on.

Earlier this month, Ohio Sen. Bill Seitz (R-Cincinnati) told Columbus Business First that he doesn’t think lawmakers are ready to “resume our march up Mandate Mountain” and would prefer to see the freeze continue.

Seitz, who has likened clean energy standards to Stalinist policies, suggested a similar approach this past spring as a response to U.S. EPA’s Clean Power Plan.

Those rules, which were finalized this summer, call upon states to reduce power plant emissions of carbon dioxide, which is a greenhouse gas linked to climate change.

Both advocates and representatives from the U.S. EPA have said that renewable energy and energy efficiency can substantially reduce the cost for complying with those rules.

‘In the wrong direction’

“A freeze—or extending the freeze—is definitely a step in the wrong direction,” said Stinziano.

“Businesses tell you they want to know what the rules are so they can adapt and proceed accordingly,” Stinziano explained. “A freeze doesn’t provide that.”

“We know there’s an economic impact,” Stinziano added. “Ohio was a leader” in energy efficiency and renewable energy, but SB 310 “stymied that,” he said.

Stinziano and Rep. Jack Cera (D-Bellaire) issued a report earlier this month, citing additional reasons to resume the standards, including health benefits, consumer savings and job opportunities.

Moreover, any extension of the standards based on the Clean Power Plan would just be “kicking the can,” Stinziano said.

“The federal rules are the law of the land,” Stinziano explained. “I think people are grasping.”

“This is all happening under the umbrella of our governor running for president, and it delays having to make real decisions in that capacity as well,” he added.

In Stinziano’s view, any continuation of the “pause” would also achieve the same immediate effect for opponents of the clean energy standards, such as utilities, fossil fuel interests, and various large industrial users.

That effect is the absence of any obligation to increase renewable energy or energy efficiency beyond current levels.

“Extending the freeze continues to delay real implementation and has the effect of just eliminating them,” Stinziano said.

4 thoughts on “Democrats criticize ‘one-sided’ testimony in Ohio energy committee

  1. Talk about one sided. A little introspection by the journalist might be merited here. Representative Hagan was given ink in the beginning. But as we read on, the article turns anti-ratepayer and never looks back. There is no summary teasing the reader to contemplate both sides. The article quotes a legislator quacking about OCC being the only ratepayer advocacy witness, but that really isn’t true. Buckeye Institute and the Utah State economist provided ratepayer-centric testimony, so did testimony from PJM’s Ott and Monitoring Analytics’ Bowring. And many written testimonies, including my own, have been considered outside the purview of the hearing room – as have written testimonies and letters from people and groups willing to “compromise our economy to save the next tree.” The truth is we can’t “stick it to the man” and feel good about it, because “the man” is us. We need to look at the electricity system, subsidies, mandates, PPAs, green regulations holistically, and I think the committee has done a reasonable job givern the backdrop of the testimonies in public utilities committees since 2007.

  2. Mr. Stacy comments here that the article is “anti-ratepayer”. That’s seriously incorrect understanding, although it is certainly the Republican talking point. The most important thing to understand is that in the last two years, in the House and Senate hearings and in the Joint Energy Mandates Study Committee, the PUCO was asked repeatedly to provide costs and benefits for the Ohio efficiency standards. They still have not done so.

    I work extensively with these programs, and I am familiar with the filings, so I can take the time to add up the reports for the last six years, and say without any subjectivity whatsoever, that the efficiency program costs from 2009 through 2014 were $852 million. That is about 1.01% of the $84 billion Ohio spent on electricity over the period, in case anyone is leaning toward the industrial whining about costs.

    In addition to the costs, there is about $400 million in lost distribution revenues and incentives over the period. The PUCO has not reported any of this in summary form. They have told key lawmakers in private conversations that the total amount of efficiency program cost was a little over $1 billion, but this didn’t happen on the record of any of the committees holding hearings.

    This information is irrelevant without the benefits. Efficiency benefits are so large that most accounts fail to capture them. Here’s a quick explanation: Each installed device, industrial process and programatic action which causes measurable electricity savings is defined in a massive document the PUCO has approved, called the Technical Reference Manual (TRM). The TRM defines not only the expected average life of the devices, but also projects free ridership, premature failures, and other reasons to discount the savings, based on decades’ worth of evaluation, including extensive physical measurements in other states which have had efficiency programs for much longer than Ohio has.

    The utilities report each year on the expected first year savings. All of them calculate the full lifetime of each installed measure, but only two of them report it, and those two do so in very different ways making side-by-side comparison difficult. The PUCO is required to do this summary presentation by law, but has not done so.

    So based on the information available, it is possible to make a conservative estimate that the $852 million investment plus the $400 million or so in shared savings has – as of the end of 2014 – produced $2 billion in retail rate savings, plus another $2.5 billion to be realized in the next decade or so.

    But this isn’t the full story. When Ohio utilities report, they also report on the “capacity” benefits of the efficiency measures they have installed. There are problems with this reporting – due to the fact that the PUCO has not required any sort of uniform reporting protocol. So if we discount the very large number reported by the FirstEnergy Company, and allocate them a much more reasonable value reported by AEP, which is the same size as FE and has very similar programs and other attributes, total capacity savings as of the end of 2014 are between 1500 and 1700 MW’s. That’s equivalent to a power plant that size, only better because there is no line loss, therefore no need for reserve margin, and the capacity savings act like a power plant which is available 100% of the time, which no actual power plant can achieve.

    If the avoided plants were combined cycle natural gas plants, this savings would be worth about $1.5 billion in plant, plus another $1.5 billion in avoided transmission and distribution equipment. It is prudent to avoid getting too hung up on the precise number of this capacity benefit. If we recognize that it is very large, and explicitly larger than the program costs, then we know all we need to know, which is that the justification for the “freeze” and all sorts of other junk in the 2014 change to the standards, is just that – junk.

    This is because those capacity savings are real cost savings to all customers, regardless of whether they participate in efficiency programs or not.

    The industrial companies who sponsored the legislation may or may not understand this. Their primary motivation is revealed if we understand that five of the companies represented by the lead proponent witnesses in all three committee hearings get over $200 million per year in direct subsidies from other electric customers, which is far greater than the combined efficiency and renewables costs.

    As for renewables, the PUCO accidentally revealed the cost of Ohio’s 2011 and 2012 standards in reports which appear explicitly designed to hide the total cost. But it is fairly simple for anyone with a calculator and an interest in the matter to determine that 2011 renewables cost Ohio $44.7 million, when the standard was 1% of Ohio’s generation, and 2012 cost $52.4 million when the standard was 1.5%. This is clear evidence of a powerful decline in renewables costs in just one year. Although the PUCO stopped making these reports after 2012, public renewable credit costs show that 2015’s standard of 2.5% is likely to cost half as much as 2011’s standard of 1%. This is after the termination of the Federal wind tax credit.

    Most of this is in my testimony to the two committees and summary comments provided in writing to the EMSC. But there is far too much chaos, and Republican lawmakers who try to grandstand have given the special interests a free hand. The most important single fact to observe is that given the 2014 “freeze” law’s permission to terminate efficiency programs, only one of the four Ohio distribution utilities actually reduced their programs, and that fourth one didn’t kill its programs.

    The most important issue here is that repeal of the bad 2014 law will allow Ohio to overcomply with the U.S. EPA Clean Power Plan while saving about $20 billion over the next fifteen years. Trying to meet the same pollution reduction with natural gas would increase costs $10 billion, assuming Ohio can tolerate a 65% increase in total natural gas consumption without raising the price of gas a whole lot.

    The statistical evidence for the assertions made here is available on request to Ned.Ford@fuse.net

  3. This is a followup comment to my long post:

    I failed to include the fact that the utilities are required to do evaluation of program performance after the fact, and that their recovery is trued-up based on that evaluation, which is approved by the PUCO. These post-implementation evaluations are included in the annual reports of the utilities and are available for public inspection by anyone who cares to take the time. These reports are not light reading.

    The PUCO has done an exemplary job overall in administering the efficiency and renewables programs. The only failure is one which seems clearly to flow from the Republican Administration. Under Governor Kasich, four state agencies involved in this energy work, the PUCO, the Ohio EPA, the Ohio Consumers’ Counsel, the Development Services Agency have obscured data, misrepresented facts, and aggressively worked to defeat the public interest. The Ohio Consumers’ Counsel deserves mention because they claim to support efficiency, but they openly oppose adequate payment to the utilities.

    The Ohio Development Services Agency paid $400,000 for a study of jobs created by the efficiency and renewables standards. The study is now available, and showed 31,000 Ohio clean energy jobs at the end of 2012, but the ODSA didn’t release the study for over two years.

    The Ohio EPA and the Kasich Administration are openly preparing to challenge the U.S. EPA Clean Power Plan, using a false premise that the only response available to them is 100% natural gas. They do agree with me that it would be extremely expensive. For what that’s worth.

    The real take-away is that this is purely partisan. Passage of the “freeze” bill was almost precisely along party lines. Passage of the original standard was nearly unanimous, although many people forget that the original standard was three pages in a 120 page bill that fixed a 1999 deregulation law which was promoted by the same industrial attorneys who sponsored the “freeze” bill. That 1999 law put 15% of Ohio’s industrial energy users out of business in the first two years after it was passed. So it is with quite a bit of understatement that I say “some people never learn”.

    Sorry for the length. This is complicated. It is important. And not enough of us are familiar with the facts.

  4. A link to all testimony from invited witnesses is included in the article in the second paragraph after the subheading, “By invitation only.”
    Messrs. Ott and Bowring focused their testimony on issues relating to the operation of the electricity markets, and they are discussed in our April 14, 2015 article at http://midwestenergynews.com/2015/04/14/advocates-hope-ohio-energy-committee-will-broaden-focus/ .
    We discussed and gave context to the testimony of Messrs. Yonk and Lawson in our July 17, 2015 article at http://midwestenergynews.com/2015/07/17/final-meeting-on-ohio-energy-standards-will-focus-on-jobs/ .