Ohio Alternative Energy Portfolio and Energy Efficiency Resource Standard Attack in 2014:
Utility and fossil fuel-funded front groups peddled disinformation to attempt a freeze on Ohio’s Alternative Energy Portfolio Standard (AEPS) and Energy Efficiency Resource Standard (EERS) in 2014. Front groups’ flawed arguments against the AEPS and EERS are not credible evidence to freeze the pro-clean technology laws. As unbiased research reveals, the true impact of Ohio’s clean energy and energy efficiency standards were positive.
The fossil fuel-funded Heartland Institute has been using flawed analysis to inflate the cost of renewable energy standards in states around the country. Heartland Institute’s James Taylor claims that because electricity prices in Ohio have risen slightly faster than the national average since 2008, the state’s clean energy standard is the culprit causing a spike in electricity prices. But Taylor ignores several additional factors that impact electricity prices.
In reality, Ohio uses less natural gas than the national average, which likely impacted the faster rise in electricity prices over the past few years. Since 2009, the low price of natural gas due to the fracking boom in the United States led to a decreased rise in electricity rates around in country—especially in states that use natural gas for electricity generation. The average residential price for natural gas dropped from $12.14 per thousand cubic feet in 2009 to $10.33 per thousand cubic feet in 2013, a decrease of 14.9%. The average price of natural gas for industrial and commercial use also dropped significantly.
In 2010, Ohio used natural gas for only 5% of electricity generated and coal for 82.1%. Nationwide, the electric power industry used natural gas for 23.9% of electricity generated, which explains, in part, why Ohio saw a more dramatic increase in electricity rates than the rest of the country. The low price for natural gas contributed to cheaper electricity prices and states utilizing natural gas for electricity generation saw less of an increase in electricity prices, at least in part because of abundant natural gas.
Furthermore, from 2009–2011, the average cost of coal in dollars per short ton (see Prices back to 1949) increased 7.5% in the United States, much faster than the 3.2% average electricity price increase cited by Taylor. Given that Ohio uses mostly coal for electricity generation, the increased rate in electricity prices is in part due to the cost of coal.
Utilities’ For-Hire Economist Distorts the Facts
Utility industry consultant Jonathan Lesser claimed in testimony in front of the Ohio Senate Public Utilities Commission in February that the cost of energy efficiency and renewable energy standards would always be more than the savings. The data don’t support Dr. Lesser’s claims.
Dr. Lesser failed to include important pieces in his testimony. His anti-clean energy and anti-energy efficiency stance may be a result of his close business relationships with interests whose business model directly competes with clean energy and energy efficiency: past clients include major utility and fossil fuel interests like Exelon; Occidental; Duke Energy; and FirstEnergy, which is an outspoken opponent of energy efficiency measures in Ohio.
The Ohio Manufacturers Association (OMA) rebutted Dr. Lesser’s testimony, saying that Dr. Lesser:
- significantly underestimates the price suppression benefits of energy efficiency (i.e., factors that drive down the cost of power), arguing incorrectly that customers will save no more than 37 cents on their monthly electric bills.
- completely ignores the direct benefits of reduced energy consumption and avoided energy purchases (i.e., savings resulting from using less electricity).
- argues that the energy efficiency program costs will continue to rise over time – completely ignoring the many downward pressures on program costs.
OMA concludes that Ohio’s anti-energy efficiency and clean energy standard bill is “a huge giveaway to electric utility companies.”
Reports show benefits of programs to ratepayers
According to a study by the American Council for an Energy-Efficient Economy (ACEEE), the Energy Efficiency Resource Standard (EERS) helps utilities reduce customer demand, thereby lowering wholesale energy prices and saving ratepayers money. The study shows that implementing the standard would save consumers in Ohio nearly $5.6 billion in avoided energy costs, far exceeding the cost for utilities ($2.8 billion) to implement the program.
The Ohio Public Utilities Commission (PUC) studied the impact of the Alternative Energy Portfolio Standard in an effort to quantify how adding renewable energy to the grid would affect electricity markets in the state. The PUC concluded that renewable resources like wind and solar helped to produce “lower wholesale market clearing prices” as a result of the free fuel costs for clean energy generation.
The PUC studied two scenarios: first, looking at renewable energy projects that are already in operation and second, looking at proposed projects that have already received a green light from the Ohio Power Siting Board, which regulates new energy and transmission infrastructure. The Ohio PUC study found that in the first scenario, renewable energy capacity reduced prices by between .12% and .16%. In the second scenario, renewable energy additions reduced prices by between .47% and .52%. In total, the Ohio PUC study estimated that the overall savings for 2014 would be approximately $8 million in scenario one and $28 million in scenario two. The study concludes, “Ohioans are already benefiting from renewable resource additions through downward pressure on wholesale market prices and reduced emissions.”
As Midwest Energy News reported: “The wholesale cost of power accounts for, very roughly, about two-thirds of a customer’s bill,” said [Tim] Benedict, the report’s author and an economist for the Public Utilities Commission of Ohio. “The remainder of the bill, which likely would not be affected by the addition of renewables, reflects administration, capital investment and other costs.”
Utility and fossil fuel interests, with help from the American Legislative Exchange Council (ALEC), spread anti-clean energy disinformation in an attempt to eliminate cleantech policies. However, both a third party study and a study by the PUC contradict the disinformation being pushed by the Heartland Institute and Lesser.
These special interests want to stop cleantech policies in an effort to sell as much dirty energy as possible—no matter what the cost to ratepayers. As of report publication, a bill seeking to freeze the AEPS and EERS is still pending before the Ohio legislature.
Ohio Renewable Energy Standard Fight in 2013:
Senator Bill Seitz (ALEC Board member, Civil Justice Task Force co-chair) sponsored an attack on Ohio’s clean energy and energy efficiency law in 2013.
An early version of SB 58 would have weakened the state’s renewable energy standard (RES) by incorporating Canadian hydropower and eliminating a requirement for 50% of RES sources to come from within Ohio’s borders. The language in SB 58 was the first iteration of the American Legislative Exchange Council’s (ALEC) second round of anti-RES bills, the Renewable Energy Credit Act & the Market Power Renewables Act
ALEC’s second round of model bills are a “stealth attack” on RES. The bill (and SB 58) is framed to appear as pro-clean-energy, but in reality, would allow electricity sources like hydropower and landfill gas to be included in the standard.
Senator Seitz’s bill would have been a windfall for ALEC’s corporate members in the utility industry. In particular, SB 58 would have significantly benefit two out-of-state ALEC utility members by allowing hydroelectric power plants and cogeneration plants to count toward the clean energy standard. Those members, TransCanada and Ameren, operate facilities that could have qualified for the RES if Seitz’s bill became law. TransCanada has numerous cogeneration and hydroelectric plants, and Ameren owns three hydroelectric facilities in Missouri. Both TransCanada and Ameren sponsored ALEC’s 40th Annual Meeting, and while precise sponsorship rates are not known, sponsorship cost likely thousands of dollars, and as much as $100k.
Seitz’s proposed changes to the state’s energy efficiency standards would have generated profits for ALEC’s Ohio utility interests, including Duke Energy and American Electric Power (AEP), at the expense of consumers. These two ALEC utility interests would have benefited from the guaranteed 33% profit on all energy efficiency programs and the expanded definition of qualifying energy efficiency projects. As reported by Midwest Energy News, “Ohio consumers already pay for energy efficiency programs through a rider on their monthly electric bills. Under current law, programs must save customers more than they cost, and customers benefit from all savings until the law’s targets are met. Small incentives let utilities share in additional savings beyond those targets.” But Sen. Seitz’s bill would have given utilities a handout in the form of 33% guaranteed profits on all energy efficiency programs – money that comes straight from consumers. In addition, utilities would have been allowed to keep these profits (one-third of after-tax benefits) until the targets are met but eliminate any incentive to do more than the law requires. Scott Gerfen of Ohio’s Consumers’ Counsel said, “The bill turns energy efficiency, which is supposed to be about saving money for consumers, into a profit center for AEP, DP&L, Duke Energy, and FirstEnergy. And, the bill takes away from customers some of the key benefits they’re now receiving from energy efficiency.”
ALEC Senator Kris Jordan (a member of ALEC’s Energy, Environment, and Agriculture Task Force) introduced another bill in 2013, SB 34, which would have completely repealed the RES, but the bill did not move in the legislature.
The Beacon Hill Institute (BHI) and American Tradition Institute co-authored a flawed report calling for RES repeal. Heartland Institute’s James Taylor and Institute for Energy Research’s Daniel Simmons both flew into Ohio to testify in favor of repealing the RES in March 2013 and George Taylor, a Senior Fellow at E&E Legal, also provided testimony to the Ohio State Senate regarding the anti-clean energy bill SB58. Simmons recycled the debunked “Spanish jobs study” for his testimony to support his arguments against the RES.