Ohio Senate unanimously approves energy and utility overhaul
The Ohio Senate unanimously approved a measure Wednesday overhauling much of the state’s energy sector. The chief goal of the proposal is to encourage investment in new, primarily gas-fired, power plants as the state’s energy demands skyrocket. But as part of the bill, lawmakers made broad changes to the way to utilities bill customers.
Utility regulators would be subject to a “shot clock” meant to speed rate cases through the process and utilities themselves won’t be able to rely on the energy bill surcharges that have helped bolster their balance sheets.
But perhaps most notable, the bill eliminates the legacy generation rider — a surcharge devised to prop up two aging coal plants that are part of the Ohio Valley Electric Corporation. That controversial rider was part of 2019’s Ohio House Bill 6 which was at the heart of a massive bribery scheme that landed former House Speaker Larry Householder in federal prison with a 20-year sentence.
So far, the legacy generation rider has cost ratepayers about half a billion dollars.
The high points
Senate Bill 2 draws a bright line between the companies building new power generation facilities and the ones more familiar names that show up on your monthly bill. Those energy giants control power distribution, and since 1999, they’ve largely been cut out of the generation business.
“We’re making it clear that generation is separate from transmission,” the bill’s sponsor state Sen. Bill Reineke, R-Tiffin, told lawmakers Wednesday.
In addition to keeping energy giants out of the marketplace, Reineke’s bill offers tax incentives for newcomers.
“There will be no (tangible personal property) tax on new generation projects,” he explained, “and a reduction from 88% to 25% on new transmission, distribution, and pipeline infrastructure.”
In addition, Reineke bragged about cutting the turnaround time on regulatory decisions.
“We are changing that from 540 days on average to 365 days, and some siting cases will drop to 120,” Reineke said. “It is not acceptable to be behind California and New York, so we will improve our turnaround time.”
With a wave of new power-hungry customers so-called behind the meter service has gained traction. Some distribution companies want to dip a toe in the marketplace, building bespoke power plants for data centers around Ohio. But under the bill, existing facilities would be ok, but after it’s effective date, distribution companies would not be able to participate.
Quibbles from supporters
With unanimous approval, Reineke’s efforts got a lot of praise, but even some supporters offered a grain of salt.
State Sen. Bill DeMora, D-Columbus, joked that a program helping schools get loans for rooftop solar, might be “the only bright idea I’ve had in a while,” and thanked Reineke for including it in the bill. But he added, “This isn’t a perfect bill,” noting it could have done more to improve energy efficiency.
“I know the utilities didn’t get everything, I know that the consumers’ counsel didn’t get everything, I know that the users didn’t get everything,” he continued, “which, what I was told growing up, is if everybody didn’t get everything they want, then it’s a good bill.”
State Sen. Louis Blessing, R-Colerain Twp., said the assumptions driving the bill might be flawed.
“So, for starters, this does move us more towards a deregulated state, away from a regulated state, and I think that is a problem,” he argued, “because I think the regulated state is a better model for cheaper, more plentiful, and reliable energy in this state.”
“If deregulation was so wonderful,” he asked, “Why are we talking about all of this need for energy right now, when we’ve been a deregulated state now for over 25 years?”
Blessing said companies building new power plants aren’t incentivized to maximize output because all that supply would just reduce the value of their product. He added that customers in deregulated markets often pay more for energy than those in regulated markets — on average, $40 a month more.
“I will vote yes,” he said, “but I wouldn’t expect this to be the panacea that we think it is.”
Leaders’ reactions
Following session, Senate President Rob McColley called the measure a “big piece of puzzle” when it comes to utility reform.
“This bill, really is something that I think is going to pay dividends for decades to come,” he said. “This is a shift in energy policy that is saying that not only are we open to large energy users coming here and generating their own energy and bringing the economic development and jobs that comes with that, but also that we are open for energy users, such as the natural gas industry, to come here and set up shop easier.”
Across the aisle, Sen. Kent Smith, D-Euclid, was thrilled to see lawmakers taking steps to repeal HB 6’s OVEC coal plant subsidies. He’s been working on utility issues for 11 years, and said SB 2 might be “a strange example of the benefit of term limits.” With a bit of back of the envelope math, he landed on 49 members of the current General Assembly were in office when HB 6 passed.
“So, you have 83 new members,” he explained — Energy Committee chairman Sen. Brian Chavez, R-Marietta, among them.
“As less of the General Assembly had to defend their House Bill 6 vote,” he argued, “some sensibility kind of began to get baked into the process, and I think that’s why we got majority party support.”
During testimony on the floor, Smith held up letters from 18 constituents begging for utility reform two years ago. He’s eager to write them a follow up but acknowledged Senate passage is just one step and he’s nervous about how the bill might change after the House has its say.
Once it’s signed by the governor, Smith said, “You know, great — that is a great day.”
“Until that happens,” he added, “we haven’t fixed anything yet.”
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