Ohio utilities’ efficiency programs among the worst in wake of corrupt House Bill 6, report says
By Marty Schladen
Ohio Capital Journal
House Bill 6 wasn’t only a bad law because it involved $61 million in bribes in exchange for a $1.3 billion utility bailout.
Most of the bailout payments have been repealed, but somehow the law — the product of perhaps the biggest corruption scandal in Ohio history — remains on the books. And after it eliminated most efficiency programs, Ohio utilities have gone from above average to among the worst in the country, according to an analysis that was released last week.
The American Council for an Energy Efficient Economy, a Washington, D.C.-based non-profit, publishes an efficiency scorecard of the nation’s 53 largest electric utilities once every three years.
It found that in 2018 — a year before the corrupt bailout was passed — Duke Ohio had the 18th-best score for efficiency programs. AEP Ohio had the 21st-best programs, according to the scorecard. Edison Ohio came in at 34th.
But the scorecard published last week looked at data related to efficiency programs in 2021 — a year after HB 6 took effect. It found that AEP and Duke tied for 49th out of 53.
Edison Ohio is a subsidiary of Akron-based FirstEnergy, which paid more than $60 million to finance the corrupt bailout law that gutted efficiency standards. It finished dead last in the most recent efficiency score.
The 2019 law was ramrodded by former House Speaker Larry Householder, R-Glenford. The vast majority of the money it required from ratepayers went to prop up two failing nuclear plants in Northern Ohio. FirstEnergy wanted to prop them up so it could sell them and avoid liability for cleaning up the sites when they’re shut down.
With global temperatures increasing at an alarming rate, HB 6 makes warming worse in at least two ways.
It forces Ohio ratepayers to spend hundreds of millions propping up two aging coal plants — including one that isn’t even in Ohio. And it gutted energy-efficiency and renewable standards that utilities formerly had to adhere to.
The efficiency standards were built into consumers’ bills to incentivize the use of technologies that save electricity and thus obviate the need for more carbon-spewing generation. For example, they enabled Ohio utilities to offer discounts on fluorescent light bulbs when they were relatively expensive, but much longer-lasting and efficient than incandescent bulbs.
The idea was that with greater demand, manufacturers would scale up production and make them more cheaply. That approach helped to allow the federal government to completely phase out the sale of incandescent bulbs this year.
The way efficiency standards worked, regulators set goals and offered “shared savings” to utilities and consumers once those goals were met. Rob Kelter, a senior attorney with the Environmental Law and Policy Center, conceded in an interview last month that the efficiency incentives weren’t perfect.
“I think there were some legitimate concerns that legislators raised about the value of efficiency and whether the programs were well-run,” he said. “But the programs were always pretty good and they delivered good value to customers.Were we too generous with the incentives for utilities? Yeah. A little bit.”
For example, Kelter said, when they were collecting money from incentives for fluorescent bulbs, utilities were slow to move to the next technology, LED bulbs, because they had a sure thing in fluorescents.
Regardless of the programs’ merits, some Ohio officials have long opposed efficiency standards.
Sam Randazzo — whom Gov. Mike DeWine in 2019 nominated to chair the Public Utilities Commission — had previously worked as a utility lobbyist to repeal efficiency and renewable standards.
In a deferred prosecution agreement with the federal government, FirstEnergy said it bribed Randazzo $4.3 million to do its bidding as he was poised to become the state’s top regulator. The FBI searched his Columbus condominium a few months after the July 2020 arrests of Householder and four others in the HB 6 conspiracy, but Randazzo hasn’t been charged.
During Householder’s federal court trial earlier this year, witnesses testified that even though he was supposed to be regulating utilities, Randazzo helped draft HB 6, the corrupt bailout legislation. Perhaps predictably, it eliminated efficiency and renewable standards and prompted the news organization Vox to call it “the worst energy bill of the 21st century.”
One reason Randazzo and the HB 6 conspirators might have been so eager to eliminate the efficiency and renewable programs was to use the resulting savings as what government insiders call a “pay for.” The bailout that was going to FirstEnergy — and to a much lesser extent AEP and other utilities — was going to show up on ratepayers’ bills. So those pushing the legislation looked for other things to cut to pay for the new charges.
On the witness stand, Householder, who was later sentenced to 20 years in prison, said he “wanted to do away with costly mandates.” He and other HB 6 supporters claimed that eliminating efficiency and renewable standards would save consumers more than $1 billion.
But federal prosecutors smashed those claims, showing that the supporters’ math didn’t take the full cost of HB 6 into account. Householder and the others also failed to mention that through efficiency programs, ratepayers stood to save by using less electricity.
The efficiency scorecard that found such precipitous drops among Ohio utilities in the wake of HB 6 scores them according to numerous metrics. But more than half of the available points are from three straightforward ones: net annual and lifetime electricity savings, and peak demand reduction.
The latter measure is important because when electricity demand reaches a peak, system operators often have to fire up gas-powered generation facilities to meet it. By contrast, when customers use electricity during off-peak times, they’re pulling power that’s already on the grid.
Mike Specian, lead author of the efficiency scorecard, praised the three big Ohio utilities for some of their offerings — including discounts to customers who use power at off-peak times.
However, Specian said in an email, “the cancelation of utilities’ efficiency programs (in HB 6) had an adverse impact on nearly every other aspect of utility performance that we evaluated, including for low-income customers.”
AEP and Duke didn’t respond to questions for this story.
Lauren Siburkis, a FirstEnergy spokeswoman, said in an email that she isn’t “able to comment on the (efficiency) report itself.” But she said her company has numerous efficiency programs that it voluntarily offers customers.
They include $100 rebates for energy-efficient appliances such as refrigerators, freezers and clothes dryers. The company also incentivizes efficiency among commercial and industrial customers through its commercial lighting program, Siburkis said.