Ohio's longstanding energy policy debate came to a (temporary) conclusion on July 23, 2019, when Governor Mike DeWine (R) signed House Bill (HB) 6 into law. The bill will have significant consequences for existing electricity resources in the region, as well as Ohio's renewable portfolio standard and energy efficiency programs. Of course, that's only if HB 6 survives a referendum vote. With the initial paperwork approved as of August 29, 2019, the opponents now have until October 21 to gather enough signatures to get the referendum on the November 2020 ballot for an up-or-down vote.1
If HB 6 does go into effect in October 2019, its two main impacts will be: (1) establishing ratepayer-funded subsidies for specified nuclear, coal, and solar resources; and (2) reducing/eliminating Ohio's statutory renewable and energy efficiency requirements.
Nuclear and Renewable Generation Funds
Newly enacted Ohio Revised Code (R.C.) sections 3706.40-3706.65 will require Ohio's four electric distribution utilities to collect a total of $150 million per year to support "qualifying nuclear resources" and $20 million per year to support "qualifying renewable resources," with the funds to be paid out from 2021 through 2028 based on a "credit" of $9 per megawatt-hour. While the Public Utilities Commission of Ohio (PUCO) will approve the rate design for each utility – subject to statutory rate caps – the Ohio Air Quality Development Authority will take on a new role in approving applications from potential qualifying resources, issuing credits, and reducing or ceasing payments under certain conditions.
Ohio Valley Electric Corporation Cost Recovery
Pre-HB 6, the PUCO had authorized three Ohio utilities with stakes in the Ohio Valley Electric Corporation (OVEC), which operates two coal plants in Indiana and Ohio, to recover the net costs of those plants from ratepayers. HB 6 replaces that existing cost recovery as of January 1, 2020, requiring the PUCO to create riders to recover OVEC's net costs from customers of all four Ohio distribution utilities through 2030, subject to statutory rate caps.
Renewable and Energy Efficiency Standards
While adding financial subsidies for specific nuclear, solar, and coal resources, HB 6 cuts back on Ohio's renewable and energy efficiency standards. The law reduces the 2026 renewable energy benchmark under R.C. 4928.64 from 12.5% to 8.5%, while eliminating the "solar carve-out" as of 2020 and lowering the compliance baseline. HB 6 also eliminates any renewable requirement after 2026, leaving the Ohio renewable energy credit market in limbo beyond 2027.
HB 6 likewise cuts back significantly on Ohio's energy efficiency standard (R.C. 4928.66). The law eliminates the annual energy savings target after 2020, substituting a cumulative 17.5% benchmark based on 2009-2020 program savings across all four Ohio distribution utilities. Given historic savings levels, the utilities are likely to achieve that 17.5% benchmark without the need for significant, if any, efficiency programs beyond 2020. Going forward, utility energy efficiency programs would be voluntary, subject to the approval of the PUCO, although alternative statutory provisions may provide impetus for at least some continuing programs (subject to a significantly expanded opt-out for commercial and industrial customers).
Of course, another pending bill – House Bill 2472 – may alter this new landscape even more. But that's a blog post for another day....
1 The Ohio Attorney General's office certified the referendum summary for the ballot on August 29, 2019 and the Ohio Secretary of State certified the initial 1,000 signatures required as of August 30, 2019. The HB 6 opponents now have until October 21, 2019 to submit 265,774 signatures of registered Ohio voters (from at least 44 of the 88 Ohio counties, with at least 3 percent of total voters from each of those counties) to place the referendum on the November 2020 ballot. If the referendum signatures pass that threshold, HB 6 is stayed until an up-or-down vote on Election Day 2020.
2 HB 247, 133rd General Assembly, https://www.legislature.ohio.gov/legislation/legislation-documents?id=GA133-HB-247.
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