Ohio Senate committee prepares to vote on sweeping energy measure

By Nick Evans
Ohio Capital Journal

Ohio senators are gearing up to vote on a major energy bill, but over the course of half a dozen hearings, it’s gone through several iterations. The proposal aims to encourage new power plants to get up and running quickly, as the state’s power demands are poised to outstrip supply in the not-too-distant future.

On the opening day of the current session, Senate President Rob McColley made it clear that increasing energy production — becoming a “net exporter” — was one of his early priorities.

“What we need to do is we need to create policies that will create more investment in energy in the state of Ohio,” he said. “Primarily base load power, primarily natural gas that can be extracted here from inside the state, and that’s going to be a win-win for the state of Ohio.”

But beyond incentivizing new production, Senate Bill 2 includes several other provisions reframing the way energy companies do business in Ohio. The Senate Energy Committee is set to take up yet another iteration of SB 2 on Tuesday morning with plans to put the latest version to a vote.

Where it stands
Last week, Sen. Bill Reineke, R-Tiffin, introduced the fourth version of SB 2. Despite tweaks along the way, many of the measure’s initial elements remain in place.

The measure funnels power companies toward the traditional ratemaking process. Electric security plans, which allow utilities can bill consumers for various grid improvements, would be abolished; some companies have relied on security plans to avoid the more rigorous rate setting procedure.

But lawmakers have also taken steps to make the ratemaking process more attractive. At the utilities request, rates can be forecast up to three years in the future, with annual adjustments based on utilities’ actual costs.

Critics worried that “true up” would be a one-way street with rates climbing higher. Reineke sought to allay those concerns, insisting rates would be “properly moved up and down” based on the company’s financials. He also explained there’s a so-called shot clock for ratemaking.

“The PUCO has a total of one year to complete a rate case,” he said, “with a 45-day period for the application to be approved, 290 days for the rate case process and 30 days to make a decision.”

The bill includes shortened timelines for siting decisions, too, particularly in brownfields.

The poster child for SB 2’s necessity is the data center. These warehouse-sized server farms are driving energy demand, and in some cases, the firms building them would like to build their own power plants to get them up and running.

The measure takes steps to ensure those “behind the meter” power sources can go forward. But lawmakers want to keep energy giants focused on power distribution out of that power generation market.

“With the exception of what they have already grandfather(ed) in,” Reineke explained, “and any projects that are in the process have one year to be completed.”

But perhaps most notable to the average Ohioan, the proposal eliminates the coal plant subsidies passed as part of 2019’s House Bill 6.

According to the Ohio Consumers’ Counsel, those riders have cost ratepayers nearly $450 million already. The agency is currently challenging the legality of the surcharges before the Ohio Supreme Court, and the measure would allow for refunds when the court determines any charge is improper.

But don’t expect SB 2 to return half a billion dollars to Ohio ratepayers. Under its provisions, the clock for refunds starts with the date of a Supreme Court decision — not the date that utilities began collecting.

Final pleas
In last week’s hearing, committee members heard a handful of last-minute concerns. Environmental activist Cathy Cowan Becker objected to sharply reducing the timeline for siting decisions. She noted there’s an Amazon data center that went up just outside her housing development in Hilliard.

“They could go to this guy who owns (the adjacent) field, offer him probably more money than he’s ever seen, buy that field, propose to put a 100-megawatt gas plant there, and that would have a 45-day approval process,” she said. “And the local officials in Hilliard would have no say.”

Tony Long from the Ohio Chamber of Commerce praised the three-year pricing model for rate setting, but dinged the proposal for not doing more to encourage smart grid programs and other tools reduce demand for energy.

Ohio Manufacturers Association lobbyist Kim Bojko argued three-year ratemaking is based on flawed logic. She explained the stated argument for taking a longer view is predictability, but that’s not what ratepayers will get. Bojko said utilities will build in steady increases for outyears and then raise rates again when they start the next round.

“So, they’ll change in year one, two, three, and four,” she said, “thereby resulting in customers rates to not be stable or certain, and they could change even twice a year based on the true up provisions.”

She also criticized the breadth of behind-the-meter facilities the measure would grandfather in.

“It would still allow the regulated utilities to own and operate generation if they made a filing — doesn’t have to be approved — just make a filing before this bill passes,” she said.

Dylan Borchers, speaking on behalf of Ohio Independent Power Producers, echoed complaints about behind-the-meter exceptions. He argued that allowing distributors into generation marks “a dramatic change” to the market Ohio has had in place for 20-plus years.

He said it’s almost impossible to maintain a level playing field when electric companies have so much leverage over their customers.

“A customer needing to connect to the grid may feel compelled to now also agree to utility-owned behind the meter generation,” Borchers said, “if it leads to quicker, more favorable treatment by the utility.”

* * *

••• Publisher's note: A free press is critical to having well-informed voters and citizens. While some news organizations opt for paid websites or costly paywalls, The Highland County Press has maintained a free newspaper and website for the last 25 years for our community. If you would like to contribute to this service, it would be greatly appreciated. Donations may be made to: The Highland County Press, P.O. Box 849, Hillsboro, Ohio 45133. Please include "for website" on the memo line.