File photo of electricity pylons. (Getty Images).
Ohio’s Senate energy committee took testimony Tuesday from supporters of an energy measure encouraging new investment in the state’s electricity market.
Ohio Senate Bill 2 is a response to a string of energy-hungry development projects around the state. The Ohio House has a similar measure in HB 15.
In addition to production plants from Intel and Honda, Ohio has seen a proliferation of data centers as artificial intelligence tools gain popularity. To that end, both measures take steps to remove regulatory barriers so new power plants can get shovels in the ground. They also make bright-line distinctions between power generation and power distribution to keep big players from crowding out new entrants.
But while SB 2 and HB 15 have the same challenges in mind, they aren’t identical proposals. The Senate proposal carries several additional requirements including time limits to speed the approval of new facilities or the setting of rates.
“Pinch me”
Ohio Consumers’ Counsel Maureen Willis said there were several positives in the Senate version, singling out a provision requiring immediate refund of utility charges that the state supreme court determines are unjust.
“I attached to my testimony this colorful chart,” Willis told committee members, “to show you exactly where the $1.5 billion in charges have occurred and in what cases.”
“This provision is a beautiful provision,” she said. “It is one of those ‘pinch me’ provisions.
Willis praised other pro-consumer changes like protections for consumers on variable rate contracts and the elimination of electric security plans, which allow utilities to tack riders on customer bills to pay for system upgrades.
Later, Tim Ling from Columbus-based thermoplastic manufacturer Plaskolite chimed in to argue that electric security plans are out of control. Speaking on behalf of the Ohio Manufacturers Association, he joked that companies can bill for almost anything.
“A utility would propose a rider called ‘For the Children’ rider, and how could PUCO not approve a rider for the children?” he said. “And once the millions of dollars are collected under this ‘For the Children’ rider, there’s nothing to go to any children at all.”
“They have truly outlived their stated purpose,” he went on, “and are now simply a costly mechanism to add above-market charges to customers’ electric bills.”
Consumers Counsel Willis raised several concerns about SB 2 even while she did like the previously mentioned aspects of the bill. She worried about an “untested” consumer choice billing program and the “shot clock” the measure places on regulatory procedures.
“Allowing the utilities’ proposed rates to go into effect on the 275th day, without recourse, will harm consumers,” she argued.
But to her, the problem wasn’t the deadline — keep that, she said — but don’t make the new rate permanent. Under current law, utilities can impose their new rate, but customers would get refunded for the difference if regulators determine it should be lower.
Ohio Business Roundtable Vice President of Government Relations Alexandra Denney defended the rate-setting deadline.
“On average in Ohio it takes 17 months for these rate proceedings,” she said. “The next closest states are New York and California that take 15 months, and many of our neighboring states are down closer to 12.”
Denney argued that by the time rates take effect the facts on the ground may have changed: “A more current and accurate assessment of that investment will save consumers money in the long run, we believe.”
She explained her organization put together a study of the state’s energy competitiveness with input from more than 30 of its members, and one the biggest takeaways was that it takes too long to get up and running.
“Our work group was unanimous that there’s a lot we could do within the energy space to encourage more generation, but none of that will be impactful if we don’t reform our siting and permitting process,” she said.
Their report proposed siting questions should be settled within 90 days, but the organization is fine with the Senate bill’s 120-day timeframe.
OVEC and taxes
The one thing everyone agreed on? It’s time to end the subsidies propping up aging Ohio Valley Electric Corporation coal plants that were approved as part of 2019’s Ohio House Bill 6.
That legislation was at the center of a $1.3 billion utility bailout and $61 million political bribery scandal that sent the former Ohio House Speaker to prison for 20 years. While nuclear subsidies for FirstEnergy as part of the bill have been repealed, other aspects of the law remain on the books, including the gutting of Ohio’s renewable energy portfolio and the coal plant subsidies.
The Ohio Senate proposal would repeal the subsidies, but not immediately. Instead, it grandfathers in the charges if they’re part of an existing electric security plan. The net effect is that some consumers could be paying those riders into 2028.
Citizens Utility Board Ohio Advocacy Group Executive Director Tom Bullock argued the subsidies should end sooner.
“This action would save $445,000 every day for consumers that have been paying these subsidy costs to these 70-year-old plants since 2009, one of which, of course, is in Indiana.”
School district interests — particularly from Perry and Ottawa Counties, where Ohio has two nuclear plants — showed up to urge lawmakers to maintain the Senate’s approach to property taxes. The House version would exempt tangible personal property taxes for all electric generation while the Senate would only exempt new facilities.
Because tangible property can be depreciated over time, counties like Perry and Ottawa have had to tighten their belts as their nuclear plants have aged.
Cajon Keeton from Ottawa County’s Benton-Carroll-Salem school district explained that in 2016, their plant was valued at $184 million. Today it’s about $14 million.
“What that has meant for us as a school district is, the tax in 2016 was $6.3 million in annual revenue,” Keeton said. “Today that’s just over a half a million dollars.”
Advocates with Americans for Prosperity and the Buckeye Institute praised another tax provision that would prioritize brownfields and former coal sites. AFP Ohio Legislative Director Hannah Kubbins noted “these project investment areas would be exempt from (tangible personal property tax) on new generation as well as no tax on new transmission or pipeline infrastructure for five years.”
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