In 2008, Ohio leaped ahead in its approach to energy. A bipartisan coalition at the Statehouse called for renewable and advanced energy sources to make up 25 percent of the state’s electricity in 2025. It set the mark of 22 percent savings from energy efficiency by the same date. John Kasich reaffirmed the goals in a big way, as governor conducting an energy summit and adding smartly to the earlier achievement.
A year ago, FirstEnergy and others pursued the idea of suspending, or freezing, the standards. They backed off. Now they have returned to make their case. Their objective isn’t to halt, even temporarily, the requirements. Rather, they want adjustments, and state Sen. Bill Seitz, a Cincinnati Republican, has led the way, recently unveiling legislation that would make significant changes, especially in the efficiency standards, jeopardizing gains the state has made and promises to make.
Worth stressing is that the exercise is worthy. The standards were not perfectly constructed. They deserve examination and improvement where necessary. One concern of power companies and their allies involves the state defining too narrowly what counts as an upgrade in efficiency. For instance, they would like to see the Toledo city schools qualify in view of closing buildings and erecting new, more energy-efficient facilities. Yet the Public Utilities Commission rightly has held that compliance should involve accelerating efficiency. That should not leave room for counting steps that would have been taken, anyway.
The Seitz bill risks making the job too easy, the state likely meeting the 22 percent threshold on paper but not really on the ground.
Consider the prospects for co-generation, or combined heat and power, something the governor correctly has touted. Incentives for its use would diminish greatly under the more generous definition of an advance in efficiency.
Many large industrial users of electricity have argued that they already have invested substantially in making their operations more efficient. They do not want to subsidize competitors seeking to do the same. They have a point. Unfortunately, the Seitz bill goes too far with its fix. Such industrial users already have an avenue for opting out of a utility’s efficiency program. A fitting improvement would involve a firm showing the state what it has done, sharing its plans for further efficiency measures and then moving forward into the next decade.
Seitz and others argue that changes are required because the economic landscape is vastly different, prices lower than projected five years ago, reflecting the fragile economy and the surge in natural gas. All true. At the same time, the pursuit of energy efficiency isn’t just for a sunny day. It belongs as part of a long-term energy strategy, bringing consumers savings, easing greenhouse emissions and inviting innovation that boosts the state economy.
What advocates of the current energy efficiency standards must recognize is that power companies face selling less of what they make — at a lower price. They already are compensated for their efficiency programs, receiving a share of the savings. The truth is, the share must be larger, utilities with a greater incentive to participate, something California discovered to its benefit.
In this area, the Seitz bill also goes too far, which the senator acknowledged last week in saying he would rework the provision. The record shows that American Electric Power has spent roughly $400 million on its efficiency program. Consumers have saved $1.5 billion. Surely, that leaves room for a fair compromise.
What belongs at the forefront isn’t so much where Ohio stands today, or in 2025, but in 2035 and beyond. What can be done to ensure that the state takes advantage of the lower-cost option of energy efficiency? In that way, Bill Seitz has triggered an important discussion. Still, his legislation isn’t the answer, a view shared by the Ohio Manufacturers Association and the Ohio Hospital Association. Better to stick more closely to the commitment the state made five years ago, and John Kasich enhanced as part of pushing Ohio forward.