For nearly five years, Ohio electricity business customers have been footing the bill for utility programs to entice customers to use less electricity. The programs are required under Senate Bill 221, the state’s 2008 energy law that mandated annual reductions in electricity consumption, culminating in a 22 percent overall reduction by 2025.
This public policy experiment sounds like a great concept — and looks good on paper — but the implementation is quietly costing Ohio consumers and businesses hundreds of millions of dollars every year. The program costs incurred by utilities to achieve compliance are paid entirely by customers through a surcharge on their monthly electricity bills. Our electric utility recently put the statewide price tag at well over a half-billion dollars and climbing. This will only get worse, as the annual reduction targets ramp up and become more difficult for utilities to achieve in the years to come.
In light of this reality, I was encouraged to see a recent Beacon Journal editorial (“Standards for efficiency,” May 1) willing to consider a review of the current energy efficiency law now under way in the Statehouse.
Bill Seitz, a Republican state senator from Cincinnati, is introducing legislation aimed at modifying the current standards. Seitz has rightly raised concerns about companies like mine that continue to pay steep monthly charges for these programs despite having already invested in energy efficiency measures.
Landmark Plastic has received awards and recognition for energy efficiency programs and environmental stewardship. We were able to pursue these projects because it made economic sense to do so. But like many other Ohio manufacturers who invested in these projects, we continue to pay very large sums of money toward energy efficiency surcharges every month.
Matt Brakey, the president of Brakey Energy, works closely with our company and other large energy users. Brakey recently blogged that it is not uncommon for him to encounter a prospective client paying more than $20,000 a month in energy efficiency surcharges. If customers have already invested in energy efficiency — or take appropriate steps to implement measures — they should be exempted from paying monthly surcharges going forward. After all, these charges amount to dollars that can be better spent toward goods and services that we need to run our business successfully.
Energy efficiency is a valuable tool for an individual customer to reduce consumption. But outside of those customers who enact measures to cut their energy use, it remains to be seen whether mandated energy efficiency programs put any downward pressure on overall energy prices, which are established through a multistate deregulated, competitive market.
Supporters of the mandates insist that basic economics says that if there is less demand for electricity, then these market prices will be lower. Even if we were to accept this proposition, Ohio alone bears the burden of the cost of these mandates, while the benefits of reduced energy costs are diffused among the entire multistate competitive market.
As we have in the past, Landmark Plastic will continue to complete energy and peak demand-reduction projects that make sense regardless of whether the mandates remain in place. Government mandated energy programs add a costly redundancy that Ohio businesses cannot afford.
A lot has changed since 2008: the economic decline of the Great Recession, a natural gas boom that has reduced the cost of producing electricity and a decline in previously forecasted utility demand. As the Senate considers modifications to the current standards, it should remain open to a more current view of the facts and circumstances today and allow the market to drive investments in energy efficiency. Energy customers, particularly large users, will invest in energy efficiency projects if it makes good business sense.
Merzweiler is operations director at Landmark Plastic Corporation, an Akron-based manufacturer of thermo-formed and injection-molded horticultural products.