Ohio Needs Strong Renewables and Energy Efficiency Policies

Stock SectorJune 1, 20187min19
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Implementing strong energy efficiency programs can ensure a quick path to a cleaner and healthier energy future while saving significant amounts of money for Ohio’s electricity customers. The relationship between energy efficiency and renewable energy policies are closely knit and have been at the forefront of Ohio energy policy debates for more than a decade.

Amid these years of ongoing debate, the Senate Energy and Natural Resources Committee is now considering an amended version of HB114 that improves siting restrictions for wind-powered electric generating facilities but also makes sweeping changes to the state’s energy efficiency laws. Like other recent energy-focused legislation in the Buckeye state, the results are not great. NRDC estimates that the energy efficiency provisions in this bill could cost customers over a billion dollars in savings if passed.

Since 2008, energy efficiency programs have helped Ohio’s electricity customers save hundreds of millions of dollars each year on their electric bills, making steady progress toward a whopping $5 billion savings by 2020. The savings achieved by these programs accrue to all electricity customers but are now at risk. While the substitute bill makes progress on addressing the state’s four-year moratorium on wind development, other proposed changes keep the package in line with the numerous similar efforts over the last several years. Lawmakers in Ohio have repeatedly proposed legislation that would lead to more energy that gets wasted across the electric grid and ultimately higher electricity bills. This recent effort is unfortunately no different.  

Substitute House Bill 114 proposes three primary changes to the current energy efficiency laws that place customers’ savings at risk:

  • The first is a significant reduction in the total amount of savings the utilities have to acquire over the next several years, achieved by both ending the programs early and reducing the annual progress benchmarks. Starting in 2021, Ohio’s utilities would be required to achieve 1.5 percent energy savings annually, down from the current level of 2 percent. This is then combined with ending the standards early in 2026 with no plans for ongoing program activity.
  • Next, the bill expands a provision that allowed the largest industrial customers to exempt themselves from the programs under certain circumstances. According to the new substitute bill, small and medium sized commercial customers would also be able to opt out of the programs, despite the fact that they will still benefit from other customers’ efficiency investments. Beginning in 2020, these customers could begin to remove themselves from the programs, amounting to about half of Ohio’s overall energy load, decimating the savings potential and depriving the rest of Ohioans of the potential energy and dollar savings that would have otherwise been captured. This will inevitably lead to higher electric bills for Ohio’s homes and businesses and lost economic benefits.
  • The third change is a provision that increases the utilities’ ability to earn what is called “shared savings” (an incentive payment originally designed to encourage the utility to drive as much energy and dollar savings as possible each year) which would now turn into an easy profit for the utility companies, estimated to be in excess of $500 million paid by customers.

It is conservatively estimated that the first two of these provisions will cost Ohio’s electricity customers $1.6 billion in lost economic benefit, but could easily be much worse upon implementation, if passed into law. When combined with the relaxed criteria for earning a shared savings incentive payment, customers stand to lose more than $2 billion from the adoption of this bill.

As illustrated in a recent map released by E2, Ohio’s energy efficiency programs have led to significant job creation in every corner of Ohio. Between the increase in economic activity and the clear reductions in monthly bills for Ohio’s electricity customers, our lawmakers should have every reason to support robust energy efficiency program activity. A strong energy policy includes not just directives for investments in wind and solar, but also sound policies to capture the savings that come from eliminating energy waste. Ohio’s lawmakers should embrace the positive changes in the bill that will attract new investments in the wind industry but should eliminate the imprudent reductions to Ohio’s efficiency standards.

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