The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Last week the Ohio Senate approved a wide-ranging energy measure and House lawmakers aren’t far behind them. Following the Senate vote, House Energy committee chair, Rep. Adam Holmes, R-Nashport, laid out his timeline.
“We want to vote out Wednesday morning,” he told the committee, “Next Wednesday morning, and have it on the (House) floor next Wednesday — that’s our goal.”
Broadly speaking, both proposals do the same thing.
Pole-and-wire utilities, think AEP, FirstEnergry or Duke, are barred from the power generation market, and there are tax incentives ready for the companies who build new power plants in Ohio. The House and Senate both get rid of the programs energy giants have used to avoid opening their books to regulators, but they agreed to allow utilities to set rates on a three-year basis.
Both measures also put an end to subsidies for two Eisenhower-era coal plants operated by the Ohio Valley Electric Corporation. Ohioans have already spent close to half a billion dollars on their monthly energy bills to prop up the aging OVEC plants. The bailout was part of House Bill 6, the 2019 measure at the center of the largest bribery scheme in Ohio’s history.
Still, there are notable differences between House Bill 15 and Senate Bill 2, which lawmakers will have to hash out on the floor or in conference committee. House lawmakers include a community energy pilot that could defray participants’ monthly bills and greater oversight for utilities’ transmission projects.
One factor that could simplify compromise is the vast array of stakeholders lined up behind the proposals. The state’s consumer watch dog and environmental groups are both on board. So are several coalitions representing industrial power users as well as a laundry list of companies who want build new power plants.
Community power
Perhaps the biggest point of separation shows up in a pair of ancillary programs that made their way into the bills. On the Senate side, after dismantling the OVEC subsidies, lawmakers were left scratching their heads over what to do about a much smaller pool of money.
When lawmakers passed House Bill 6, they included a fund for future solar projects as a kind of fig leaf. The fund brought in more than $60 million but paid out very little of that total. Sen. Bill DeMora, D-Columbus, proposed using the remainder to fund loans for schools that want to invest in rooftop solar.
The House bill doesn’t address that solar generation fund, but it does propose a program that could shake up how small communities get power.
Lawmakers envision a community energy pilot program — something like crowd funding a neighborhood solar array rather than every household getting solar on its roof. But the range of viable fuel sources extends beyond solar, including wind, natural gas, biomass, hydroelectric, and fuel cells. Those facilities have to be small (10 megawatts), but the legislation directs regulators approve a lot of them (1,000 megawatts over five years).
“The key element of community energy projects is that we avoid costly transmission infrastructure,” David Murray of TurningPoint Energy explained. The company develops community solar projects around the country with 60 megawatts already up and running and 10 times that in the pipeline.
“We do not need to rely on the regional electricity grid,” he argued. “We, as a developer, we will pay for the cost of interconnecting our projects to the distribution grid, which deliver benefits to all utility customers and enhance grid resiliency as well.”
What that means for the average customer subscribing to a community power program is a rebate on their monthly bill. “Typically, we see bill savings of around 10 to 20% for customers,” Murray explained. And although, he insisted the systems’ costs won’t impact utility customers who don’t subscribe, the Ohio Consumers’ Counsel, Maureen Willis, isn’t so sure.
“While we support renewable energy,” Willis argued, “we continue to advocate for its development in the competitive market without subsidies from utility consumers. Subsidies for the community solar (program) may be unintended but are likely to occur under the bill as written.”
In her testimony against a similar measure last General Assembly, Willis argued utilities would likely engage in cost-shifting — finding ways to make up the revenue lost from program participants by increasing charges elsewhere.
Chair Holmes acknowledged those concerns but downplayed the risks.
“We don’t like subsidies,” he said. “So we don’t want anyone subsidizing. That was a driver behind eliminating the OVEC and the solar subsidies, and so we’re looking at this, and also for members, this is a pilot program, so it’s a five-year program.”
Redefining ‘major’
The House bill also departs from the Senate version by including changes to the which utility projects qualify as “major,” and thus get heightened regulatory scrutiny.
“The added review should provide consumers some protection against ‘gold-plating’ transmission investment and charging utility consumers for that,” Willis argued.
The investments, known as supplemental transmission projects, offer a kind of backdoor for charging customers, she argued. So long as the utility is cleared to proceed with the project, they get to bill their customers for it. Projects get reviewed by the 13-state regional transmission organization PJM, but only on the basis of “do no harm.”
“That’s not a protective standard for Ohio consumers,” Willis insisted. “It doesn’t consider costs, and it doesn’t consider alternatives.”
“In 2023, she added, “the Ohio tab for the supplemental projects was $1.38 billion.”
David Proaño, a lobbyist for the Ohio Energy Leadership Council, dug a bit deeper, with a report from PJM detailing supplemental projects.
“Just look at the AEP column,” he told lawmakers.
In 2012 the company had just five projects, he explained. Eight years on that number had jumped to 132. Proaño put that explosion in projects down to utilities’ guaranteed rate of return — if their investments increase so does their revenue. “This is what’s driving this transmission boom,” he argued. And when utilities don’t have to competitively bid their projects or justify their cost effectiveness and necessity, it’s easy to inflate project costs.
“(PJM) trust(s) these transmission companies to build it, because we’ll trust that you’re doing whatever you need to do to keep things reliable,” Proaño said.
And the number of AEP’s supplemental projects didn’t stop growing in 2020 — since then the it’s almost tripled.
“In 2024 they had 354 — 354,” Proaño said, “can you imagine?”
Chair Holmes took a moment after Proaño was done to insist, “we’re not accusing anybody of anything, but clearly, we don’t know. And those numbers don’t have to be challenged right now, so we got to fix that.”
To provide greater oversight, HB 15 lowers the threshold for review on transmission lines based on their capacity and length. The changes mean 69kV power poles — one step up from what you might expect for neighborhood distribution — and replacement of any lines longer than a mile will now get state level review.
