The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
The Ohio Senate Energy Committee voted on Tuesday to advance a sweeping proposal meant to spur new power plants. The move sets the stage for a potential vote by the full chamber today, Wednesday. Meanwhile, lawmakers in the House appear to be entering the homestretch on their own version of the bill.
Last minute tweaks and last words
Ohio Senate Bill 2 stretches its arms around the nearly every aspect of the energy market — changing how power companies set rates and get approval for new sites, as well as setting rules for ‘behind-the-meter’ power production and providing property tax exemptions for new plants. In addition, the measure eliminates a controversial rider propping up a pair of aging coal plants, a surcharge that was approved as part of 2019’s Ohio House Bill 6.
With its vast scope SB 2 has been closely watched, and worried over — going through five iterations on its way to passage. With each successive hearing, the bill has gotten a makeover, picking up pro-consumer provisions in one hearing and pro-utility changes the next.
Tuesday’s hearing was no different. The bill’s sponsor, state Sen. Bill Reineke, R-Tiffin, introduced several changes including a prohibition on power distribution companies like AEP or FirstEnergy from setting up on-site power plants for individual customers, known as behind-the-meter production. The measure also clarifies earlier changes related to a new three-year rate setting scheme.
Generally speaking, utilities have been hostile to SB 2 because of its behind-the-meter restrictions and elimination of programs allowing them to bill customers for grid improvements. In return, and at utilities’ suggestion, lawmakers allowed companies to set rates on a three-year basis. They also put a “shot clock” on regulators — rate-setting cases, for instance, have to be done within a year.
But AEP Ohio remained dissatisfied.
The company’s Vice President of External Affairs Frank Strigari was still stuck on provisions barring the company from providing behind-the-meter service and ending the coal plant rider subsidy.
The latest version of the bill bars utilities from setting up behind-the-meter facilities unless they’re operational prior to the bill’s effective date.
“This move restricts the customer choice that I spoke to earlier,” Strigari insisted, “and is a setback to the ability of the state to compete nationally for economic development projects.”
He also argued that lawmakers should revert to the original version of the bill for the coal plant rider, allowing AEP to continue collecting through 2028. Strigari said all they want is a “reasonable transition” out, and that cutting off cold turkey would result in the company writing off $52 million.
“I would suggest that such a draconian shift will hinder AEP Ohio’s ability to invest in grid upgrades needed to fuel the growing economy in Ohio,” he said, before suggesting “(it) will ultimately drive up the cost of capital that’s paid for by ratepayers.”
Lawmakers’ response
Strigari’s arguments failed to move lawmakers on the panel. He ad-libbed an appeal to a Donald Trump social media post praising “beautiful, clean coal” to suggest that continuing the coal subsidy would be consistent with the president’s policy objectives.
Committee chairman state Sen. Brian Chavez, R-Marietta, noted, “just to be clear, nothing in this bill prevents using beautiful, clean coal.”
State Sen. Jane Timken, R-Canton, pushed back on Strigari’s argument that distribution utilities should be allowed in the behind the meter marketplace.
“I’ll just use the phrase, that you’re all just going to bigfoot everyone else out of the business. How do you solve that problem?” she asked. “Because I have concerns that this will just be another opportunity for you all to expand your business and push everyone out.”
Meanwhile state Sen. Casey Weinstein, D-Hudson, flipped Strigari’s characterization of the coal subsidies on its head.
“It’s Ohioans who pay half a million a day, half a billion, almost, cumulatively for this,” he said. “So, you’re asking us to continue having Ohioans pay almost $500,000 a day. This isn’t an AEP hit. This would be a hit on Ohioans — just to clarify.”
In the end lawmakers voted unanimously to advance the proposal, and after the hearing, Chavez said he expects it to go before the full Senate for a vote on Wednesday. In the Ohio House, a similar measure is slated for its sixth hearing Wednesday afternoon, with changes of its own in the works.
Despite AEP’s opposition, state Sen. Reineke’s efforts brought together an impressive coalition. Ohio Consumers’ Counsel Maureen Willis gave it the thumbs up as did the Ohio Environmental Council. Big industrial customers are on board as are a string of power companies interested in building new power plants.
“We worked very hard to make something work,” Reineke said after the hearing. “We’ve tried to listen to all the parties involved, and I think we have a really good piece of legislation.”
Taking a step back, he argued that the most important changes are perhaps the most straightforward — sharp distinctions on who’s allowed in the marketplace and property tax breaks.
“The biggest advantage of this bill is that we’ve drawn a clear line,” he said. “So, everybody knows where they’re at, at this point. So that welcomes, that’s kind of an invite, hey, come into our state.”
