Governor Kasich, Amend Ohio SB 310

TO: GOVERNOR JOHN KASICH

FROM: JOSEPH ST. JAMES

SUBJECT: AMEND OHIO SB 310

INTRODUCTION

The passing of Senate Bill 310 in Ohio, signed into law June 13, 2014, ‘freezes’ SB221 for two years. SB221 includes state rules requiring electric utilities to sell more power generated by renewable energies “to help customers use less electricity.”[i] Although SB310 was passed to reform and research the state’s “costly energy efficiency and renewable energy mandates”[ii] on the Ohio economy, SB310 is not a moderate compromise or a minor “pause.” It is something that if left unchanged will make Ohio’s EERS “policy in requiring utility energy efficiency programs void.”[iii]

BACKGROUND

The passing of SB310 created a long series of arguments between its supporters and opponents. Those who support it, such as the Industrial Energy Users of Ohio, believe that the reform “will keep Ohio economically competitive.”[iv]Opponents, such as environmentalists, a majority of the general public, and renewable energy companies, believe that SB310 is halting a successful EERS policy that created more than “$1 billion in electricity savings, a reduction of 50,000 tons of air pollution, and thousands of green-collar jobs as well as new investment in clean energy.”[v] Not only that, it exceeds its energy savings targets “every year by an average of more than 50%.”[vi] They believe that SB310 lowers the standards set for large industries to achieve energy efficiency goals and for measuring energy reduction. Even if repealing SB310 is not possible, it is possible to amend it so that once the freeze is over policy changes in SB310 cannot change the characteristics of SB221 that have made it successful.

PROBLEM

There are several aspects of SB 310 that don’t allow for SB221 to be quite as effective in its energy efficiency goals when it starts again:

– It facilitates “large customer ‘opt out’ with minimal accountability.”[vii]

– It weakens the role of the evaluation, measurement, and verification of data, creating “inaccurate and blown up savings estimates.”[viii]

– It allows a full “’carryover’ of excess savings to years in the future,” [ix] which reduces the actual required savings in future energy reduction goals.

– It expands the definition of what “contributes to the energy reduction goals.”[x]

 
POLICY RECOMMENDATION

The Ohio State Senate should amend the bill so that not only will they be conducting research on the effects of SB221 during the freeze, but also so that research is continuously done every year. To appeal to steel and other manufacturing companies, mandates could be softened and negotiated so that they must reach the same energy reduction goals at a later time. This continues similar efficiency goals while appealing to manufacturers.

In order to make sure that the ideals of SB221 that are productive aren’t compromised, it is important to consider other factors. It is essential that the Public Utility Commission not be required to count any such factors that go towards energy reduction goals such as “what actions customers take on their own that comply with the federal energy efficiency standard.”[xi] This reduces incentives for large industries to do their own part in saving energy. We must discontinue carrying over excess savings to future years, as it does not incentivize future industries to continue over-achieving savings goals in the future. Finally, we must make customer ‘opt outs’ more difficult so “that we can have lower rates for consumers and increase savings”[xii] by having more organizations on board.

POLICY ANALYSIS

Strengths

The implementation finds a compromise for economic growth while fostering environmental sustainability. It calls for an amendment instead of a repeal of SB310 so that it is more likely to pass.

Weaknesses

Economic advisors may still find that such policies create economically unstable results. Thorough discussion about these effects would be necessary.

Opportunities

Such an amendment would be popular due to considerable opposition to SB310 from groups of “business, environmental, consumer advocates, faith groups, local government, and general public interest.”[xiii] Supporters of the amendment would gain greater public support.

Threats

Those on either extreme will find fault with compromising values. Environmentalists will still wonder why Ohio is still the first state to “renege on its renewable standards.”[xiv] Groups such as the Ohio Steel Council would not receive the provisions they have asked for to allow “large industrial customers to opt-out of Energy Efficiency programs.”[xv]

CONCLUSIONS

The reasons that supporters of SB310 use for freezing and reviewing the effects of SB221 are understandable, yet some changes would ultimately affect the positive and productive qualities of energy reduction that make SB221 successful. This policy recommendation outlines what specific problems in SB310 must be amended so that effective energy efficiency strategic planning can continue in a way that appeals to both opponents and supporters of the original SB310 plan. In order to minimize the effects of the weaknesses and threats discussed above, economic advisors should be consulted to better understand potential sites of compromise. Although groups on either extreme will find fault with such compromise, it is the approach that will gain the most approval from those who are moderates on the issue.

Works Cited

[i]Dealer, John. June 13, 2014 “Ohio Renewable Energy and Efficiency Rules Frozen for Two Years as Gov. John Kasich Signs Legislation.” Cleveland.com. http://www.cleveland.com/business/index.ssf/2014/06/ohio_renewable_energy_an d_effi.html

[ii]Dealer, John. June 13, 2014 “Ohio Renewable Energy and Efficiency Rules Frozen for Two Years as Gov. John Kasich Signs Legislation.” Cleveland.com. http://www.cleveland.com/business/index.ssf/2014/06/ohio_renewable_energy_an d_effi.html

[iii]Kushler, Martin. June 23, 2014 “ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought.” ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought. http://www.aceee.org/blog/2014/06/ohio-sb-310-post-mortem-it-s- worse-yo.

[iv] Brakey, Matt. May 23, 2014 “Seven Things You Need to Know about SB 310.” Crain’s Cleveland Business. http://www.crainscleveland.com/article/20140523/BLOGS05/140529884/seven-things-you-need-to-know-about-sb-310.

[v] “2014 Clean Energy Defense.” April 16, 2014. Ohio Environmental Council. http://www.theoec.org/campaign/2014-clean-energy-defense.

[vi] Kushler, Martin. June 23, 2014 “ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought.” ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought. http://www.aceee.org/blog/2014/06/ohio-sb-310-post-mortem-it-s- worse-yo.

[vii] Kushler, Martin. June 23, 2014 “ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought.” ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought. http://www.aceee.org/blog/2014/06/ohio-sb-310-post-mortem-it-s- worse-yo.

[viii] Kushler, Martin. June 23, 2014 “ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought.” ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought. http://www.aceee.org/blog/2014/06/ohio-sb-310-post-mortem-it-s- worse-yo.

[ix] Kushler, Martin. June 23, 2014 “ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought.” ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought. http://www.aceee.org/blog/2014/06/ohio-sb-310-post-mortem-it-s- worse-yo.

[x] Kushler, Martin. June 23, 2014 “ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought.” ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought. http://www.aceee.org/blog/2014/06/ohio-sb-310-post-mortem-it-s- worse-yo.

[xi] Kushler, Martin. June 23, 2014 “ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought.” ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought. http://www.aceee.org/blog/2014/06/ohio-sb-310-post-mortem-it-s- worse-yo.

[xii] Kushler, Martin. June 23, 2014 “ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought.” ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought. http://www.aceee.org/blog/2014/06/ohio-sb-310-post-mortem-it-s- worse-yo.

[xiii] Kushler, Martin. June 23, 2014 “ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought.” ACEEE | Ohio SB 310 Post Mortem: It’s Worse than You Thought. http://www.aceee.org/blog/2014/06/ohio-sb-310-post-mortem-it-s- worse-yo.

[xiv] Knox, Tom. June 13, 2014. “Kasich Signs Senate Bill 310, Puts Two-year Freeze on Ohio’s Renewable and Energy-efficiency Standards – Columbus – Columbus Business First.” http://www.bizjournals.com/columbus/news/2014/06/13/the-freeze-is-on-kasich-signs-s-b-310-halts.html.

[xv] Schulz, Brenda, and Emily Petrovich. 2014. Columbus, Ohio: Ohio Steel Council,. http://www.ohiosteel.org/wp-content/uploads/OSC-Letter-of-Support_SB- 310_04_08_14.doc.pdf