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Ohio regulators will rule on the need for the largest-yet solar energy project proposed in the state.
Ohio regulators began hearing evidence this week to decide the fate of American Electric Power’s proposal for 400 megawatts of solar energy in Appalachian Ohio. If approved, the combined project in Highland County would be the largest solar energy installation so far in the state.
The first phase of the evidentiary hearing process that began Jan. 15 hinges on one big question: Is there a need for the project based on projections from AEP’s Ohio utility?
“Our proposal makes it clear that our state needs renewable generation resources to make Ohio even more attractive to companies looking to come here, address customer demand for renewable energy, and foster the development of a clean energy economy in Ohio,” said AEP Ohio spokesperson Scott Blake. “Renewable energy projects help develop a skilled workforce that can offer hope to workers and transform a region for generations.”
Supporters include groups such as the Natural Resources Defense Council, Appalachian Ohio Solar Jobs Network, Ohio Partners for Affordable Energy, the Mid-Atlantic Renewable Energy Coalition and others.
Opposing the project are the Office of the Ohio Consumers’ Counsel, the Ohio Coal Association, the Ohio Manufacturers Association Energy Group, and other large electricity customer groups and competitors.
A question of need
If the Public Utilities Commission of Ohio agrees, AEP’s Ohio utility plans to charge utility customers for construction and operation costs of the project.
As a general rule, electricity generation and distribution in Ohio are separate, with distribution being a regulated monopoly and generation subject to customer choice. However, Ohio law allows an exception if, among other things, the Public Utilities Commission determines there’s a “need for the facility based on resource planning projections” from the utility.
AEP and the project’s supporters say the evidence will show ample need for the facility, for Ohio generally and especially for Appalachian Ohio.
“These renewable projects position Ohio well for any future environmental safeguards related to carbon pollution and bring much needed jobs to Appalachia, an area that has steadily lost jobs tied to the coal industry,” said project director Evan Blumer of the Appalachian Ohio Solar Jobs Network.
“We need to bring these new economic benefits to Ohio’s Appalachian communities,” Blumer added. “Our neighbors are doing this now, and Ohio cannot be left behind.”
The addition of a large amount of renewable energy generation would also help attract large companies who want their electricity to come from clean energy, said Dan Sawmiller, Ohio energy policy director for the Natural Resources Defense Council.
Also as coal’s share of the electricity market has declined, it has been replaced more and more by natural gas. The proposed project “can help reduce the volatility of that market exposure” by leveling out rates over time, Sawmiller said.
Then there’s the matter of money. AEP’s forecasts show that customers will save more than $200 million over a 20-year time period.
Based on NRDC calculations, Sawmiller said those benefits were “conservatively estimated.” And that still wouldn’t count either the project’s benefits for reducing greenhouse gas emissions in order to rein in and improve resilience to climate change, he said. Nor would it include health benefits from reductions in other pollutants that lead to more cases of asthma and other disease.
A narrower view
In contrast, opponents want the commission to interpret “need” very narrowly. They note that when all types of electricity generation are considered for the PJM region, there is sufficient generation capacity.
Nor are challengers swayed by the fact that the proposed project is for renewable energy.
“Renewable energy is a good thing and Ohio’s competitive market is already providing Ohioans with lots of choices for renewable power without subsidies,” said J.P. Blackwood, spokesperson for the Office of the Ohio Consumers’ Counsel. The Ohio Consumers’ Counsel Governing Board passed a formal resolution opposing AEP’s proposal on Jan. 15, the same day that the hearing started.
PUCO staff member Timothy Benedict likewise took a very limited approach to the question of need.
“Having determined that supply is sufficient to meet the needs of Ohio Power’s customers…, Staff therefore finds that the Company has not demonstrated a need to construct any additional resources at this time,” Benedict said in a Jan. 8 filing recommending against the project.
“The PUCO Staff testimony makes clear that the PUCO commissioners will ultimately determine how to define need,” Blumer said in response. “Those benefits will be presented to the Commission throughout this case, and it is the Commission who will decide whether to bring these benefits to Appalachian Ohio and to AEP’s electricity customers.”
“It’s bad enough that the PUCO has allowed AEP to charge 1.5 million customers to subsidize its old coal plants,” said Blackwood. “Now AEP wants its customers to subsidize new renewable energy power plants. Consumers need the utility subsidy culture at the PUCO to end.”
The Ohio Coal Association, an intervenor in the case, echoed the anti-subsidy sentiment, even though the initial proposal for the AEP solar project grew out of a partial settlement in a case to allow subsidies for two 1950s-era coal plants.
“All renewable energy, whether solar or wind, is heavily subsidized,” said President Mike Copes at the Ohio Coal Association, “and thus its price does not reflect its true cost. Bad for coal.”
“Coal, gas, nuclear and other energy sources have long been subsidized in the Midwest and across the United States,” Blumer countered. “When comparing, renewable sources have seen far less [subsidies], as that market develops, than its competitors.”
“Furthermore,” Blumer added, “some of these competing resources are now desperately begging for state or federal bailouts for their uneconomic facilities, leaving communities like those in Appalachia in their wake as they shutter plants.”
Current expectations are that the hearing in the case will run through at least Jan. 25, with parties having an opportunity to submit briefs afterward. It’s unclear how soon after that the commission will rule on the issue of need for the project.
“The opponents here want to limit, limit, limit” what counts as need, Sawmiller said. “I think that’s unwise. I think that’s shortsighted.”
“The opportunity that this project presents in Appalachia cannot be ignored,” said Sawmiller. “That’s just a critical thing.” In his view, there’s a very real need for jobs and economic development in that part of Ohio.
Likewise, he, AEP and other supporters want the Commission to consider all the other factors that they say show a need for the project.
“You can’t just look the other way and pretend these benefits don’t exist or don’t matter,” Sawmiller said. “These are important benefits for the Commission to consider, and they do matter.”