A new report from a coalition of environmental groups reframes energy efficiency in terms that might better resonate with Ohioans across the political spectrum.
“While efficiency is a correct term, what we’re really talking about is reducing energy waste,” said Miranda Leppla, vice president of energy policy for the Ohio Environmental Council.
And Ohio is on track this decade to waste a lot of energy — and money.
The environmental groups’ report projects that reducing energy waste by 1% to 2% per year would save Ohio ratepayers between $2 billion and $5 billion over 10 years.
The March 2021 analysis was conducted by energy consulting firm Gabel Associates and funded by Ceres, E2, the Environmental Law & Policy Center, the Natural Resources Defense Council, the Ohio Environmental Council, and the Ohio Hospital Association.
“Efficiency investments come back to consumers as dividends that lower their costs over time,” said Tom Bullock, executive director of the Citizens Utility Board of Ohio.
Those investments are no longer required of Ohio electric utilities, however, since the state’s scandal-tainted HB 6 power plant bailout law gutted state standards that had required utilities to achieve increasing levels of energy efficiency through 2027, among other things.
An orphaned issue
While some lawmakers had tried for years to gut Ohio’s clean energy and efficiency standards, that didn’t happen full scale until HB 6 was pushed through the General Assembly by former House Speaker Larry Householder and signed into law by Gov. Mike DeWine in 2019.
Despite the law, the Public Utilities Commission of Ohio can still authorize voluntary energy conservation programs for electric and gas utilities, but it has yet to do so despite two proposals from utilities.
The PUCO staff resisted the inclusion of energy efficiency provisions in AEP Ohio’s pending rate case because of “current legislative uncertainty” surrounding the potential repeal of HB 6. On March 12, AEP Ohio withdrew those proposed terms as part of a proposed settlement with the Ohio Consumers’ Counsel, the PUCO staff, Industrial Energy Users-Ohio and others.
Similarly, when the PUCO said Duke Energy couldn’t recover shared savings as a profit on a new energy efficiency program, its June 2020 order said, “the future for EE programs in this state will best be served by reliance upon market-based approaches such as those available through PJM and competitive retail electric service providers.”
Ohio utilities’ energy efficiency programs have become “kind of an orphan issue that’s been left on the side of the road,” Bullock said. “It wouldn’t be, but for the corruption of HB 6.”
Money on the table
The new report outlines the potential economic consequences of abandoning utility energy efficiency programs. In addition to direct savings for customers, the investments also reduce overall demand, putting downward pressure on capacity costs in the PJM wholesale market. Ohio imports roughly 20% of its electricity from other states, the Gabel report noted.
“So not only are they leaving money on the table … they’re also sending dollars out of the state that could be kept in the Ohio economy, which benefits people in Ohio,” Baatz said.
Those economic benefits could provide the equivalent of an additional 6,500 to 17,400 jobs lasting 10 years, according to the report. It also quantifies the harm to human health and social costs that would be avoided by reduced pollution at between $7 billion and $19 billion.
More than half of the health and social benefits would come from reduced pollution from nitrogen oxide and sulfur dioxide, with another chunk coming from cuts in carbon dioxide emissions, which drive human-caused climate change. Particulate matter pollution also has harmful effects, the report noted, although it did not separately estimate those damages.
“There’s still a lot of opportunity here to achieve energy savings in a cost-effective way” for Ohio, Baatz said. The 1%, 1.5% and 2.0% annual efficiency increases modeled for the report are achievable based upon what evidence from other states continues to show, he added.
“I think a lot of the opposition to [energy efficiency standards] in Ohio is ideological, and it’s based on ‘we don’t want the government to do this because it’s probably going to happen anyway,’” Baatz said. “A lot of studies around these types of programs have shown they won’t happen anyway. And that’s why the programs work. They produce savings and they help customers lower their bills, [and] help companies improve bottom lines.”
The Ohio General Assembly has been moving forward on piecemeal bills to get rid of HB 6’s bailouts for FirstEnergy’s former nuclear plants as well as terms that had guaranteed utility profits at unusually high levels. Bills to get rid of the law’s coal plant subsidies have not fared as well yet. And bills for a full repeal of the law at the heart of the corruption scandal have so far stalled.
“Ohioans deserve a full repeal of this legislation and a conversation about what holistic energy policy looks like for the state,” said Leppla, of the Ohio Environmental Council. Meanwhile, she added, “we hope that this report reminds regulators of the vast benefits that come along with energy waste reduction programs and spur action both by all utilities in the state and that regulators will approve these important programs for Ohioans.”The Public Utilities Commission of Ohio’s Feb. 24 order formally ending utility efficiency programs said regulators plan to hold workshops on the benefits of such programs. No dates or agenda topics had been set, said spokesperson Matt Schilling.