This is the second in a series of blog articles exploring a report issued by an Ohio legislative committee regarding the future of Ohio’s energy efficiency, peak demand reduction and renewable benchmarks for Ohio regulated electric utilities, established in Ohio Revised Code Sections 4928.64 and 4928.66.

The first article presented the deficiencies of the Committee’s cost-benefit analysis (in summary: the report ignored benefits achieved by the utility-scale energy efficiency, peak demand reduction or alternative energy programs). Discussed below is the first of the Committee’s five recommendations, to extend indefinitely the two-year “freeze” of the statutory renewable energy, energy efficiency and peak demand reduction benchmarks mandated by SB310. For justification, the Committee points to the USEPA’s recently finalized Clean Power Plan (“CPP”) stating: “Until the USEPA provides greater clarity on the operation of the CPP, and until litigation is resolved, the General Assembly should freeze the Mandates at their current levels” (Report at 11).

In summary, the Committee’s theory is that having to comply with Ohio’s benchmarks and the CPP simultaneously may be more costly to Ohioans, if the efficiencies and energy generated by Ohio’s benchmarks do not satisfy the requirements of the CPP’s stated carbon dioxide emission reduction goals. If the savings from programs instituted by the utilities for compliance with Ohio’s benchmarks “don’t count” toward CPP compliance, then having two sets of clean energy programs will be more costly. The Committee is basically recommending that NO requirement for renewable development or energy efficiency should be borne by Ohio utilities until the CPP requirements are known.

The Committee points to the testimony of Craig Butler, chief of the Ohio EPA, to underpin this recommendation. However, Craig Butler did not agree with the Committee’s recommendation, calling it “misguided.” Chief Butler stated that, despite the uncertainty of pending litigation, energy efficiency and renewable energy “may be key to a low-cost strategy to reduce carbon emissions and ultimately comply with the federal Clean Power Plan.” The Committee relies heavily on Mr. Butler’s testimony before the U.S. House of Representatives in September. But in this testimony, Mr. Butler never advocates for the cessation of energy efficiency and renewable energy efforts in Ohio pending the resolution of legal issues. In fact, Mr. Butler notes that all forms of energy generation, including energy efficiency and renewables, have been utilized in Ohio and benefitted Ohioans.

Although the CPP does not specifically designate end-use energy efficiency as a “building block,” energy efficiency savings and renewable energy will count for emission rate credits or credit under the clean energy incentive program – both of which provide pathways for compliance with the CPP. Under the CPP, states have significant flexibility to incorporate current energy efficiency and renewable efforts toward CPP compliance. Through these compliance mechanisms, the CPP encourages more state development of energy efficiency and renewables for compliance. Ohio and Ohioans have already benefitted from previous development of renewables and energy efficiency. Thus, the Committee’s recommendation to indefinitely “freeze” these efforts because of the uncertainty of the final CPP requirements or the related litigation is unsubstantiated.

Next: Part 3: Expedited PUCO Review of Utility Portfolios