Ohio’s New Energy Law: What You Should Know

Jul 26, 2019

Ohio legislators have passed new energy laws that affects everyone’s electric bills and change the state’s course on green energy policies. But it can be easy to get bogged down by all the information contained in the bill, here's a breakdown.

To understand Ohio’s new energy law and how it impacts electric bills, imagine someone pulls out a sheet of paper and draws a bar graph. That graph is charting four sources; nuclear, coal, renewable energy, and energy efficiency.

The value of each bar represents how much those sources are getting in subsidies and support through public policy.

For the past 10 years, the bar for nuclear has been at the bottom. The bar for coal has been dropping. While the bars for renewables and efficiency have been climbing.

But the new law passed by Ohio legislators, HB6, scraps that. The chart now flips in favor of nuclear and coal and the bars for renewables and efficiency plummet.

So let’s take a look at the new law to understand which sources are getting support, and which are getting snubbed.

Nuclear

The new law bails out nuclear power in Ohio. Everyone paying for electricity in their homes will see a new $0.85 charge on their monthly bills. That, along with new charges for commercial and industrial users, will pump $150 million into two nuclear plants, Davis-Besse and Perry.

FirstEnergy Solutions, which is currently filing for bankruptcy, said it would shut the plants if they did not receive a significant subsidy.

Gov. Mike DeWine said this plan saves jobs and protects the environment.

“It’s important for the state of Ohio to be able to have a significant amount of energy that is created to be carbon free having nuclear plants today is the only way we’re going to achieve that,” says DeWine.

Several conservative lawmakers are against this major policy shift saying it’s the government picking winners and losers.

The Public Utilities Commission reports nuclear accounts for about 15% of the state’s energy generation.

Coal

Utilities will charge ratepayers up to $1.50 a month to subsidize the Ohio Valley Electric Corporation’s two struggling coal plants, both built in the 50’s, one in southeast Ohio, the other in Indiana.

This provision has outraged environmental advocates like Dan Sawmiller with the Natural Resources Defense Council who says the market is already phasing out coal.

“And so the price tag for these bailouts for these coal plants just went significantly higher and it’s going to stay in place until 2030, these will be the oldest coal plants operating in the entire country,” says Sawmiller.

Customers of AEP, Duke Energy, and Dayton Power & Light are already paying fees on their electric bills to subsidize OVEC. The provision in HB6 strengthens the ability to attach that fee and requires FirstEnergy Corp to also pass a rider on to their ratepayers.

Current OVEC charges for average residential ratepayers:

  • AEP Ohio: $1.84/month
  • Dayton Power & Light: $0.57/month
  • Duke Energy: $1.08/month

The exact cost per ratepayer going forward is not yet known since each utility will set that price through their plans to the PUCO.

Supporters say keeping the plants around adds reliability to the grid. In total, coal accounts for 47% of Ohio’s electricity generation.

Renewable Energy

Renewable standards required utilities to increase their use of alternative sources such as wind and solar. The new law shrinks that standard and ends it completely after 2026.

Supporters of the mandates say they drove development and created jobs.

But House Speaker Larry Householder (R-Glenford) says lawmakers didn’t see the benefits they thought they would.

“Over the last 11 years, ratepayers in the state of Ohio have paid for a failed plan,” Householder says.

Current Renewable Energy (AER) charges for average residential ratepayers:

  • AEP Ohio: $1.17/month
  • Cleveland Electric Illuminating: $0.47/month
  • Dayton Power & Light: $0.10/month
  • Duke Energy: $0.56/month
  • Ohio Edison Company: $0.47/month
  • Toledo Edison Company: $0.36/month

The benchmark for utilities to add renewables to their portfolio is currently set at 5.5%. That number was supposed to climb to 12.5% by 2026, but lawmakers brought that number down to 8.5%.

Renewables currently provide 3% of Ohio’s electricity generation.

Solar does get about $20 million in subsidies as part of that new $0.85 charge, but it only goes to five or six existing projects.

Energy Efficiency

Energy efficiency programs are the biggest losers in this new law. The requirements that spurred investment into programs that reduced energy use and brought down the cost of electric bills is going away.

Critics of the efficiency standards say the programs were getting too expensive.

Current Energy Efficiency (EE/PDR) charges for average residential ratepayers:

  • AEP Ohio: $2.85/month
  • Cleveland Electric Illuminating: $4.87/month
  • Dayton Power & Light: $1.79/month
  • Duke Energy: $2.89/month
  • Ohio Edison: $2.64/month
  • Toledo Edison: $6.67/month

But utilities had to prove that they were saving customers money in the long run. Reports to the PUCO show the efficiency programs ended up saving ratepayers $5 billion over the course of ten years.

What's Next?

Through the new law, residential ratepayers could pay as much as $2.35 on their monthly electric bills for the new nuclear, coal, and solar subsidies.

Lawmakers say this will be a rate reduction, because most customers have been paying more than that for the now defunct efficiency programs.

But again opponents argue that the efficiency mandates helped keep down the bottom line on electric bills.

These new rates will be implemented in 2021. In the meantime opponents are testing the waters with a potential referendum on the 2020 ballot.