Ohio House wants to revive state’s energy efficiency rebates
COLUMBUS — A policy designed to reduce net electricity demand statewide by offering rebates in exchange for energy-efficient upgrades, gutted by state lawmakers in 2019 via legislation that sent a House Speaker to federal prison, cleared the Ohio House last week.
That’s the closest lawmakers have come to restoring “energy efficiency” programs in Ohio, albeit in a more modest form, in the four years since the House Bill 6 bribery scandal came to light.
Under House Bill 79, such “energy efficiency” programs would be optional for utilities to administer, and optional for customers to pay. While specifics would depend on what an electric company proposes, the programs generally revolve around the utilities providing customer rebates for free or discounted smart thermostats, refrigerators, air conditioners, LED light bulbs, and other power saving devices and appliances to customers.
Utilities pay for those programs through charges to customers. Monthly charges to residential customers can’t exceed $1.50 under the legislation. For nonresidential customers, the maximum charge is $7.50.
Energy efficiency programs existed in Ohio for over a decade up until the passage of 2019′s HB6 — legislation that bailed out two nuclear plants and two coal plants, while also neutering a requirement that utilities source more power from solar and wind power. Since then, a sweep of criminal convictions and indictments from the state and federal government have pointed to FirstEnergy Corp. and its executives paying bribes to two public officials in support of passing the bill. Two executives have pleaded not guilty and await trial in state court.
Lawmakers repealed the nuclear bailouts after the arrest of then-House Speaker Larry Householder, now serving a 20-year sentence in federal prison for what prosecutors described as the largest public corruption scandal in state history. However, the legislature so far hasn’t touched the changes HB6 imposed on Ohio’s clean energy laws. They also left a $304 million and counting coal bailout intact.
Reinstating energy efficiency is basically a “repeal” of HB6, said a lead sponsor of the bill, Lakewood Democratic Rep. Bride Rose Sweeney. That’s because it restores (in a more limited and more discretionary form) the status quo before the now-infamous 2019 legislation.
“This bill, while it may seem complicated, it’s going to lower energy costs,” she said.
Some state lawmakers have previously tried to reinstate some version of the energy efficiency program, but they’ve never made it into law. HB 79 passed the House last week despite a furious lobbying campaign to stop it, with the majority of House Republicans who hold a supermajority in the chamber (plus one House Democrat) still voting against it. And it still must pass the Ohio Senate, which isn’t scheduled to reconvene until after the November election, and get Gov. Mike DeWine’s signature before the end of the year to become law.
While the legislation caps the monthly charge for customers to pay for the energy efficiency plans, utilities can also charge customers for “lost distribution revenue” — the money utilities would have made but for the program tamping down electricity demand.
Any such energy efficiency plans must decrease customers’ aggregate energy consumption by 0.5% each year, per the legislation. Customers must get at least two mailers notifying them of their ability to opt out.
The bill would also enable “peak demand reduction programs,” where a distribution utility (such as FirstEnergy, American Electric Power or AES Ohio) could pay customers for the ability to do things like marginally dialing down homes’ air conditioning during the thick of a heat wave as a means to reduce grid stress or avert a blackout.
The bill’s passage comes as more companies like Amazon, Google and Meta build data centers — which rely on huge amounts of power — in Ohio, adding new demand to the grid. An AEP executive recently told E&E News that the regional projected demand for energy, driven by data centers, is now three times that of New York City’s.
For customers of a participating utility company who don’t opt out of the $1.50 per month maximum charge, they could receive rebates on more efficient replacements of their most power intensive appliances, like a washing machine or a refrigerator. That individual customer would reap those savings. Meanwhile, even the customers who opt out, according to the bill’s backers, would enjoy cheaper energy costs given the overall reduction in demand from hundreds of thousands of participants.
“When utilities run these programs, all customers benefit — it drives down the market price for electricity that everyone pays,” said Rob Kelter, a lobbyist for the Environmental Law and Policy Center.
In a rare occurrence in a major gas producing state with an industry-friendly legislature, the Ohio Environmental Council Action Fund, Sierra Club and other environmental advocates applauded the legislation.
House Speaker Jason Stephens, a Lawrence County Republican, cited recent heat waves in making a case for the bill to reporters. If Ohio can “shave off a little bit of that demand” in cooling off homes, it can avoid the uncomfortable and dangerous possibility of rolling blackouts. House Majority Leader Bill Seitz — unique for his role as a loud and proud Republican backer of HB6 and of the energy efficiency proposal — said the programs allowed under the bill are more focused and leave customers with more choice than their previous version. But more importantly, they solve problems tied to an expected energy shortfall.
“When demand is high, supply is low, prices go up,” he said on the House floor. “You don’t have to be Milton Friedman to figure that out. When there’s scarcity, prices go up, or you have blackouts.”
While environmental organizations and bipartisan lawmakers backed the bill, ratepayers advocates, Republicans, and a powerful conservative think tank mounted opposition. The Ohio Consumers’ Counsel, a state agency that represents ratepayers’ interests before lawmakers and regulators, criticized the bill for putting the onus on customers to opt out from the bill’s monthly charges while electricity intensive customers like manufacturers are opted out by default.
Additionally, the OCC questioned what it called the “porous” nature of the cost cap given the lost distribution revenue and cost deferrals allowed in the legislation. Parma Rep. Sean Brennan, the only Democrat to oppose the bill, voiced concerns along these lines, adding that the state proposal is redundant given availability of federal tax credits for similar consumer purchases.
Countering this point, sponsors circulated projections from a Legislative Service Commission economist estimating the lost distribution revenue to cost between 18 and 88 cents per month to customers.
The more conservative Republicans in the House blasted the bill. Uhrichsville Rep. Brett Hillyer called it an extension of “the war on coal.” Wayne County Rep. Scott Wiggam called it an “energy tax increase.” Cincinnati area Rep. Jean Schmidt said Ohioans can’t afford the $1.50 surcharge and should instead turn their lights off and their air conditioning down when they leave their houses.
“Those are smart ways to save energy,” she said.
Americans for Prosperity, a think tank founded by the ultrawealthy Koch family that pushes for deregulation and weaker environmental laws, pressured Republicans to kill the bill. AFP’s previous lobbying on the bill managed to stall votes for months and prompt bill sponsors to distribute letters to members correcting what they called “misinformation” about the bill from AFP.
State Director Donovan O’Neil said the bill is just another means of power companies hiking Ohioans electric bills via “mandates.” He has described the peak demand reduction idea as a “massive intrusion” into people’s homes. And he said the opt-out mechanism is deliberately weak.
“How many people are actually paying attention to what comes in the mail?” he said in an interview.
Stephens framed the legislation as but one piece of a puzzle, telling reporters that Ohio also needs to make sure it’s doing “everything” possible to ensure drillers keep producing natural gas to tamp down energy prices.
In contrast, Sweeney touted the bill as a limited and pragmatic answer to a worsening problem of manmade climate change.
“It’s the best we’re going to do with this majority in charge,” she said. “I personally think we should be doing so much more.”