Looking at the future of energy efficiency
HB 6 has cost Ohio billions in economic growth
The House Bill 6 debacle is many stories. There is one which deserves more attention.
In 2008, a law enacted with Senate Bill 221 resolved a 10-year freeze on Ohio’s electricity rates. SB 221 included — almost as an afterthought — a small market-based renewable generation standard and a half-page of language which permitted Ohio’s four regulated distribution utilities to conduct efficiency programs which reduced enduse consumption, provided that the programs saved money.
HB 6 terminated this efficiency mandate. Supporters of HB 6, including representatives of Ohio’s government, gave false testimony about the costs of the efficiency and renewables programs, but much more important, they entirely neglected to discuss its benefits.
That half-page of legal language in the 2008 law caused the Ohio utilities to spend $1.5 billion over nine years, and that spending created savings which approached $5.8 billion as of the time of passage of HB 6.
Installed hardware with a lot of useful life remains in Ohio’s homes, businesses and industrial facilities and will save another $4 billion or so. Program activity in 2020, before HB 6 terminated the efficiency program requirement, has pushed savings well over $10 billion.
Customers who participate in the programs save most of the money. Less apparently, over nine years the utilities have provided efficiency hardware to 80%-90% of all customers. Hardest to understand, energy savings over nine years has eliminated the need for power plants and transmission and distribution hardware worth over $3.5 billion. This is additional to the $10 billion in avoided energy costs.
This last point is deliberately misrepresented by some large industrial customers. In a 2014 hearing, they sponsored a witness who testified that the avoided capacity — worth more than $3.5 billion today — flowed to other states and wasn’t truly a benefit to the Ohio customers who paid for it.
Pennsylvania, Michigan, Indiana, Illinois and New York — all states whose electricity grids interconnect with Ohio — also have similar programs, and their benefits flow to us. Even neglecting the considerable benefit to Ohio citizens, businesses and industry, we should preserve these programs just to be good neighbors.
We could identify different power plants not built and come up with different values for the $3.5 billion. New natural gas, wind or solar plants would all be in the neighborhood of $3.5 billion. New coal plants would be more like $15 billion. New nuclear plants would cost well over $20 billion.
We don’t need to identify the saved capacity from the efficiency programs accurately. But we do need to identify the fact of its existence. Any reasonable value for the avoided capacity is greater than double the total program costs. This means that all customers, even nonparticipants, save more money than their share of program costs.
And this also means that the industrial opt-out provisions which were introduced in Ohio in 2013 and expanded in subsequent changes to the law are based on a dishonest premise.
None of this will ever be properly discussed and considered in Ohio legislative hearings if the replacement bill for HB 6 is an omnibus bill which mangles the nuclear bailouts into the same legislation as the wind standards, the solar standards, the efficiency standards and the bailout to the two coal plants, including the one in Indiana.
Both new wind and new solar are cheaper than existing fossil fuels and nuclear power today. They don’t need subsidies, but they do need assurance that Ohio lawmakers won’t attack billions of dollars of new investments as they have done.
Ohio’s Republicans have already cost Ohio citizens, businesses and industry several billion dollars in lost economic growth due to HB 6. It’s not too late to repair the damage, but time matters.
One sure thing: If the replacement vehicle for HB 6 attempts to deal with all of these issues in a single bill, corruption is alive and well in Ohio. Everyone who participated in the hearings in 2019 knew that HB 6 was corrupt. Anyone who claims differently is part of the problem.
Ned Ford has worked for more than 35 years to promote utility efficiency programs in Ohio. He lives in Waynesville.