SB 221, Electric Restructuring and Advanced Energy Initiative

SB 221

Electric Restructuring and Advanced Energy Initiative  

Governor Ted Strickland and the General Assembly have worked together to create a comprehensive energy plan.  Known as Amended Substitute Senate Bill 221 (S.B. 221), the Ohio Farm Bureau Federation and its members provided leadership in the process to support its passage. The new law revises Ohio’s energy policy in several areas, most notably:

•    Electric Pricing: The new law authorizes the Public Utilities Commission of Ohio (PUCO) to establish rules ensuring electric price stability. Investor-owned utilities (IOUs) will file an Electric Security Plan (ESP). The electric price established by a PUCO-approved ESP will consider generation and transmission charges as well as the cost for care/maintenance and further development of local distribution infrastructure.

IOUs will have the option to establish electric pricing using a PUCO-approved competitive auction process, known as a Market Rate Offer (MRO).  If the established MRO price is lower than the utility’s ESP price, the company can proceed under a PUCO–approved transition process to the market rate.

Energy prices are evaluated – The PUCO has authority to test a utility’s rate plan to ensure that prices paid by consumers are fair and equitable, as well as check to see if rates are generating excessive earnings for the utility. The PUCO can order appropriate rate corrections, refunds and/or establishing new rate plans to correct pricing issues.

Government aggregation is enhanced – Counties, townships and municipalities wanting to establish community aggregation plans for the purchase of electric power have new options that help reduce utility standby charges. More communities could use aggregation to create cost-effective electric rates.

•    Advanced Energy and Efficiency Incentives/Standards: Passage of S.B. 221 creates an Advanced Energy Standard – A minimum of 25 percent of electricity sold by Ohio’s IOUs must come from renewable (wind, solar, biomass, fuel cell, hydro), clean coal (US EPA Futuregen projects) and advanced nuclear sources by 2025. At least half of the minimums must be met by renewables and at least half of all power to meet the standard must come from Ohio-based projects. Similar initiatives to enhance/upgrade energy efficiency efforts are established. The PUCO has authority to approve utility plans that ensure annual benchmarks mandating incorporation of advanced energy sources into Ohio’s power supply mix and efficiency targets helping consumers reduce energy consumption are achieved. Progressive benchmarks charting expected progress are set for each year starting in 2009-2025. Failure to meet these annual goals could mean non-bypassable financial penalties assessed against power companies.
The new law provides incentives for Ohio’s Edison technology centers and universities to pursue research and development, provide workforce training programs and encourage manufacturing and job creation using advanced energy technology. The Ohio Air Quality Development Authority (OAQDA) and Ohio Department of Development (ODOD) can use S.B. 221 provisions to create financial assistance programs to support the initiatives.

Farm, small business and residential energy consumers have opportunities to benefit from S.B. 221 in the following areas:

•    New Options to Control Energy Costs: While implementation of S.B. 221 will ensure that consumers will not see the dramatic rate increases predicted to occur when IOUs complete their current rate transition plans, electric prices are still expected to increase over time.  Creation of PUCO-approved ESP and MRO plans, evaluation of electric rates and utility profit levels, will give state government new tools to monitor and address electric rates.  New government aggregation options will give local communities new tools, options and responsibilities to work together to create effective electric rates.

Relationships between investor-owned utilities and their customers will change.  S.B. 221’s advanced energy generation and energy efficiency targets, coupled with other state and federal guidelines governing electric service, will spark IOU investment in Advanced Metering Infrastructure and consumer friendly interconnection.  Renewable generation in strategic areas of the transmission grid will be linked with centralized power plants (using new, clean coal and advanced nuclear capabilities) to create utility-scale generation.

Individual farm, small business and residential energy consumers will have new tools, options and responsibilities too. Incentives could be offered to customers who want to invest in on-site generation and net metering provisions on the local distribution circuit. Consumers could use special programs to purchase new energy-saving appliances, implement home weatherization projects and install censors and software that monitor their energy use. These initiatives will link the utility, energy service providers and customers.  Farm, small business and residential consumers investing in new technology and/or participating in such programs will have additional options available to help them control energy costs.

•    Renewables and Clean Coal: Utilization of wind, solar, biomass, fuel cells and other forms of renewable energy for utility-scale and on-site applications will allow all energy consumers access to sources of power that reduce Ohio’s dependence on imported fuel and challenges with emissions. While rural areas provide ample space for development (wind and solar), agriculture will provide essential feed stocks for enhancing renewable (biomass and fuel cell) and clean coal technologies.  

•    Economic Development: Advanced energy means jobs.  Ohio will need skilled workers in manufacturing, energy related R&D, construction, software development, facility maintenance, technology installation, energy services management, education and training. Many of these jobs will develop in suburban and rural areas.

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