Ohio House Bill 6 Loses Energy

As we head into the stretch of summer big issues loom in front of the Ohio legislature. In the wake of the fallout from former Speaker Larry Householder’s arrest and subsequent indictment earlier this summer along with three others, the legislation at the center of the scandal House Bill 6, which provided a subsidy for Ohio’s two nuclear power plants, as well as other energy related policy changes including the elimination of Ohio’s energy efficiency and renewable energy standards is now front and center as the general assembly returns to session in September ahead of the November 3rd election.

House Bill 6 addresses a wide range of energy issues including:

  • Requiring each electric distribution utility (EDU) to collect a per-customer monthly charge from all of its retail electric customers in Ohio beginning January 1, 2021, and ending December 31, 2027, that is sufficient to produce:  $150 million annually for total disbursements from the Nuclear Generation Fund; and $20 million annually for total disbursements from the Renewable Generation Fund;
  • Requiring the charge to be for bills rendered beginning January 1, 2021, and ending December 31, 2027, not to exceed the following: o Residential: 85¢; Industrial customers that exceeded 45 million kilowatt hours of electricity at one location in the preceding year, $2,400;
  • Creating the Nuclear Generation Fund and the Renewable Generation Fund, where the above charges are to be deposited (88.25% of charges into the Nuclear Generation Fund and 11.75% into the Renewable Generation Fund).
  • Permitting an owner or operator of a qualifying renewable resource to apply, by February 1, 2020, to the Authority to receive quarterly payments from the Renewable Generation Fund for renewable energy credits earned by the resource, defines “qualifying renewable resource” as in-state electric generating facility that: uses or will use solar energy as its primary energy resource; obtained a certificate for construction of a major utility facility from the Power Siting Board prior to June 1, 2019; and is interconnected with the transmission grid that is subject to the operational control of PJM interconnection, L.L.C., or its successor, and sets the price of a renewable energy credit at $9 per megawatt hour.
  • Reducing the renewable energy benchmarks for EDUs and electric services companies (ESCs) to 8.5% of electricity supply, with no solar portion, by the end of 2026, and eliminates further requirements after that, requires PUCO to reduce the number of kilowatt hours to comply with the renewable energy requirements for all EDUs and ESCs in Ohio, by application of a formula that reduces the compliance amount using the kilowatt hours produced by the qualifying renewable resources receiving renewable energy credits, and reduces the baselines for purposes of the renewable energy requirements of EDUs and ESCs to exclude the load and usage of mercantile customers that are self-assessing purchasers of electricity (45 million kilowatt hours a year) to facilitate competitiveness of those customers.
  • Replacing the energy efficiency benchmarks for years 2021 through 2027 with the 17.5% compliance process, terminates energy efficiency/peak demand reduction portfolio plans on December 31, 2020, and extends to December 31, 2020, the expiration date for all portfolio plans in effect on the act’s effective date.
  • Defining “legacy generation resource” as all generating facilities owned directly or indirectly by a corporation formed before 1960 by investor-owned utilities for the original purpose of providing power for use in defense of the United States or furtherance of national interests, and includes the Ohio Valley Electric Corporation, and replaces, on January 1, 2020, any mechanism approved by PUCO, prior to the act’s effective date, for retail recovery of prudently incurred costs associated with contractual commitments related to a legacy generation resource, with a non-by-passable rate mechanism for recovery through December 31, 2030, from customers of all EDUs in Ohio;
  • Subjecting to local control wind farms of 5-20 megawatts that are primarily dedicated to providing electricity to a single customer at a single location;
  • Qualifying the definition of “net metering system” by specifying that, for an industrial customer-generator with a net metering system that has a capacity of less than 20 megawatts and uses wind as energy, it satisfies the definition if it was sized so as to not exceed 100% of the customer-generator’s annual requirements for electric energy at the time of interconnection;
  • Permitting an EDU, on a nondiscriminatory basis and subject to PUCO approval, to enter into an agreement, having a term of three years or more, with a mercantile customer or group of mercantile customers for constructing a customer-sited renewable energy resource in Ohio that will provide the customer or group with a material portion of its electricity requirements, and requires any direct or indirect costs, including costs for infrastructure development or generation, associated with the customer-sited renewable energy resource to be paid for solely by the EDU and the mercantile customer or group of customers;
  • Requiring an EDU to file with PUCO a new rate schedule for county fairs and agricultural societies that includes a fixed monthly service fee or an energy charge on a kilowatt hour basis;
  • Requiring the Director of Development Services annually to submit, beginning in FY 2021, a waiver request to spend 25% of federal low-income HEAP funds from the home energy assistance block grants for weatherization services;
  • Allowing certain electric distribution utilities to file an application for a decoupling mechanism with PUCO;
  • Permitting energy projects of up to 20 megawatts to be exempted from property taxation without the formal approval of a board of county commissioners (the prior threshold was 5 megawatts); and
  • Disallowing future reductions in the taxable value of TPP of an electric company receiving nuclear resource credit payments.

Efforts to pass a full repeal of the legislation have been introduced in both the Ohio Senate and the Ohio House. State Senator Stephanie Kunze and State Senator Sean O’Brian co-sponsored bi-partisan legislation, Senate Bill 346, which would repeal House Bill 6 and return Ohio’s energy policies to where they were prior to the House Bill 6 passage. This would effectively provide a restart to the debate. Similar legislation in the form of two pieces of legislation has been introduced in the Ohio House Representatives. House Bill 746 by Representative Laura Lanese and Representative Dave Greenspan, as well as House Bill 740 by Representative Michael Skindell and Representative Denson.

Leadership in the Ohio Senate have signaled their desire for a repeal House Bill 6 to allow for a new debate on the merits of the policy moving forward without the attachment of the now exposed scandal. Recently elected Speaker Bob Cupp has formed a new committee in the Ohio House, the House Select Committee on Energy Policy and oversight, which both House Bill 746 and House Bill 740 were recently referred to. Speaker Cupp has indicated that the committees charge will be to examine the path forward to repeal House Bill 6 while preparing a replacement for the overall policy the legislation put into law.