Clean Power Plan: We Can Do This

On September, Tipping Point Renewable Energy participated in the Northern Ohio Energy Management Seminar, presented by the Ohio Manufacturers' Education Council.


First, Tipping Point Renewable Energy Founder and CEO Eric Zimmer participated in a panel discussion on a range of energy issues in the keynote panel entitled "Ohio's Energy Renaissance: The Path to a Stronger Ohio Economy." Zimmer joined representatives from FirstEnergy, the American Municipal Power, and the Industrial Energy Users of Ohio.

On the issue of SB 310, the bill recently enacted into law in Ohio that rolls back energy efficiency and renewable energy requirements, Zimmer was clear:

Eric Zimmer, founder and CEO of Tipping Point Renewable Energy, based in Dublin, Ohio, said SB 310 was completely unnecessary.
Demand for electricity has declined, he said, because of the industrial energy efficiency upgrades. But, agreeing with Ridmann, he said that cost caps should be part of any further tinkering by lawmakers just in case Ridmann's $5 billion cost estimates turn out to be accurate.
Zimmer reminded listeners that utilities, like auto makers, have consistently fought environmental and efficiency regulations, but ultimately have been able to meet or exceed them. 

(Excerpted from Energy efficiency should be "customer driven," says FirstEnergy executive, defending the company's efforts to dismantle state efficiency rules on

Zimmer urged the audience not to shy away from initiatives to improve the environment and help businesses use energy more efficiently,

"There is a lot of hand wringing... but when we put our attention on solving the problem versus litigating the problem we are able to make a lot of progress," Zimmer told the group.

Solar Slowdown Comes to Ohio

New solar generation in the second quarter of 2014 in Ohio dropped to the lowest level since early 2010, thanks at least in part to legislation approved by the Ohio legislature and signed by the Governor earlier this summer.

According to the most recent data from the Public Utilities Commission of Ohio, only 1.01 megawatts of new solar photovoltaic capacity was approved for registration in Q2 2012 compared to 0.65 megawatts of capacity in Q1 2010.  Similarly, the downward trend in the number of projects approved continued in the Q2 2014.

Source:  Ohio's Alternative Energy Portfolio Standard - Certified Renewable Energy Facilities .Public Utilities Commission of Ohio. Excel spreadsheet. Downloaded 8/22/14. 

Source: Ohio's Alternative Energy Portfolio Standard - Certified Renewable Energy Facilities.Public Utilities Commission of Ohio. Excel spreadsheet. Downloaded 8/22/14. 


Energy Management for Small Businesses

The largest electricity consumers are sophisticated buyers supported by well-regarded consultants and other service providers that will help them to manage their exposure to volatile energy markets.  But small and medium sized businesses care just as much as large companies about controlling their energy costs.  

According to the EPA, small businesses spend more than $60 billion a year on energy. (Link to PDF) EPA estimates that "small businesses that invest strategically can cut energy costs 10 to 30 percent without sacrificing service, quality, style or comfort, all while making significant contributions to a cleaner environment."

Energy is one of the of the least considered and managed expenses for many businesses even through it accounts for a large part of their expenses.  For many types of business, energy can be the third or fourth largest expense. Yet, most small businesses are far too passive when it comes to the acquisition of and use of energy. 

Tipping Point Energy has launched it's Energy Leverage service designed to provide small and medium sized businesses by helping them to develop and implement a strategic energy management plan that fits their needs:

  • survey existing facilities and collect data an historical energy use patterns
  • understand operational constraints on your building that will help you to 
  • develop an energy procurement strategy based on a multi-dimensional analysis of the risks and opportunities of the management
  • identify no-cost/low-cost opportunities to save money with simple operational or behavioral adjustments
  • identify investment opportunities in capital equipment that are profitable
  • advise and assist in identifying financing alternatives to implement profitable energy efficiency capital projects



Illinois Adopts Partial Fix to Renewable Energy Statute

On May 30, the Illinois legislature adopted a partial fix to existing state law that will result in a boost for solar energy in the state. Once signed by the Governor, HB 2427 sets out a process for the Illinois Power Agency (IPA) to acquire up to $30,000,000 of solar renewable energy credits (SRECs) using money that has already been collected.

The IPA has considerable leeway in designing the procurement but they are directed to procure SRECs from new or existing PV, including but not limited to distributed generation.  Of the SRECs from distributed generation, 50% of those should come from projects smaller than 25 kilowatts nameplate capacity. The SRECs will be purchased in in contracts of not less than 5 years.

The amount of solar energy that will result from this procurement depends on a number of factors. The IPA has discretion to allocate among new vs. existing generation and among wholesale/utility vs. distributed generation.  However, they are directed, to the extent possible, to allocate 50% of the procurement of distributed PV resources to projects of less than 25 KW installed capacity.

Different levels of generation will bid into the procurement at different levels.  In general, it is true that smaller projects have higher costs per watt, and thus would require higher incentives to get done.  Thus, we expect the market clearing price for the <25 KW market to be higher than for large commercial DG projects or utility scale, wholesale projects.

The price bid into the procurement will determine how much new generating capacity comes online due to the procurement, but here is a quick "back of the envelope calculation" that shows how if the market were equally split between a >25 KW market with an SREC price of $50 and a <25 KW market with an SREC price of $100, the procurement would result in 75 MW of new generating capacity. The analysis is highly sensitive to changes in allocations, terms of contracts and market clearing price.

Total Procurement  $30,000,000.00
Term of Contracts 5
$/year  $6,000,000.00
For <25 KW 50%
<25KW Total REC Purchases  $3,000,000.00
Assumed SREC Price $100
# of SRECs Purchased  30,000.00
KWh to Produce Purchased SRECS  30,000,000
Solar Factor 1.2
KW to Produce Required KWh  25,000
MW to Produce SRECs  25
For >25KW 50%
>25KW Total REC Purchases  $3,000,000.00
Assumed SREC Price $50
# of SRECs Purchased  60,000.00
KWh to Produce Purchased SRECS  60,000,000
Solar Factor 1.2
KW to Produce Required KWh  50,000
MW to Produce SRECs  50

The Illinois Power Authority will be holding a workshop on the role of distributed generation in their regular 2015 Procurement Plan on June 12 (link to announcement).  If Governor Quinn signs HB 2427, as expected, a "special procurement" process for PV resources would be initiated that would include a separate hearing.

Our Economy Can Be More Productive AND More Energy Efficient

For many years, it was taken as a given that the use of electricity by industry was directly related to the level of industrial production.  However, we have read a lot recently about how that decades long relationship no longer holds true.  In order to get to the bottom of it, Tipping Point Renewable Energy dug into the data.  And we found that there is clear evidence that industrial production has decoupled from industrial electricity use. We believe this demonstrates clearly that as a society we can be more productive and more energy efficient.

The first graph shows the annual levels of Industrial Output (using the Federal Reserve Index of Industrial Output) and the total number of kilowatt hours used in the industrial sector (using Department of Energy's Energy Information Administration data). Since 2011, when our industrial output has been rising, electricity sales to the industrial sector have actually declined.

Digging a little deeper into the data, we found that until 1999, there was a very strong correlation between the level of Industrial Output and the total number of kilowatt hours used in the industrial sector. However, from 2000 to 2013, the correlation falls apart completely.  The graphic below shows the results of the analysis from those two experiments.

Data from the Federal Reserve of St. Louis and the Department of Energy's Energy Information Administration.

Data from the Federal Reserve of St. Louis and the Department of Energy's Energy Information Administration.

The graph on the left shows the relationship between industrial output and total electricity sales (in kWh) to the industrial sector from 1973 to 1999 (earlier months in dark red transitioning to dark green in the later years).  Likewise the second graph shows the same two dimensions from 2000 to 2014, again with earlier years in the red transitioning to green for the later years.

The r-squared value (roughly the correlation) for the two values in the earlier period is .87, which shows that the two variables are highly correlated.  However since 2000, there is virtually no correlation between the two with an r-squared of .07.

Obviously there is much work to be done explain this result and we welcome comments on approaches to explore this further. However, it does demonstrate that the economy can be more productive in terms of industrial output while we are using less electricity. This is a profound change in our economy and hopefully represents an underlying shift toward a more strategic use of energy in the industrial sector. 

Comments are open, let's hear what you think.

Latest Data on Solar in Ohio

Here are the latest numbers on solar generation in Ohio, based on data available from the Public Utility Commission of Ohio (PUC)).  Each month PUCO releases a list of approved renewable energy generating facilities (available here).

This first chart shows that as of the end of March 2013, there were 1,316 approved solar PV generation facilities located in Ohio with a net installed capacity of 103.8 megawatts. 

Both the number of installations and total capacity continue to grow in Ohio. But the news is not all rosy.  A different look at the number of installations approved per month shows the pace of approvals is dropping off:

Number of facilities approved per month slowed in late 2012 and has continued.

Number of facilities approved per month slowed in late 2012 and has continued.

Another interesting data point is that the the solar energy is deployed widely across the state.  The following map shows the counties in Ohio with approved solar PV facilities. The darker the county, the more solar energy capacity is installed.  It's easy to see where the very large installations at Campbell's Soup plant in Napoleon and AEP/PSEG's Wyandot facility (one of the early large installations) are located. But the striking thing about this map is that every county in the state but one has solar energy.

NRDC / EEI Agreement on Utility Regulation Is the Great News for Solar

The Edison Electric Institute (EEI) and the Natural Resources Defense Council (NRDC) issued a joint statement calling for a new way to regulate utilities the decouples utility profitability from pure sales of electricity. 

The statement represents a recognition by the industry that utilities need to adapt their business model to the new industry paradigm and that regulators need to do their part to make that change possible.

EEI Press Release

NRDC Press Release 

Text of the Joint Statement (PDF from NRDC's website)

Why Some Utilities Are Getting Cold Feet After Pushing for Deregulation

In swearing in a new Chairman of the Public Utilities Commission of Ohio (PUCO), Governor John Kasich said that deregulating electricity may not have been such a good idea. The Columbus Dispatch covered Governor Kasich's comments:

“I will tell you it’s a challenging time in a state that has gone through this whole business of trying to figure out what deregulation actually means,” Kasich said, speaking to the audience in the PUCO chamber before the swearing-in.

Among the challenges, he said, is trying to keep electricity prices low when they are tied to market forces.

“The ideological effort to deregulate, I’m not so sure it’s the smartest thing we’ve done in the state of Ohio,” he said. “But we are where we are, and we can’t go backwards now. So it’s onward in a deregulated environment, and we’ve got to figure it out.”  Gearino, Dan. "Kasich Questions Electricity Deregulation at PUCO Chief's Swearing-in." The Columbus Dispatch. The Columbus Dispatch, 17 Apr. 2014. Web. 17 Apr. 2014.

In the 1990's and early 2000's, it was fashionable for many in the electric utility industry to push for electricity deregulation.  Their argument was that while the transmission and distribution of electricity remain natural monopolies, generation could be a competitive business.  By introducing customer electric choice for generation services, everyone would benefit as market forces would keep prices low and drive innovation.

To a large extent, consumers in many parts of the country have reaped considerable benefits from deregulation.  We recently did some research on whether electricity deregulation has benefitted consumer or not and concluded that the results are inconclusive.  We've started a draft post on the results of our survey of the the literature on the subject that we hope to publish one of these days, but in the meantime, our summary is that it all depends on the rules under which a particular state deregulated and the large macro-economic drivers of electricity economics that prevailed at the time the new policies were rolled-out.

One thing that is clear, however, is that many of the loudest advocates for deregulation in the electric utility industry have been bitten by their own creations. An excellent example of this is the Ohio-based utility FirstEnergy; take a look at their stock price from 2001 (when deregulation took effect in their home market of Ohio) to today:

As a vocal advocate of electric deregulation, First Energy was "all-in" in the deregulated energy markets.  They spun off their electric generation assets to an unregulated subsidiary in search of high growth opportunities for those assets. They aggressively pursued customers in "customer choice" markets, including the heretofore unheard of practice in the fraternal utility world of poaching large commercial and industrial customers from their neighboring utility service territories.  

What happened?  Well, to be honest, a lot of things contributed to the dramatic drop in their fortunes, but one thing that has definitely contributed is a double whammy of flat or declining electric demand in their core markets and the until recently declining prices of natural gas. These have led to weak electric generation markets in the PJM Interconnection has been slow since the beginning of the "Great Recession."

As a result of the drubbing that they've been taking in the electric generation markets, First Energy has had to retrench, seeking cover in their regulated businesses. They recently cut their dividend from $0.55/share to $0.36/share and announced their intention to invest in transmission upgrades.  According to Bloomberg:

FirstEnergy, the worst performer in the S&P’s 500 Utilities Index last year and so far this year, cut its dividend yesterday for the first time in the 17-year history of the company. Saving the funds will provide “additional financial flexibility to pursue regulated growth opportunities over the next several years,” FirstEnergy Chief Executive Officer Anthony Alexander said in the statement. (Source: Chediak, Mark. "Utility Dividend Promise Fades as Weak Prices Cut Profit." Bloomberg, 22 Jan. 2014. Web. 17 Apr. 2014.)

So, back to Governor Kasich's ruminations on the deregulated utility model (which it is not hard to imagine at least partly reflects the input he's been getting from First Energy as one of the largest utilities in his state), he's right that the market has caused some problem that some large companies in Ohio are going to have to address.  However, it is at least partly a situation that those same companies helped to create.  The Governor hopefully will not support their efforts to to take their market frustrations out on the successful and burgeoning energy efficiency and renewable energy industries in Ohio. 

Bottom line is that the entire electric utility industry is facing new economic conditions.  Some of those new economic conditions are partly of the industry's own making (deregulated retail electric markets) and some of those conditions are beyond their control (macroeconomic conditions, distributed generation, improvements in energy efficiency etc).  Regardless of the origin of these challenges, it's clear that successful utilities need to be searching for a sustainable (both economically and environmentally) business model.   

When Will Natural Gas Pass Coal in Electricity Generation?

As was widely noted when it happened, in April 2012, generation of electricity from natural gas very nearly passed coal as the number one energy source for production of electricity in the US.   In that month, coal-fired plants produced only 4.5 million megawatt hours of electricity than natural-gas fired plants.  

This "aberation" was quickly forgotten when the difference grew through the end of 2012.  However, the graph we have prepared using Department of Energy data (Source: Department of Energy Electric generator capacity data (Form EIA-860) Link ) shows that although the difference between the sources grew, the trend clearly continues.

What does this mean for consumer of electricity and gas?  Although the supply of gas in the United States continues to grow, demands on gas supplies for electric generation will also continue as more and more coal-fired plants are retired over the next decade.

Deciphering Commercial Electricity Bills and Electricity Price Increases in Central Ohio

How often have you looked at your electric bill and tried to figure out exactly what it means, only to revert to just dividing the total by the numb of kilowatt hours to get an "average price".  While this is an interesting exercise, it doesn't really give an accurate picture of the underlying prices that are actually embedded in the rate.  This applies to residential customers and most commercial customers.

Variable price of electricity for AEP Ohio GS-2 (Medium General Service) after demand and fixed charges were subtracted from January 2009 to December 2013. Source:&nbsp;Tipping Point Renewable Energy analysis.

Variable price of electricity for AEP Ohio GS-2 (Medium General Service) after demand and fixed charges were subtracted from January 2009 to December 2013. Source: Tipping Point Renewable Energy analysis.

In preparation for a talk on using solar energy to hedge electricity price risk for commercial and industrial users, we have done some analysis on one of our customers' AEP Ohio account.  

This customer is a medium size business that uses about 12,000 KWH per month. They fall neatly into AEP Ohio's Medium General Service (GS-2 Secondary) tariff rate, which is the service that applies to a very large number of businesses and municipalities in central Ohio.  

To do the calculation, we removed fixed charges and demand charges from the bill and then divided the remainder of this bill by the number of kilowatt hours.  

As you can see from the chart, the price has been steadily rising since January 2009, which is how far back this customer's usage and billing information is available. In fact, this shows that even in the midst of the shale gas boom and despite lower natural gas prices, the retail cost of electricity is rising.  The trend line in the chart shows a 4.7% annual inflation rate.

We will have more to come in the next couple weeks as we do more analysis of the current price trends, regionally and nationally.  If you'd like help dissecting your bill, contact us.

Internal Rate of Return IRR

We started this series discussing how payback is a poor choice as way to convey the value of solar. In our last article we introduced two better approaches: NPV and IRR. We went into depth with NPV, today we will cover Internal Rate of Return (IRR). 

In evaluating the attractiveness of an investment in the solar energy project, one of the things that we like to point out to people is that solar energy projects can have very attractive Internal Rates Of Of Return. The problem is that IRR is not a very intuitive metric.

IRR Illustration.png

According to Investopedia, IRR is:

The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. (Source: Definition of 'Internal Rate of Return - IRR, Investopedia, Link)

What does this really mean? 

You should consider the Internal Rate of Return to be the rate of return that an investment would have to beat in order to be better than the proposed solar array.  So, for example, if you are presented with a solar project with an IRR of 5% over 20 years, the operative question is whether you have an alternative to invest that same amount of money in a savings account, CD or other investment that would beat that return.

Let's take a real live example of a project we recently proposed for a large commercial business in Ohio.  We calculated the IRR at 5% over 10 years for an investment of $100,000.  That is the same as if the business owner had put $100,000 in a CD. As of the writing of this article, the 10 year CD rate at Chase bank is 0.9%.  That means that the solar project is paying 4.1% more in interest than the CD.

Important Considerations

What is the downside: you have to consider the risk of the investment.  A bank CD is guaranteed by the FDIC, so it is more or less a risk free investment.  On the other hand the risk factors in the solar investment are:

  • Electricity prices
  • Incentive payments - There are many different types of incentive payments with differing degrees of business risk.  
    • Fixed benefits, such as the 30% federal investment tax credit, are valued based on the installed cost of the system and the risk of that benefit being reduced are very low.
    • Variable and production based incentives, such as solar renewable energy credits, can be extremely volatile and their risk should be evaluated as such.  This topic will be covered in a future post.
  • Array output - While the amount of sun varies considerably day by day, over the course of a year, and especially over the course of several years, the output of a given array in a given location can be predicted with remarkable accuracy.  Over the long run, the U.S. Department of Energy estimates that the long-term estimates are plus/minus 10%.  
  • Operational / equipment risk - This is very low for standard, fixed solar PV arrays.  They have no moving parts and all critical equipment should be warranted for at least the period of the financial analysis.


Calculating the IRR of a project provides a useful metric to helping understand the economic value of a project.  However, it does have a number of limitations which should be taken into consideration (a good summary is here).

Retail Electricity Prices on the Rise (Mostly)

 Electricity prices are on the rise throughout most of the country according to the the US Department of Energy's Electric Power Monthly for October 2013 (released on December 20, 2013).  This map shows the change in the year-to-date average price of electricity to all sectors (residential, commercial, industrial and transportation) from October 2012 to October 2013.

Source:  US Energy Information Administration, Electric Power Monthly, October 2013, Table 5.6.B "Average Retail Price of Electicity to Ultimate Customers by End-Use Sector, by State, Year-to-Date. Link to Excel Spreadsheet. Link to HTML

Latest Data on Solar in Ohio

As of November 25, 2013, the Public Utilities Commission of Ohio has approved 100.42MW capacity of solar photovoltaic capacity in Ohio.  Hamilton County leads the way in the number of individual facility approved with 169 approved solar pv facilities.  But Henry County leads in installed capacity with 14.5 MW installed.

Source: The Public Utilities Commission of Ohio, List of Approved Cases. Link

Tipping Point CEO Quoted in Midwest Energy News

Critics: Ohio energy bill boon for utilities, bad for consumers

The legislation, Substitute Senate Bill 58, is less ambitious than earlier attempts to repeal energy efficiency and renewable energy benchmarks set five years ago. The bill leaves those targets intact, but would eliminate an in-state requirement for renewable energy purchases and loosen efficiency rules for utilities.An Ohio lawmaker’s latest attempt to weaken the state’s energy laws is a “giveaway” for utilities that flies in the face of consumer and business interests, say critics.

Current law says 25 percent of Ohio’s electricity must come from renewable and alternative energy by 2025. Existing law also calls for a 22 percent cut in retail electricity sales by 2025.

At a hearing last week, sponsor Bill Seitz, a Cincinnati-area Republican, stressed that the bill keeps the mandates, “even though I would have preferred repealing them outright if left to my own choices.”

However, utilities will have to do less under the new bill.

“The meat and potatoes of this thing makes those benchmarks irrelevant,” says Dan Sawmiller of the Sierra Club’s Beyond Coal program. “That’s on both the energy efficiency side and on the renewable energy side.”

“It’s a terrible bill,” says Eric Zimmer, CEO of Tipping Point Renewable Energy in Dublin, Ohio. “It’s an end-around on the advanced energy industry, and frankly on common sense.” Zimmer chairs the board of Ohio Advanced Energy Economy, a business coalition that aims to expand Ohio’s alternative energy industry.

Current law says half of the renewable energy must come from within Ohio. Seitz’s bill would let that entire share come from or through any of the 20-plus states served by the PJM and MISO grid operators.

“From an Ohio perspective,” Zimmer says, the bill would have Ohioans “subsidizing renewable energy projects in other states.”

“If we’re going to make this investment, we ought to make this investment in this state where we create jobs and businesses,” adds Zimmer. The current bill “destroys any sort of conducive business environment in Ohio.”

Relying on research by The Ohio State University’s Center for Resilience, Zimmer says the current standards have created more than 3,200 jobs for Ohio. The research says Ohioans could lose out on more than 3,000 jobs between now and 2025.

The same research shows Ohioans would pay $3.65 billion more for electricity over the next dozen years if the bill becomes law, says Zimmer. The calculations consider both the renewable energy requirements and the energy efficiency provisions.

Toilets ‘water down’ efficiency mandate

The bill would also let a broader range of actions count for compliance with Ohio’s energy efficiency standards, as well as cap the amount spent to achieve reductions in electricity demand. And consumers would save less from the programs they pay for.

“The substitute bill guts the energy efficiency standards in a big way,” says Trish Demeter, Director of Clean Energy Campaigns for the Ohio Environmental Council. “There’s a ton of handouts to utilities and big businesses. On the losing side are Ohio small businesses and consumers.”

“Utilities now will be able to count power plant upgrades and improvements to transmission and distribution as energy efficiency,” notes Rob Kelter, an attorney with the Environmental Law & Policy Center.

The Sierra Club, ELPC and the Ohio Environmental Council are members of RE-AMP, which also publishes Midwest Energy News.

Energy companies already have incentives to upgrade generation plants and transmission facilities. “The more efficiently they can produce their power, the more profit they can earn,” says Sawmiller. Such upgrades, however, don’t change overall demand for electricity.

The bill would even let low-flow toilets and recycled glass count towards energy efficiency. While such measures do save some energy by requiring less wastewater processing or manufacturing, they don’t directly reduce retail electricity demand. Also, all reductions won’t necessarily occur within Ohio.

“Those things undermine the integrity of the efficiency standards,” says Kelter. “They diminish their meaning.”

Letting non-electric things count “waters down real customer-focused energy efficiency,” agrees Sawmiller. “This will lead to zero electricity savings, yet Ohio customers will be required to pay.”

Consumers pay

Ohio consumers already pay for energy efficiency programs through a rider on their monthly electric bills. Under current law, programs must save customers more than they cost, and customers benefit from all savings until the law’s targets are met. Small incentives let utilities share in additional savings beyond those targets.

The new bill would let utilities keep one-third of all after-tax benefits until the law’s targets are met. Utilities wouldn’t get anything after meeting the targets, so the bill eliminates any incentive to do more than the law requires.

“Those shared savings are really paid for by the customers,” notes Kelter. In his view, letting utilities keep one-third is “just a giveaway.”

“The bill turns energy efficiency, which is supposed to be about saving money for consumers, into a profit center for AEP, DP&L, Duke, and FirstEnergy,” says Scott Gerfen at the Office of the Ohio Consumers’ Counsel. “And the bill takes away from customers some of the key benefits they’re now receiving from energy efficiency.”

The bill also caps spending for energy efficiency. “By virtue of putting in an artificial cap, you’re guaranteeing the customers will be paying more for their electricity,” says Kelter. That’s because the cap would limit spending on steps that would cut customer demand and electric bills.

Consumers would also pay more for the capacity part of their electric bills. Earlier this year, the Public Utilities Commission of Ohio ruled that FirstEnergy must bid all projected energy efficiency savings into the annual PJM capacity auction. The auction buys electric generation capacity for three years in the future. Seitz’s bill would require bidding in energy efficiency only if demand cuts have already been achieved.

“Energy efficiency and peak demand reductions can lower the wholesale cost of capacity,” the OCC’s Wilson Gonzalez told the state Senate Public Utilities Committee this spring.

Compared to other types of capacity, energy efficiency is usually the cheapest option. Thus, the less energy efficiency that gets bid into the annual capacity auction, the more all Ohioans can expect to pay for the capacity part of their electric bills.

Industry responds

FirstEnergy spokesperson Doug Colafella says the company is neutral on the renewable energy portions of Seitz’s bill. However, FirstEnergy favors changing the energy efficiency provisions. The bill provides “better accounting for all the energy efficiency that’s taking place in Ohio,” says Colafella.

“We believe that’s a win-win for everyone, if we can keep the targets in place but put some modifications in place that reduce the future price tag of meeting the standards,” says Colafella.

Representatives of the Industrial Energy Users of Ohio and the Ohio Energy Group, which both represent large power customers, testified before the state Senate Public Utilities Committee last week. Both groups support Seitz’s bill.

OEG’s David Boehm argued that the current law is “markedly skewed in favor of residential and commercial participants.” Like other customers, industrial users must also pay to lower the state’s overall electricity demand, even if they’ve already taken steps to save electricity.

Boehm complained about the law’s overall costs too. Customers statewide have already paid more than $500 million, he said, “and it’s just getting started.”

Focusing on costs is a “flaw” because it ignores savings, says ELPC’s Kelter. “You’re replacing more than $500 million that they would have had to spend on generation or buying power on the wholesale market.”

Indeed, the Ohio Manufacturers Association has said it favors the state’s energy efficiency requirements and does not want them watered down. In April, the group released a study thatprojected almost $5.57 billion in savings from $2.7 billion in energy efficiency investments.

And what do Ohioans think?

The new bill contrasts sharply with survey results showing that a majority of Ohioans want energy policies that do more—not less—to address global warming. The Yale Project on Climate Change Communication conducted the survey.

“Given that it is such a pivotal swing state, we were pretty surprised and impressed to see that most Ohioans do think that global warming is happening,” says lead author Anthony Leiserowitz at the Yale School of Forestry and Environmental Studies. Furthermore, “two-thirds say that the issue is important to them.”

Survey results say a majority of Ohioans want the state government to do more to address global warming, and 69 percent want corporations and industry to do more.

Renewable energy requirements and energy efficiency standards aim to address global warming by reducing emissions of carbon dioxide and other greenhouse gases. The latestreport from the Intergovernmental Panel on Climate Change says “substantial and sustained reductions” of greenhouse gas emissions are necessary to prevent the worst impacts of climate change.

Ohioans are willing to vote with their dollars too. A majority—59 percent—want to require electric utilities to produce at least 20 percent of their electricity from wind, solar, or other renewable resources, even if the average household pays an extra $100 per year. The survey has a margin of error of +/-3 percent.

How Ohio lawmakers respond to the survey results will become clear in the coming weeks.

“There’s already majority support for taking a lot of these actions,” notes Leiserowitz. And while some people may support energy standards because of global warming, others may want more options for how they spend and save money.

“People can come to support the same policy for very different reasons,” Leiserowitz says.

Kathiann M. Kowalski is a freelance journalist based in Ohio who writes often on science and policy issues.