Nine years after passage of a state law that aimed to drive down customer electric bills and usher in an era of energy efficiency and green energy, a lone state lawmaker is trying to stop what has become a state-approved escalator of rising power bills.
State Rep. Mark Romanchuk, a Republican from Ontario, near Mansfield, on Wednesday introduced legislation that could turn the electric utility industry in Ohio on its head.
The bill has the backing of a coalition of customer groups, including the Ohio Consumers’ Counsel, AARP Ohio, the Northeast Ohio Public Energy Council (NOPEC) the Ohio Farm Bureau and the Ohio Manufacturers’ Association.
The proposal, House Bill 247, would:
- Eliminate Ohio’s so-called “Electric Security Plans” or ESPs, rate plans which are usually overly complicated and debated for months or even years before approval by the Public Utilities Commission of Ohio. The ESP option was included in Senate Bill 221, approved by a near unanimous vote in 2008. Its inclusion in the bill was overshadowed by intense debates over requiring power companies to start offering green energy
Romanchuk would require the traditional utilities, such as FirstEnergy, to base customer power prices solely on wholesale power prices. This “Market Rate Option” was created along side the ESP in SB 221. FirstEnergy tried it once, in 2008, but the PUCO rejected it as not meeting the letter of the law. The company then filed an ESP, which the PUCO re-wrote to slash proposed rate increases.
- Determine delivery rates in distribution rate cases before the Public Utilities Commission of Ohio, open to more focused scrutiny and challenge. Under the 2008 legislation, the PUCO’s use of the ESP has included a practice in which utilities pancake “riders” on top of base delivery rates, pushing the rates higher than power prices — and helping the companies grow their revenues. FirstEnergy has about 30 rate “riders,” though not all are active at any one time. A return to distribution rate case could end riders and simplify rates.
“These non-bypassable riders have not worked out very well for customers,” said Romanchuk in an interview. “That’s another reason to get rid of the ESPs because the ESP is the mechanism that allows the utilities to add, in my view, these unjust riders.”
- Require Ohio’s utilities to get out of the power plant business. Romanchuk thinks the utilities should sell all of their power plants, as Duke Energy Ohio has already done, and concentrate on power delivery and energy efficiency services. Unlike many other states which required this complete separation when they adopted deregulation, Ohio has permitted the traditional utilities to move the ownership of the power plants to wholly owned subsidiaries.
“There is too much cross subsidization going on,” Romanchuk said. “That needs to end. Texas has done it. If you are in the distribution and transmission business, you are not in generation. That’s not good for the market.”
Cross subsidization is precisely what FirstEnergy has tried to do in a very public way since 2014, first with proposed power purchase agreements between its power plant company and its delivery companies, Ohio Edison, the Illuminating Co. and Toledo Edison. The PUCO eventually approved the extraordinary PPAs, but federal regulators stepped in, saying the deal was something it should review because of its impact on interstate competitive markets.
Then last fall, FirstEnergy convinced the PUCO to approve a three-year “rider” on delivery rates that supposedly was to go to modernization of the local delivery system but could be used for whatever the company thought best. Now FirstEnergy is asking lawmakers to approve a special subsidy for its nuclear power plants, again with a rider on delivery rates. Opponents are ready to file federal lawsuits as they have in Illinois and New York where nuclear subsidies were first adopted.
- Mandate that utilities must reimburse customers (with money not credit) when they have been found to have overcharged them. Romanchuk said he was surprised to learn that there is not amechanism in the law to require the utilities to just reimburse customers when it has been determined they have over-charged them.
Ohio Consumers’ Counsel Bruce Weston, in a prepared statement called the bill “a major step toward consumer protection.” Weston has been critical of the ESP provisions in the 2008 law for some time.
“Lower electric prices in the competitive market should translate to lower electric bills for Ohio families and businesses,” Weston said, adding that Ohio consumers are paying higher electric rates than consumers in 33 other states.
Erik Burkland, president of the Ohio Manufacturers’ Association, said the legislation, if approved, would “help protect manufacturers from unwarranted, anti-competitive, above-market charges.”