It would seem counterintuitive to freeze a state law that has reaped over a billion of dollars in financial rewards for consumers, added thousands of well-paying local jobs to a struggling economy, and protected public health by enabling significant reductions in climate change-causing carbon emissions.
But that’s exactly what Ohio did in 2014.
Last spring, Ohio’s legislature passed SB 310, freezing the state’s energy efficiency and renewables standards through 2016 while a legislative committee (dubbed the “Energy Mandates Study Committee” or “EMSC”) determines their fate. The committee, which has held half a dozen hearings since December, is meeting for the last time today after which members are required to produce a final report and potential recommendations by September 30th of this year.
It certainly makes sense to do a “gut check” on state policy to ensure it’s delivering the predicted benefits. But as I’ve been blogging about for the last year, the irony of the “freeze” is that it ices a wildly effective and popular policy that has been delivering huge benefits to consumers since it was first enacted more than five years ago.
One of the core tasks of the committee is to conduct a “cost-benefit analysis of the renewable energy, energy efficiency, and peak demand reduction mandates . . .” (see SB 310, Section 4). But — as a matter of law — the clean energy standards are required to be cost-effective year in and year out, and publicly-available annual reports show they are delivering more value to Ohioans than their costs.
This begs the question: What remains to be studied when so much data already document success?
The committee has much to consider over the coming months as it sorts through the testimony on record thus far. And the value of clean energy to Ohio and complementary policies like the renewable energy and energy efficiency standards cannot be overstated.
At a minimum, we recommend the EMSC consider the following cost savings, economic, and environmental data as it prepares its September report. Without this information, the final conclusion is at risk of imbalance, skewed in the favor of increasingly uneconomic and unpopular fossil fuel resources, and depriving Ohio of low-cost power and a much-needed economic boost.
Energy Efficiency Remains the Lowest-Cost Resource, Beating Out Coal and Natural Gas
Statewide, Ohio’s energy efficiency programs prove to be exceedingly cost-effective, delivering a 2:1 return on investment for homeowners and businesses. This means more dollars in Ohioans’ wallets to spend on their families.
The utilities (who unfortunately never testified in front of the committee), including American Electric Power (AEP), Duke, Dayton Power & Light, and FirstEnergy, themselves document the significant consumer benefits of the standards, such as a reported $1 billion in savings to date from energy efficiency programs, with an additional $4 billion projected over the next decade.
Even FirstEnergy extols the virtues of efficiency programs for Ohioans in its current portfolio plan, stating: “Collectively, the proposed [energy efficiency] programs provide significant opportunities for energy and cost savings for virtually all of the Companies’ customers and provide the Companies with the best opportunity to meet or exceed their … requirements in a cost effective manner.”
The EMSC already received extensive expert testimony confirming these cost savings, notably from Chuck Goldman, staff scientist for the Electricity Markets and Policy Group at Lawrence Berkeley National Laboratory (LBNL). In fact, in a recent LBNL study of energy efficiency programs in 34 states Ohio led the nation for the cheapest and most cost-effective programs, beating out top-performing states like New York, Massachusetts, and Rhode Island.
Data presented to the committee also demonstrates that, while customers pay for energy efficiency programs upfront, they are relatively cheap compared to building new power plants. This is consistent with AEP’s recent finding that energy efficiency delivers power at a rate of less than 2 cents per kWh, making it the “lowest cost alternative,” even cheaper than natural gas and coal-fired power.
But the benefits don’t stop there. The American Council for an Energy Efficient Economy reports efficiency lowers wholesale energy prices in Ohio. LBNL confirmed this effect, stating even customers who don’t take advantage of the programs, such as rebates for efficient appliances, still benefit. If we lower demand through increased energy efficiency, we lower the price of electricity for everyone.
Energy Efficiency Will Continue to Save Ohioans $$ and Boost the Economy for Years to Come
Other than the long-resolved question of cost-effectiveness, the committee also appears concerned with whether Ohio will be capable of capturing more energy efficiency savings in the coming years. The claim is that the “low-hanging fruit” have all been picked.
Thankfully, that doesn’t appear to be the case.
For example, AEP recently conducted a study concluding that the utility has high potential for continuing to innovate and reach robust efficiency savings over the next 15 to 20 years, all at low costs to customers. There is plenty of fertile ground for all customer classes: for homeowners, predominantly from LED lighting and appliances, and heating, ventilation and cooling projects; in the commercial and industrial sectors, there is still significant low-hanging fruit yet to be captured, even on lighting projects. And as the EMSC heard several times in testimony, Ohio’s industrial facilities have deep potential to save energy by installing combined heat and power projects which were made possible by the Kasich-shepherded SB 315.
These opportunities also extend to low-income customers, which are of particular concern for several members on the committee. Ohio has yet to even scratch the surface of programs for this community, such as multi-family retrofits. For example, the Energy Efficiency For All initiative developed by National Housing Trust in partnership with NRDC and other groups recently estimated that directed programs for apartments and other rental dwellings could cut electricity use by as much as 32 percent and save customers $21 billion by 2034. Ohio’s utilities currently offer scant programs for this customer class, if any at all.
Renewable Energy Is Cheaper than Ever and Could be a Boon to Ohio’s Job Market
The committee has also heard ample testimony confirming that the cost of renewable energy like wind and solar has declined precipitously in recent years and is creating good-paying jobs that sustain entire communities.
As a preliminary matter, much was said during the SB 310 debate about the desire to keep energy rates low. According to testimony from the Retail Energy Supply Association (RESA), five years into the implementation of the clean energy requirements Ohio’s energy rates are still lower than the national average.
The data indicates these trends can continue, even with larger proportions of renewables in Ohio’s energy mix. The American Wind Energy Association (AWEA) and Solar Energy Industries Association (SEIA) testified that wind and solar are cost-competitive with traditional resources and are at times the cheapest options available. As resources with zero fuel cost, wind and solar are valuable hedges against rising and often volatile prices for traditional resources like natural gas. As with energy efficiency, the Public Utilities Commission of Ohio (PUCO) also concluded that renewables lower wholesale energy prices, keeping energy costs low for everyone.
Further, LBNL found that the cost of implementing Ohio’s renewable energy standard is small, to date accounting for less than 1 percent of retail rates (which for an average customer in the FirstEnergy territory would translate to approximately $2 to $3 per month). A May 2013 study by Synapse Energy Economics found that doubling the use of wind energy in the PJM region — which covers 12 states (including Ohio) and D.C. — beyond existing requirements would save consumers $6.9 billion per year, even after accounting for infrastructure investment costs.
Ramping up Ohio’s wind and solar power can also be done while maintaining reliable electric service. A recent assessment by PJM found that Ohio’s electric system could support 30 percent renewable energy, while maintaining reliability and reducing pollution and costs.
Not to mention the significant job-creating opportunities that the clean energy standard brought to the state. As of 2013, Ohio was home to over 400 advanced energy companies that employed over 25,000 Ohioans and was leading the country in the number of facilities manufacturing components for wind technology and second in the number of solar equipment providers. A report by the Pew Charitable trusts shows Ohio attracted $1.3 billion in private clean energy investment from 2009 to 2013. Similarly, Environmental Entrepreneurs (E2) reported that, just prior to the passage of the SB 310 clean energy freeze, Ohio’s clean tech economy had grown to support 89,000 jobs.
Unfortunately, much of that hard-earned momentum was a casualty of the freeze as well as HB 483, which basically tripled setbacks for wind turbines and made future commercial-scale development unviable.The renewable sector is particularly lagging, in the E2 report showing a scant 1.5 percent job growth in Ohio far lower than the national wind and solar rate.
Recent interviews with Pew Charitable Trusts and Ohio’s clean tech industry reinforce the need for businesses to have stable policies to continue innovating and competing in the growing global clean energy economy. Without that stability, job creators seek out opportunities in other states.
The obvious way to reverse this downward trend is to thaw the freeze on the clean energy standards. But the committee will hear testimony today that will claim otherwise.
Despite the documented benefits of the renewable energy standards, Greg Lawson of the Buckeye Institute and Ryan Yonk of Utah State University and Strata Policy will be swinging for the fences in their testimony today to end Ohio’s so-called “mandates.” Mr. Yonk, in particular, will be pushing flawed data in a new report. His perspective can hardly come as a surprise given that Utah State has already been called out for making misleading statements about wind energy, not mention both Yonk and the University’s deep ties with the fossil fuel industry and the Koch brothers. Buckeye Institute suffers from similar questionable motives.
We urge the study committee to weigh these facts seriously as they listen to today’s testimony, and compare them with data from well-established sources like US Department of Energy, Synapse, and Ohio’s own PUCO.
Ohio’s Clean Energy Standards are the Key to Unlocking Carbon Reductions — and $$ Savings
Finally, the committee should consider the connection between Ohio’s clean energy standards and the forthcoming Clean Power Plan — the first-ever limits on carbon pollution from our nation’s power plants. The data are clear: Ohio has the ability to affordably cut carbon when clean energy comes into play.
An NRDC analysis demonstrates that if Ohio develops its own plan to cut carbon using efficiency and renewables as the primary tools, not only will the Clean Power Plan rules be achievable but the average Ohio household could enjoy reduced electric bills. The consumer protection organization Public Citizen came to the same conclusion, finding Ohio consumers will see much-needed savings on their electric bills — approximately $144 annually by 2030 — if energy efficiency is used to meet the federal law.
Backing up these findings, a PJM report shows that Ohio can satisfy the Clean Power Plan targets if it coordinates with neighboring states and focuses on clean energy.
But that’s not all. Billions of dollars are potentially on the table for Ohio if the state cuts carbon emissions through a market-based program that also takes advantage of existing clean energy policies. A recent audit by the Regional Greenhouse Gas Initiative (RGGI), a collective of nine states in the Northeast and Mid-Atlantic, confirms that we don’t have to choose between a healthy economy and healthy people. Over the last six years, the RGGI states have cut carbon emissions by 1/3 while generating nearly $3 billion in economic growth region-wide, including over 14,000 new jobs and hundreds of millions of dollars in electricity bill savings.
The report made clear that the existing state-level clean energy requirements in the RGGI states were critical to this success. Despite some statements to the contrary, and as detailed by my colleagues Rebecca Stanfield and Amanda Levin, the RGGI experience demonstrates that complementary, clean energy requirements (like the ones Ohio froze) are still essential even under a market-based carbon reduction plan.
What Comes Next?
In the coming weeks the EMSC will be developing its final report, and potentially, recommendations.
Given the wealth of data from well-regarded and rigorous sources demonstrating the benefits the efficiency and renewables standards have brought — and will bring — to Ohio, we urge the committee to thaw the freeze. These policies are still in their infancy, and to delay their reinstatement or further diminish them would reverse the progress the state has made over the last five years.
The original intent of SB 310 was to do a “gut check” on Ohio’s clean energy policies and ensure the state is moving forwarded on the smartest path to deliver safe, reliable and affordable energy to consumers.
In order to achieve these outcomes, energy efficiency and renewable energy like wind and solar must be a part of the mix. The facts don’t lie; the clean energy standards are the way to get there.