Strickland: 25% of electricity must be from renewable, advanced sources by 2025
8/29/2007COLUMBUS Ohio utilities must find at least 25 percent of their power from renewable and advanced technology sources by 2025 under a much anticipated proposal unveiled today by Gov. Ted Strickland.
The Democratic governor has called for Ohio to take a step back to reimpose some regulatory controls over "monopoly" utilities, but he said they should still be able to take advantage of competitive market forces if they ever develop.
"This is not a plan for the utilities, he said. "It s not a plan for manufacturers. It s a plan for Ohio. It s a plan to protect existing jobs and to attract new jobs."
In a speech in the air-conditioned coolness of the Statehouse Atrium before lobbyists for heavy industry, utilities, environmentalists, consumer and business groups, the governor said the electricity supply portfolios of utilities must be one-quarter "advanced energy technology."
That would include fuel cells, cleaner-coal and nuclear technology, as well as renewables like wind, solar, hydroelectric, and biomass like landfill gases. Of the 25 percent, half must come from renewables.
The state wants to slow its march toward an open electricity market that has not generated true competition for most customers and has resulted in rate shock in some other states. Maryland customers saw rates spike as high as 72 percent.
The dispute of this fall, however, is how much the state should throw the deregulation bus into reverse and reinforce the Public Utilities Commission of Ohio s grip over electricity prices in Ohio.
A fuel reversal has been advocated by automakers, steel mills, and other heavy manufacturers, the heaviest users of electricity. Free-market advocates, however, have accused them of trying to lock in lower prices many of them enjoy through special contracts with utilities at the expense of residential and smaller commercial customers.
Nearly all involved predict higher electricity prices. It s just a question of how much higher and whether Ohio should give up entirely on a market ever forming.
A 1999 law started a five-year clock in motion beginning in 2001, allowing utilities to temporarily recoup the costs of power plants and other investments from customers in their geographic territories, regardless of whether those customers opted to buy their electricity from other suppliers.
The law enacted a 5 percent rate cut during this transition period, and, six years later, Ohio s average electricity rates are largely in the middle of the pack compared to its Midwest neighbors.
For the most part, the expected power sellers didn t come, and when they did, they were far more interested in the high-volume industrial users than the average Ohio homeowner.
As 2005 approached, it became clear a truly competitive marketplace had not materialized. The PUCO instead approved utility-specific "rate stabilization plans" that largely maintained the status quo for another three years to buy the state time.
Those plans begin expiring at the end of 2008, and the state is now set to walk into the open market on Jan. 1, 2009.
In ominous timing, a 6-1 Ohio Supreme Court decision this morning struck down the plan of Toledo Edison parent FirstEnergy Corp. to defer its rising fuel costs during those three years and recover them from customers over 25 years beginning in 2009.
The court found that passing costs incurred from generating electricity now from future customers through its billings for distribution illegally blurs the line between the two utility functions that the 1999 law created.
The suit was brought by WPS Energy Service, a competing energy supplier, and Elyria Foundry Co., a heavy industrial customer that would have been required to pay for the fuel costs even if it didn t buy power from FirstEnergy.
Direct Energy, a Texas-based electricity supplier, has urged Ohio not to abandon the long-term goal of an open electricity market. The subsidiary of London, England-based Centrica wants to sell electricity largely generated by natural gas plants and wind turbines in Ohio much as it currently sells natural gas to about 200,000 Ohioans.
That puts it in alliance with a potential competitor, FirstEnergy, which also wants to proceed to market. FirstEnergy has some of the highest rates in the state.
"If you build it, we will come," said Direct Energy s Mike Beck. "If a market is structured the right way so that we can compete fairly, we will come into Ohio."
Contact Jim Provance at: jprovance@theblade.com, or 614-221-0496.
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