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Published: Thursday, 8/30/2007

Strickland pushes Ohio energy shift

BY JIM PROVANCE
BLADE COLUMBUS BUREAU
Gov. Ted Strickland said the proposal is designed to protect and attract Ohio jobs. Gov. Ted Strickland said the proposal is designed to protect and attract Ohio jobs.
KIICHIRO SATO / AP Enlarge

COLUMBUS - Ohio utilities must find at least 25 percent of their power from renewable and advanced technology sources by 2025 under a much-anticipated proposal outlined yesterday by Gov. Ted Strickland.

The Democratic governor promised "predictable'' and "stable'' electricity prices in the future but stopped short of guaranteeing that consumers' bills won't climb.

In the air-conditioned cool of the Statehouse Atrium in a speech before lobbyists representing heavy industry, utilities, environmentalists, and consumer and business groups, Mr. Strickland held out the possibility that a competitive electricity marketplace could yet develop.

But until it does, the generation of power would be subjected to renewed regulation by the Public Utilities Commission of Ohio.

"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.''

Under the governor's proposal, the electricity portfolios of utilities like Toledo Edison's parent FirstEnergy Corp. would have to be one-quarter advanced-energy technology by 2025.

That would include fuel cells, cleaner coal, and nuclear technology, as well as renewables like wind, solar, low-impact hydroelectric, and geothermal power.

Of the 25 percent advanced-energy threshold, at least half, or 12.5 percent, would have to come from renewables.

Half of the total advanced portfolio would also have to be generated within Ohio, a direct bid to create jobs here.

Mr. Strickland wants to slow Ohio's march toward an open electricity market that has not generated true competition for most customers and has resulted in rate shock in some states. Maryland customers' rates spiked as high as 72 percent.

"We now face a choice,'' he said. "We can embrace unchecked monopolies presented under the guise of a deregulated marketplace, a false marketplace that would stifle our economy, and leave to chance the development of innovation.

"Or we can embrace a carefully crafted hybrid approach that recognizes [that] how we generate, distribute, and price electricity affects every one of us every day,'' he said.

House Speaker Jon Husted (R., Kettering) and Senate President Bill Harris (R., Ashland) issued a joint statement saying they'll study the full ramifications of the proposal when they receive it in bill form.

Mr. Strickland hopes to have an agreement with lawmakers by the end of the year.

A reversal to fully regulated utilities has been advocated by automakers, steel mills, and other heavy manufacturers, the biggest users of electricity.

Free-market advocates, however, have accused them of trying to lock in lower prices many enjoy through special contracts with utilities at the expense of residential and smaller commercial customers.

Eric Burkland, president of the Ohio Manufacturers' Association, said the group was still studying the proposal.

"The governor clearly shares our goal of placing consumers on equal footing with utility companies,'' he said.

A 1999 law set a five-year clock in motion beginning in 2001 for utilities to prepare themselves for entering a competitive market for electricity by recouping the costs of power plants from customers regardless of whether those customers bought 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.

As 2005 approached, it became clear a truly competitive marketplace had not materialized to maintain downward pressure on prices.

The PUCO 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.

By including nuclear power in his "advanced energy'' mix, Mr. Strickland agreed a utility like FirstEnergy, already a heavier producer of nuclear power than its Ohio counterparts, will have a built-in advantage in meeting the new standard.

Environmental groups have questioned that decision.

"When you compare new nuclear and new coal-fired power plants to new wind farms, renewable energy is going to win hands down'' when it comes to being consumer- and environment-friendly, said Erin Bowser of the nonprofit Environment Ohio. "We are going to be encouraging Ohio's leaders to set the bar higher for clean renewable energy.''

FirstEnergy wants to enter the market as originally planned on Jan. 1, 2009, and opposes mandatory quotas for renewable and advanced energy.

"We share the hope that customers have long-term price stability, but we have concerns about some of his proposals,'' said spokesman Ellen Raines. "Many of the items on his list have big price tags attached. How much these costs are and who will pay for them is a significant concern.''

While reserving immediate judgment on the plan, Ohio Consumers' Counsel Janine Migden-Ostrander liked Mr. Strickland's call for the PUCO to give consumers equal standing with the utilities.

"If you look at the commission's decisions over the past eight years, they have not been consumer friendly,'' she said. "It continues to be a concern when you put more authority in the lap of the commission when they have not traditionally listened to what the consumers had to say.''

Direct Energy, a Texas-based electricity supplier, expressed optimism that Mr. Strickland didn't abandon hope that a competitive market could develop.

"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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