Ohio House approves sweeping energy generation bill

With a few last-minute tweaks, and one notable surprise, Ohio state lawmakers pushed a wide reaching energy bill through the House. Last week the Senate passed its version of the same measure unanimously, and meaningful differences remain between the two bills. But in terms of broad strokes, it appears lawmakers have a plan.

Under the changes, new power plants will get generous tax breaks, and the major power companies in the monopoly distribution market won’t be allowed to participate. Those so-called pole-and-wire companies will also see significant changes to the way they set rates.

In exchange for a longer rate-setting horizon and a shortened regulatory timeline, a broad class of energy bill surcharges known as riders will disappear. In some cases, energy companies relied on those programs to avoid opening their books to state regulators for more than a decade.

Perhaps most notable, the roundly criticized legacy generation rider that props up a pair of aging coal plants will be repealed. The surcharge was part of 2019’s Ohio House Bill 6 and it has cost Ohio ratepayers close to half a billion dollars already.

OVEC’s last gasp?

But in the House Energy Committee, one lawmaker argued to keep the coal plant charges in the bill. State Rep. Monica Robb Blasdel, R-Columbiana, said that maintaining the rider through the end of 2026 would provide the Ohio Valley Energy Corporation companies a glide path.

“This amendment proposes a reasonable and responsible course of action,” she insisted, “preserving Ohio’s reputation as a trustworthy and stable place to do business.”

Rep. Andrea White, R-Kettering, echoed that point, warning “an immediate repeal would signal agreements made with the state can be rescinded without warning or transition, and that message would have potential ripple effects far beyond the energy sector.”

Rep. Sean Brennan, D-Parma, pushed back strongly, arguing “Let’s make the glide path the governor’s signature.”

“If you feel that (the OVEC rider) is needed, make the case for it in a separate bill, and let’s see if you can get that passed in this General Assembly,” he said. “I’ve suggested that to folks behind the scenes, and they’ve told me that bill will never pass.”

Ohio Senate committee unanimously advances energy overhaul

The coal plant bailout has been an object of scorn among Democrats for years, but repeated efforts to repeal the rider have gone nowhere in the GOP-supermajority General Assembly. But surprisingly, the idea of extending the rider did get some Democratic support in committee.

Rep. Latyna Humphrey, D-Columbus, argued that eliminating the charges wouldn’t end up hurting the utilities’ bottom line — they’d just write off the loss — and that gap would eventually get passed along to ratepayers.

It echoes a point made by AEP Ohio in testimony before the Senate Energy committee. Frank Strigari, an AEP vice president, called the repeal “draconian” and warned it would result in a $52 million write off of unrecovered costs that would drive up costs for consumers.

“I represent the poorest House district in Franklin County,” Humphrey said, “and my constituents cannot afford to take on this burden.”

Prior to the vote, Committee chair state Rep. Adam Holmes, R-Nashport, took a moment weigh in and reference the committee’s mission statement.

“I’m sure you have it tattooed on your chest,” he joked, before describing point-by-point how maintaining the rider would go against the committee’s stated goals.

In particular, he referenced White’s point that another year of the OVEC rider would cost ratepayers $27.

“Everybody pays it,” he said. “What does that mean to some of those folks that are living in North Olmsted or in Appalachia? Could they use $27?”

“And what do they get for the money?” he added. “Do they get more electricity? Better electricity? That money is not spent on improving the OVEC plans, it goes to the bottom line of the companies for their multi state businesses.”

When the amendment was put to a vote, it failed 17 to 7. And after the hearing, Holmes acknowledged they’d dodged a bullet.

“If it had gotten in, we would not have voted it out of committee,” he said.

House passage

For his part, Ohio House Speaker Matt Huffman dismissed the idea of extending the OVEC rider to soften the blow of it going away. “This is essentially cash directly into the pockets of the utilities that are being serviced,” he said ahead of the House session.

“I think ultimately the question is, why should these things continue?” he said.

On the floor, sponsor Rep. Roy Klopfenstein, R-Haviland, explained the regional electricity grid manager known as PJM “has issued significant warnings that we are heading for an energy shortage crisis across its entire market as soon as 2026.”

“While other states have taken steps to close down generation and restrict new construction,” he argued, “this legislation sends a clear message that Ohio is open for business.”

But on the House floor, a handful of lawmakers took the opportunity to argue again for keeping the OVEC subsidy in place. Rep. Don Jones, R-Freeport, said House Bill 15 is a good bill, “but there’s one provision of it that I just, I can’t walk away from.” Like opponents in the committee hearing, he criticized the measure for “pulling the rug out” on an earlier agreement.

“We need to give these folks a little bit of a glide path or a runway, so to speak, to help them get their business in order,” Jones said.

But the vast majority of lawmakers saw the issue differently.

Instead of worrying about the message that cutting off the OVEC rider might send, Rep. Josh Williams, R-Sylvania Twp., expressed concern about the message sent by not repealing it.

“This industry should understand that when you go behind closed doors and bribe a member of this chamber, including the Speaker, that any deal you guys resolved is going to be null and void,” he insisted.

Rep. Brian Stewart, R-Ashville, said that the rider amounts to $1.50 monthly tax on nearly every utility rate payer in the state. Just as Brennan suggested in committee, Stewart said that a clean bill imposing that tax would be dead on arrival.

“I know this because just last year, we rejected a smaller tax increase that would have been added to Ohioans’ electric bills,” he said.

“Folks,” he added, “a tax on Ohioans to bail out a utility company is still a tax.”

Final words

In the end, the measure passed overwhelmingly — 90 votes in favor compared to just three against.

Speaking after the vote, Huffman expressed optimism about sorting out the differences between the House and Senate versions of the bill.

“I think House Bill 15 is a great bill, Senate Bill 2 is also a good bill,” he said. “The differences are slight.”

And he downplayed the utilities’ assertion that losing the OVEC subsidy would wind up raising consumers’ rates.

“That’s easy to say, but hard to prove,” he said, adding “this money (isn’t) going to Lawrence County to help that plant. It goes in Duke’s checking account in Charlotte, North Carolina.”

He said between state regulators on the PUCO, and the fact that the utilities are bringing in billions of dollars across multiple states, it’s dubious to suggest the relatively modest loss of $52 million could be directly tied to rate increases down the road.

Minority Leader Allison Russo applauded the rare example of significant bipartisan legislation.

“There were a couple of times I asked, am I missing something?” she admitted. “You know, this seems generally good — what am I missing?”

But she pushed back on argument made by some lawmakers that repealing the OVEC subsidies will turn the page on the House Bill 6 corruption scandal that has cast a shadow over the statehouse for the past several years.

“The reality is, we have done absolutely nothing to change our ethics laws, our campaign finance laws that really allowed this corruption scandal to happen in the first place,” she argued.

“We have all of the circumstances and the environment still in the General Assembly for any other corruption scandal to happen,” Russo warned.

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