Ohio Senate committee advances energy compromise

With a final few tweaks, Ohio senators advanced a major piece of energy legislation.

The Senate Energy Committee vote was unanimous. With both chambers in session Wednesday, it’s likely lawmakers could sign off on the legislation and send it along to the governor.

The most substantive change had to do with the Public Utility Commission of Ohio clock — it moved from 320 days to 360. Lawmakers are putting a ceiling on PUCO deliberations because they want rate cases to move more quickly.

After Tuesday’s hearing, state Sen. Bill Reineke, R-Tiffin, connected the longer shot clock to broader changes in the ratemaking process. Utilities must come before the PUCO every three years, and they’ll be able to set rates in three-year increments with annual “true-ups” to reflect the companies’ actual balance sheet. Reineke explained the longer timeline will give regulators a bit of breathing room.

Final testimony

Before lawmakers put the bill to a vote, Ohio Consumers’ Counsel Maureen Willis made a final bid to remove a provision on consumer refunds. Under the changes, bill payers could receive refunds after the Supreme Court determines a charge was unwarranted, but any payments prior to that decision would be out of reach.

Willis explained her office in the middle of a case against Dayton-area AES Ohio which could yield more than $300 in refunds per customer.

“If HB 15 becomes law as written AES’s half a million consumers would lose that refund opportunity that has been in the making since 2019,” she said.

Ohio senators propose changes to harmonize House, Senate energy bills

The final version of the bill also left out a passage subjecting more power line projects to state oversight. Willis called that omission “disappointing.”

“No one is reviewing these projects,” she argued. “Not the Ohio Power Siting Board, not the PUCO and not (the Federal Energy Regulatory Commission). Ohio consumers, your constituents, pay 100% of those costs through transmission riders.”

Rebecca Mellino from the Nature Conservancy praised lawmakers for repealing a controversial coal subsidy approved as part of 2019’s HB 6 but argued “Ohio lags far behind neighboring states” when it comes to renewable energy. She suggested provisions encouraging brownfield redevelopment could offer an opportunity for renewable energy investment.

Bigger picture

The core incentive for new energy production is a reduction in tangible personal property taxes — levied on things like machinery and equipment. But while lawmakers attempt to boost energy production with a tax cut, they’re also trying to find reductions in property taxes.  Energy committee chairman, Sen. Brian Chavez, R-Marietta, insisted the reductions won’t undermine services.

“We’re not changing any taxes that are in effect right now,” he explained. “So any taxes from power plants that are in place will stay in place as they depreciate out — this is only on new generation.”

Sen. Kent Smith, D-Euclid, argued the tax break is an important cue to companies. When lawmakers passed HB 6, he said, they subsidized coal and nuclear facilities.

“It was not just putting your thumb on the scale,” he said, “I mean, it wreaked havoc in natural gas generation.” With the current bill, lawmakers will remove the last of those subsidies.

“So we’ve sort of restored capitalism in the energy generation space,” Smith argued. “And by reducing the tangible personal property percentage, hopefully that sends a signal.”

Still, there’s little Ohio’s legislation can do to address lawmakers’ central concern about power demand outstripping supply. The 13-state power network PJM has a substantial backlog of power plants that want to connect to the grid, and large-scale consumers like data centers are pushing demand for power higher.

“That’s why we focused on behind the meter generation,” Chavez said, “so that any new industry that comes into Ohio is not adding additional strain on the existing grid.”

Behind the meter generation involves building a bespoke power plant directly connected to a given business.

“PJM is aware of the concerns that are out there. They’re hearing that from all 13 states,” Chavez added. “They are on our list. We’re going to go talk to them in the fall, and we’re going to have some frank conversations with them to see how we can partner to get through this.”

Follow Ohio Capital Journal Reporter Nick Evans on X or on Bluesky.