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Considering Ohio's renewable economy

Marc Lefkowitz  |  12/18/07 @ 1:35pm

Ohio's 127th General Assembly is considering amendments and hearing testimony on the energy bill, in particular, provisions for an Advanced Energy Portfolio Standard this week. The amendment that tops the list for groups like Greater Cleveland Partnership, Cleveland Foundation and Cuyahoga County are benchmarks that ensure the utilities doing business in the state are making progress toward supplying Ohio-produced renewable energy.

"The Rip Van Winkle approach, where the statute creates a goal to be reached 18 years from now, could be too easily avoided by doing nothing tangible for 18 years," Cuyahoga County Department of Development's Paul Oyaski writes in an email. "Hence, interim enforceable benchmarks are desired."

Creating the appropriate market incentives and energy benchmarks via local, statewide, and even federal policy will bear directly on the economic, environmental, and social impact in the county's efforts to build a wind farm on Lake Erie, the county's energy task force concluded (6.6 MB pdf).

Oyaski joined Cleveland Foundation energy expert Richard Stuebi; Ken Alfred, executive director for the Ohio Fuel Cell Coalition; Gary Calliari, legislative chair for Building Owners and Managers Association (BOMA); and Amanda Woodrum, policy liaison for Policy Matters Ohio in providing testimony in Columbus yesterday.

"It makes sense to me that policymakers should weigh the costs of a policy against its benefits," Stuebi said, according to The Hannah Report.

The Cleveland Foundation sponsored an independent economic analysis in early 2007 of the potential costs to Ohio if the state were to adopt a strong AEPS. The study was not, however, based specifically on the provisions of HB357.

"The study assessed the possible implications of implementing the renewable energy requirements associated with the advanced energy portfolio standard adopted next door in Pennsylvania," he said. The study can be found at www.clevelandfoundation.org.

The renewable energy requirement in HB357 is 22 percent by 2020, in contrast with the study that based its data on eight percent by 2023. The study also assumed all renewable energy would have to be located in Ohio, whereas HB357 calls for half of the energy from the AEPS to come from within the state.

"The effects stemming from these two differences tend to cancel each other out...it is difficult to guess the net impact of changing these two very important sets of parameters," he said.

He said the study found that Ohio should experience essentially no change in electricity prices. "It will take some time before the new advanced energy resources required by policy grow to become sizable relative to the enormous already-installed base of generation in the state," Stuebi added.

According to the study, Stuebi explained, electricity prices may increase on the order of 0.2-0.3 cents per kilowatt hour. "This is less than five percent of today's electricity prices, which by virtually universal acclaim are going to increase substantially in coming years, with or without AEPS."

The study also looked at the impact on Ohio if federal legislation regarding carbon emissions were implemented to combat climate change. "Ohio lawmakers can ease the pain of future compliance with federal carbon legislation by passing an AEPS now," Stuebi said.

To summarize, Stuebi pointed out that the renewable energy requirements similar to those set in Pennsylvania should not cause Ohio's electricity rates to rise more than a few percent, however the benefits for setting a standard are great for economic development in the growing advanced energy industry.

"If the assembly or the Public Utilities Commission believes it is necessary to insulate large customers facing intense competitive pressures from electricity price increases associated with an AEPS, we believe that the societal cost is sufficiently small that it would be acceptable to allocate solely to residential customers," Stuebi said.

In closing, Stuebi stated that the foundation disagrees with the assertions made that renewable energy mandates are a burden to the reliability of the power grid and that Ohio does not have sufficient resources-calling these red herrings. The foundation finds the cost to be relatively low for high economic development benefit.

Rep. Lundy, asked about the cost consumers would be willing to pay as a part of service for an AEPS and his standard question about jumpstarting wind energy projects in Lake Erie as a "gold rush for Ohio" and "poster child" for the country.

Stuebi said that 35 percent of consumers polled said that they would be willing to pay $10 or more for greener energy. He also added that in the 25 states in the past five to seven years that have adopted a standard, customers are just now ramping up and cost changes will be seen in the coming years. He said customers that have made a decision for wind power have experienced rate decreases and in many studies there has been no price impact other than the two to three percent increase.

Stuebi suggested other states have carved out particular types of technology such as solar or wind. He said a one percent carve-out for off-shore wind would be a provision worth considering as well as weaving into legislation a state purchase for this type of investment. He said this would boost specific technologies for economic development that may not be competitive now, but may become competitive later, which would result in huge benefits economically.

Calliari also addressed economic impact as it pertained to rate structures in the legislation and incentives for energy efficiency. He believes more incentives for energy conservation should be included in HB357, particularly in the building of energy efficient facilities. BOMA Columbus did not take a position on any one form of alternative energy; they support all resources.

Alfred spoke to the benefits on all levels of fuel cell technology, which he pointed out has great benefits not only for gaining a sustainable portfolio standard but also for economic development and job growth in Ohio.

Policy Matters addressed the issue of Ohio's dollars paying for energy outside the state and the country. She stated that $20 billion is sent out of the state every year in order to fuel Ohio's economy. Setting renewable and energy efficiency standards, Woodrum said, would not only replace some of Ohio's polluting resources but would also make the state energy independent and contribute to economic development.

Read more about Ohio's energy policy here. 

Read about Ohio's energy bill here

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