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Bill Loophole May Undermine Economic Impact of Renewable Energy Portfolio Standard

Monday, May 26, 2008 at 5:00 AM

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On May first, 2008 Governor Strickland signed a new energy and utility bill into law. Among other things, the bill established the long-awaited Renewable Energy Portfolio Standard - legislation requiring that by the year 2025, 12.5 percent of the state's power come from renewable technologies like wind or solar. But the bill's language is murky, and as ideastream's Gretchen Cuda explains, not everyone thinks it's a victory for green energy.

CUDA: There’s a lot of hope for renewable energy in Ohio.  Hope that companies that build wind turbines and solar panels it will move here.  Hope that they’ll tap into our existing workforce, revitalize our lost manufacturing empire, and with them, bring new economic prosperity. But all of that hope hinges on one thing - demand.  And demand for renewable energy is just what the bill was designed to create explains Cleveland Foundation energy expert, Richard Stuebi.

STUEBI: Up until this bill passed, Ohio was at a competitive disadvantage in trying to attract those kinds of business relative to the 25 other states that have passed renewable portfolio standards.  So getting this bill passed was an important statement to make to the the renewable energy industry.  It’s almost like a ticket to play. Alright now we’ve anted up. We are in the game.

CUDA: But being in the game is not the same as winning.  Gene Krebs is the director of Greater Ohio, a local environmental think tank- he doesn’t think the bill can stand up to utility companies who have little financial interest in the green revolution.

KREBS:  Have you seen an announcement from any of our four investor owned utilities that they are going to be actively seeking wind turbine placement opportunities?  NO.

CUDA:  And one reason utility companies might not be already scouting for wind farms is that they see a way around the law.  An amendment to the bill says that if the cost of renewable energy increases overall rates by 3 percent or more, companies are off the hook for meeting the 12.5 percent renewable requirement.  Ken Silliman is chief of Chief of Staff to Cleveland Mayor Frank Jackson.  He says that could become a major setback.

SILLIMAN: This loophole is big enough to drive a Mack truck through. It’s a loophole that swallows the rule - and has the effect of rendering the goals and the benchmarks meaningless for the foreseeable future.

CUDA: Silliman argues that renewables won’t be cost competitive with conventional energy for a decade or more. He fears the renewable standard will likely be bypassed by the utility companies, and those coveted renewable energy manufacturing firms Ohio wants to attract will take notice and go elsewhere.  But Richard Stuebi disagrees.  Stuebi argues that energy rates may be impacted by very little by the new renewable standards, and if federal carbon legislation is passed as he expects it will, renewable energy could actually represent a cost savings.

STUEBI:  We don’t think renewables are going to cause much of a rate increase. And because we don’t think it will cause much of a rate increase, if it’s worded right and interpreted right by the Public Utilities Commission we in the renewable energy industry can live with it.

CUDA: But that’s the rub, worries Greater Ohio’s Gene Krebs: just how WILL the Public Utilities Commission of Ohio interpret the clause?  He says the amendment gives the P-U-C-O a great deal of latitude, and there are a lot of unanswered questions.

KREBS: For example when do you start counting?  Is it every year or is it cumulative? How often do they have to show it?What’s the basis for the data, how will the data be compiled? Who will be compiling the data? will PUCO simply be taking the utilities word for it? You know, they ask the utilities to make a ‘good faith effort’ to acquire sufficient renewable energy.  Oh yeah, like how do you define ‘good faith effort’?

CUDA: And P-U-C-O has a history of favoring the utilities over consumer interests.  An annual ranking of state utility regulators by the Wall Street firm Lehman Brothers, consistently ranks Ohio as one of the most utility friendly in the nation.  Despite this fact, Stuebi is cautiously optimistic.

STUEBI: I mean we’re pretty confident …uh…confident is a strong word, but there is cause to be optimistic that the interpretations that we in the advanced energy community want to see put in code will actually be done so.

CUDA: The Cleveland Foundation, and environmental watchdog groups like the Sierra Club say that oversight is key to ensuring that utility companies follow both the letter and the spirit of the law.  And one thing they all agree on is that they’ll be watching.  Gretchen Cuda 90.3

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Environment, Government/Politics, Energy, Regional Economy/Business - News

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