Ohio Freezes Renewable Power Mandates

Published June 13, 2014

The Ohio legislature voted to freeze the state’s escalating renewable power mandates at 2014 levels. In so doing, Ohio became the first state to invalidate preexisting renewable power mandates. 

Committee Will Reexamine Mandates
The House and Senate voted largely along party lines to institute the freeze. Specifically, the bill freezes Ohio renewable power and energy efficiency mandates at 2014 levels while a committee of 12 lawmakers from both parties studies the impacts of the mandates and make recommendations on the future course of the requirements. If the committee fails to agree on changes, the two-year freeze will be lifted in 2017. 

After the legislature approved the bill, Kasich spokesman Rob Nichols said the governor approved of the bill and would sign it into law.

Prices Spiked Since Enactment
The renewable power industry had long hailed Ohio’s renewable power and energy efficiency mandates, enacted in 2008, as a way to boost the Ohio economy. The mandates set annual benchmarks electric utilities have to meet until 2025.

In 2008 testimony before the Ohio legislature, Heartland Institute senior fellow James Taylor, who is the managing editor ofEnvironment & Climate News, warned the renewable power mandates would result in a sharp escalation in the state’s electricity prices. The Democrat-controlled legislature enacted the mandates anyway, claiming their analysis determined electricity prices would rise very little if at all. 

Since 2008, Ohio electricity prices have risen at triple pace of the national average. Had Ohio electricity prices risen by the national average, the average Ohio household would have saved $955 since 2008. 

In legislative hearings last year, Andrew Ott, senior vice president for markets at PJM Interconnection, which coordinates electricity transmission in Ohio and 12 other states, testified the Ohio electricity generated from renewable sources costs at least double or triple that of conventional power. 

In addition to freezing the renewable power mandates, the new legislation expands the types of projects that count toward meeting energy-efficiency standards and lifts a requirement that utilities purchase half of their renewable energy from in-state suppliers.

Part of a National Trend
Ohio’s freeze on renewable power mandates is part of a national trend of state legislatures reexamining these requirements. Thirty states have renewable power mandates, with most having been enacted between 2004 and 2008. No states, however, have enacted renewable power mandates since 2009, as spiking electricity prices in states with such requirements dissuades others from following suit.

Several state legislatures came close to rolling back or repealing their mandates in 2013 and 2014. Kansas, North Carolina, and Colorado held particularly close votes that fell just short of reversing course on the mandates.  

Outright Repeal Advocated
“Artificial props for inefficient technology will end up costing Ohio ratepayers more in the long run and damage the ability of the best ‘green’ technology to take hold in a truly competitive environment,” said Greg Lawson, statehouse liaison and policy analyst with the Buckeye Institute for Policy Solutions.

“Senate Bill 310 is a step in the right direction, but far from the complete answer for Ohio. The real answer for Ohio is that renewable-energy mandates should be repealed in whole, and the free market, not government, should allocate resources,” Lawson explained.

“Ohio’s two year freeze of the state’s renewable power mandate is a small step in the right direction for Ohio and a much bigger step in the national conversation over these costly policies,” said John Nothdurft, director of government relations for The Heartland Institute. “Over the last two years, more than 18 states have considered proposals that would freeze or roll back these mandates, and as a result of the vote in Ohio, more states will likely follow suit. Ohio lawmakers should be commended for standing up for low- to moderate-income Ohioans who suffer from increased electricity prices more than any other group.”

Heartland Institute research fellow Isaac Orr said, “To adapt the words of a famous Ohioan: Ohio legislators have taken one small step toward reducing their constituents’ electricity costs, but one giant leap toward repealing costly and inefficient handouts to special-interests groups masquerading as energy companies across the nation. 

“The true benefactors are seniors and lower-income Ohioans who … have a hard enough time paying their bills in the first place. Hopefully, the study required by this bill will lead to bigger relief for consumers and a repeal of wasteful RPS mandates,” Orr explained.

Bonner R. Cohen, Ph. D., ([email protected]is a senior fellow at the National Center for Public Policy Research.