The Ohio legislature is considering legislation to soften the state’s renewable power mandates, though special interest lobbyists are fighting hard to preserve their market carve-outs.
2008 Bill Imposed Mandates
In 2008, the Ohio legislature passed legislation imposing the renewable power mandates, promising the mandates would not raise electricity prices. Under the 2008 legislation, Ohio’s utilities are required to produce 12.5 percent of their power from renewable sources, such as wind, solar, and hydropower, by 2025. Another 12.5 percent must come from so-called “advanced energy,” such as clean coal or state-of-the-art nuclear generators. In Ohio, this is known as the 25 by 25 standard.
Electricity Prices Rapidly Rising
Since the law went into effect, the energy picture in Ohio and elsewhere in the United States has changed dramatically. The change has been led by the shale revolution, which has boosted domestic production of oil and natural gas, and by the failure of the renewable energy sector to develop as quickly and as cost-effectively as promised, despite substantial subsidies and mandates. Since the Ohio legislature passed the renewable power mandates in 2008, Ohio electricity prices have risen 9 percent—triple the 3 percent rise in U.S. electricity prices.
Sen. Bill Seitz (R-Cincinnati), who chairs the Ohio Senate Public Utilities Committee, supported the 2008 legislation but now says the mandates have caused more harm than good. Earlier this year, Seitz proposed legislation to scrap the 2008 law in its entirety, but he has compromised in recent months in favor of legislation that would impose only modest reforms. Seitz says he still would like to repeal the 2008 law in its entirety and may pursue legislation to do so in 2014.
The compromise bill being hammered out by Seitz and other lawmakers would leave Ohio’s mandates in place through 2018. After 2018, the legislation would remove carve-outs for in-state renewable power, allowing utilities to meet the mandates by importing renewable power from out of state if it is cheaper to do so. According to the National Renewable Energy Laboratory, Ohio has poor solar and wind power potential compared to other states. Generating such power in Ohio is thus more expensive than importing renewable power from other states.
Seitz also pointed out the in-state mandate may well violate the U.S. Constitution’s Commerce Clause, which prohibits states from discriminating against out-of-state goods and services.
Cronyism and Competing Interests
The bill’s slow progress through the Ohio legislature is a reflection of widespread disagreement over the future of renewable energy in the state.
“So-called green energy mandates like those that were passed in [the 2008 bill by] the Strickland administration fly in the face of free-market economics and eventually pick winners and losers in the energy business through fiat,” said Greg Lawson, statehouse liaison and policy analyst with the Columbus-based Buckeye Institute.
“Given Ohio’s—and the nation’s—remarkably different energy picture today, it makes sense to substantially revise these requirements if not completely eliminate them,” said Lawson.
Bonner R. Cohen, Ph. D. ([email protected]), is a senior fellow at the National Center for Public Policy Research.