In the final days of 2016, Republican Gov. John Kasich vetoed legislation that would have delayed the state’s renewable energy mandates from going into effect for two years. Instead, they are set to resume this year.
Now state Rep. Bill Seitz is pushing to get rid of these costly regulations altogether.
Ohio’s renewable portfolio standards require utility companies to derive an increasing share of their electricity from renewable sources like wind and solar. By 2025, 12.5 percent of utility power must be generated from renewable energy. Financial penalties are imposed for failure to meet the mandate. Ohio utilities currently derive 2.5 percent of their electricity from renewables.
The Ohio Legislature imposed a two-year pause on these mandates in 2014 while a newly established Energy Mandates Study Committee examined whether Ohio should revive them. After the committee recommended legislators indefinitely suspend Ohio’s portfolio standards, the Legislature sent to Kasich’s desk a measure that would have delayed implementation until 2019.
Kasich vetoed the bill two days after Christmas. In a statement released with the veto, the governor said “Ohio cannot afford to take a step backward on the economic gains that we have made in recent years … and arbitrarily limiting Ohio’s energy generation options amounts to self-inflicted damage to both our state’s near and long-term economic competitiveness.”
In response, Seitz plans to introduce legislation this session that would extend Ohio’s renewable energy target deadline to 2027 and turn it into a voluntary goal instead of a state mandate. These changes would effectively abolish Ohio’s renewable portfolio standards.
“What we are now saying is we are going to scrap the renewable portfolio mandates in their entirety and [replace] them with goals,” Seitz told the Ohio Energy Management Conference in Columbus on Feb. 21. “We are confident that [utilities] will probably meet the goal without any state mandate holding a gun to their head.”
His proposal would dramatically reduce the regulatory burdens that renewable portfolio standards impose on Ohio. A 2015 study from the Institute of Political Economy at Utah State University predicts renewable energy standards will have a “lasting negative effect on [Ohio’s] economy.”
The study estimates Ohio’s renewable energy portfolio standards will eliminate 29,366 jobs, reduce personal income by $258 million and increase electricity costs by $1.92 billion by 2026.
Another study, from the Columbus-based Buckeye Institute, found renewable portfolio standards increase energy prices, slow job creation and diminish economic activity.
“When electricity prices rise, electricity-intensive businesses tend to reduce their energy consumption,” says Orphe Divounguy, an economist at the Buckeye Institute. “Reducing industrial energy consumption means that industry cuts back on production and hiring.”
A major victim of Ohio’s green mandates is one of the state’s largest private-sector employers, Timken Steel. The manufacturer estimates annual operating costs for two Canton-based steel plants increased by $2.9 million as a result of these rules.
“Electricity is our third highest production cost,” former Timken lobbyist Peggy Claytor said. “A mere change of one-tenth of a cent per kilowatt-hour impacts our electricity bill to the tune of $1 million.”
Timken’s experience is common in states with renewable portfolio standards. According to the Institute for Energy Research, the average price of electricity is nearly 40 percent higher in states that mandate renewable energy.
While the raw numbers are bigger for large institutions like Timken, environmental regulations disproportionately harm poor families, said Wayne Winegarden, a senior fellow at the Pacific Research Institute.
“The higher electricity costs will fall most heavily on lower-income families and the weight of the adverse economic impact will disproportionately impact Ohio’s African-American households,” he said.
Seitz is confident his proposal will spare Ohio’s residents from rising energy costs and overcome Kasich’s opposition.
“We will do our part by launching a full scale effort to totally repeal these [former Gov. Ted] Strickland-era mandates,” he said. “With veto-proof majorities [this] session, we are optimistic of success.”
Seitz’s bill will face an uphill battle. Although Republicans control enough seats in Ohio’s House and Senate to override a veto with a three-fifths majority vote, many Republican legislators support Ohio’s renewable energy mandates.