Last Friday, Ohio Governor John Kasich signed Senate Bill 310 freezing the state’s renewable energy portfolio and energy efficiency requirements at 2014 levels.
Environmental activists decried the new state law by evoking apocalyptic fears of ecological collapse while characterizing renewable portfolio standards as just the type of collective sacrifice needed to avoid the end of the world. Average Ohio citizens made it clear they wanted no part of the increased monthly utility bills that Toledo Edison said would rise from $54 today to $241, if no changes were made in the 2008 mandate law. And business wanted nothing to do with the 2008 enactment’s degrowth requirement to cut power usage by 22%.
While 30 states and the District of Columbia have adopted renewable portfolio standards (and 7 other states have some voluntary goal), Ohio is the first state to roll back such a clean energy mandate.
Renewable portfolio standards are state laws designed to increase generation of electricity from renewable resources. These laws require electricity producers within a given jurisdiction to supply a certain minimum share of their electricity from designated renewable resources, generally wind, solar, geothermal, biomass, and some types of hydroelectricity, but may include other resources such as landfill gas, municipal solid waste, and tidal energy.
Renewable portfolio standards are a public policy mechanism to require private sector development of renewable energy funded by increased electric bills to rate payers. But they are a regressive fee on electricity in that they take a larger percentage from low income people than from high income people.
Curiously environmental activists lobbied hard against the provision in the new law that requires disclosure of the costs to customers of the renewable energy resource on every monthly bill.
The new law is not perfect. It is only a 2 year moratorium mandating a study and stating the General Assembly intendeds to enact legislation in the future “that will reduce the renewable energy resource.”
The just passed law should be considered in context given the federal EPA’s recent release of its carbon curbs that states will now have to meet largely through this very type of electric utility mandates. Also significant is that most of the meaningful federal tax incentives for renewable energy projects expired last year and have not been renewed by Congress.
Renewable portfolio standards are not good public policy. The hodgepodge of standards exist today for the failure of Congress to act on energy policy. Possibly EPA’s new carbon curb proposals will initiate discussions about solutions to the real world environmental issues of the day, cognizant that electricity use will increase (i.e., EPA’s new carbon curbs assume that electricity consumption will drop sharply) including considering an answer in market based solutions driven by innovation and technology.
It is likely best to not be an alarmist about Ohio’s new law or to deny that it was passed overwhelmingly by the legislature after a hue and cry from the public, who recognized an unwise (expensive) existing law (green or otherwise) when they saw it.
The real concern may be whether Ohio is the beginning of a trend?