Strickland's Rate Plan for Ohio

This article actually makes some sense. Names in red are as follows: Dave Boehm represents AK Steel which drives everything in southern Ohio, and perhaps all of Ohio; Bill Coley's dad was financial vice president of Globe Metallurgical and Bill is an excellent trial attorney to both Globe and the financial industry. Janine Migdon represented Enron in its early "glory" days in Ohio.

Energy plan won't cut rates
Electricity likely will get costlier
BY MIKE BOYER

One thing critics and advocates of Ohio's new energy plan agree on is that it won't mean lower electric rates for consumers.
A confluence of factors ranging from higher fuel costs, tougher and more expensive environmental rules and regulatory barriers have combined to push electric rates higher in Ohio and nationally.
That's unlikely to change under the compromise plan finally hammered together last week by legislative leaders and Gov. Ted Strickland.


"Higher rates are inevitable," said Alan Schriber, a Wyoming resident and chairman of the Public Utilities Commission of Ohio, which gets new authority to oversee electric rates under the restructuring plan.
Monthly electric bills have risen about 43 percent since September 2005 for Duke Energy's 680,000 Southwest Ohio customers under the so-called rate stabilization plan the new legislation is designed to replace, according to the Ohio Consumers' Counsel, the state's residential-utility advocate before the commission.
Consumers' Counsel's Janine Migden-Ostrander said that while the legislation includes some consumer-friendly features, it won't stem rising electric rates.
"I'm very concerned about the rate impact on consumers," she said.
Said Dave Rinebolt, executive director of Ohio Partners for Affordable Energy: "Are rates going up? Yeah, probably. But energy prices are out of control across the country."
Ohio Partners for Affordable Energy is a low-income advocacy group and a supporter of the legislation that Strickland is expected to sign this week.
"What this legislation does is give us an opportunity to balance the needs of consumers against the utilities," said Rinebolt.
Cincinnati utility lawyer David Boehm, architect of the Ohio manufacturers' utility re-regulation plan that was the basis of Strickland's original proposal, said the new law might not mean lower consumer rates, but "it sets up rates for consumers more favorable than if we went to market-based rates."
The new legislation, which had widespread support from large industrial users and interest groups such as the Ohio Farm Bureau and the Ohio Hospital Association, also:
Restores the commission's authority over electric rates, slowing a decade-old move by the state toward letting market forces determine the generation portion of electric bills (typically more than two-thirds of the total). Deregulation, which took hold in a number of states in the late 1990s, was fueled by the belief that it would trigger competition resulting in lower rates.
State Rep. Bill Coley, R-Liberty Township, a member of the House Public Utilities Committee, argues that deregulation wasn't given the opportunity to work for a number of reasons. He's not convinced restoring PUCO oversight on rates will be better. "In the 1970s, electric prices in the state rose 352 percent and that was under a regulated system," he said.
One advantage of the new law is that it preserves the ability to move to market-based rates if they prove to be a better deal for consumers, he said.
Establishes a road map for the state's electric-rate structure. Uncertainty over whether Ohio would stick with its plan to deregulate electric rates or return to more traditional rate regulation was discouraging new investment in the state's struggling economy, Strickland said. "This is a big deal for Ohio's economic future," he told The Enquirer's editorial board recently, pointing to a decision by a European-American consortium not to locate a $1 billion steel mini-mill in the state because of uncertainty over electric rates.
Creates, for the first time, requirements for utilities to use environmentally friendly renewable energy and implement lower-cost energy efficiency standards. The law, requiring power companies to increase their use of renewable sources such as wind and solar from 0.25 percent of their total generation in 2009 to 12.5 percent by 2025, makes Ohio the 25th state in the nation to adopt such mandatory renewable standards.
The American Wind Energy Association praised Ohio's renewable energy standard, calling it nationally significant.
The legislation "can jump-start ...Ohio's world-class manufacturing infrastructure and world-class skilled manufacturing workforce in wind energy manufacturing," said Randall Swisher, association executive director.
The new law gives the PUCO power to cut electric rates if it determines utilities' profits are excessive. The legislation allows the state's four investor-owned utilities to remain regulated by filing what are called Electric Security Plans with the commission or opt for what's called a market rate option, which allows them to phase-in market-based rates over a five- to 10-year period.
Another pro-consumer provision of the new law, says Migden-Ostrander, ends so-called regulatory transition charges - basically costs the utilities said they couldn't recover when the state moved toward de-regulation.
But Migden-Ostrander said the legislation doesn't ban so-called "side deals," special discounts utilities negotiate with large customers. Critics claim the deals, focus of a high-profile class-action antitrust lawsuit against Duke by several Cincinnati lawyers, are designed to win corporate approval for utility rate hikes and raise rates for other consumers. Duke says deals it has signed with about 20 unidentified corporations are legal and weren't designed to win support for its 2004 rate hike.
Migden-Ostrander, who successfully won the right to examine Duke's contracts in an Ohio Supreme Court case last year, said the new law allows parties in future rate cases to know who has special contracts but won't open those agreements to public scrutiny.
The new law is a setback for several hundred competitive energy suppliers who've moved into the state over the last decade to offer competing service to the incumbent utilities.
"The success or failure of this new energy policy is clearly on the shoulders of the PUCO," said Lynn Olman, a former state representative and chairman of a coalition of competitive energy suppliers.
The law continues energy aggregation, which allows municipalities and other groups to pool their buying power to negotiate for better rates. Olman said the independent marketers he represents plan to continue to be active in the state.
"This is only round one," he said. Once Strickland signs the legislation into law, the commission will begin a process of determining the specific rate-making rules of the new law. The investor-owned utilities are expected to begin filing rate plans for commission approval so they can be in place by Jan 1.
Steve Brash, Duke Energy spokesman, said the utility will file a 10-year regulated rate plan. Last year, Duke said it wanted the state to clarify cost-recovery for new generation so it could decide whether to build a new clean-coal generation plant to fill its need for more electric supplies.
The new law, Brash said. "provides a clearer road map for cost recovery."
Whether the new legislation is better than the deregulation law it replaces remains to be seen, critics say.
"I think it's questionable whether we're better off," said Migden-Ostrander. "We'll have a better idea when we see what the PUCO does in the next year."