News and Analysis
Governor John Kasich has appointed Asim Haque, an attorney with Honda North America, to serve as commissioner of the Public Utilities Commission of Ohio (PUCO). He replaces Andre Porter whom the governor appointed to lead the Ohio Department of Commerce.
Haque’s term begins on June 24 and ends on April 10, 2016. This appointment is subject to the advice and consent of the Ohio Senate.
A Public Utilities Commission of Ohio (PUCO) order established that AEP-Ohio could recover its incremental expenses incurred due to major storms in 2012. AEP-Ohio subsequently filed an application with the PUCO to establish the storm damage recovery rider rates.
According to OMA energy counsel, Bricker & Eckler, PUCO staff’s review of the AEP-Ohio $61.8 million request revealed some charges that were either unreasonable or not appropriately recovered through a storm damage recovery rider.
Therefore, the OMA Energy Group, OMA’s organization for large electricity users, has filed comments to the PUCO to encourage it to determine if all expenses that AEP-Ohio proposes to include for recovery are appropriate.
The PJM auction results for 2016/17 were released last week with better news for electricity customers. Starting June 1, 2016, rates will fall due to capacity provided by new gas-fired generation coming online and energy efficiency conservation bid into the auction.
Consumers in capacity-constrained northern Ohio will see prices fall for the 2016/17 year, but will still pay more than those in other parts of the state.
The OMA’s energy counsel, Bricker & Eckler, wrote this memo to put the auction results in context for the OMA Energy Group (OMA EG), an OMA organization of larger electricity users. Bricker also posted this blog for its general audience.
And, here is an article from Cleveland Plain Dealer about the auction results, which are a big deal for manufacturing competitiveness.
At this week’s meeting of the OMA Energy Committee, XTO Development Advisor Ken Golden shared a report by XTO's parent company, ExxonMobil, that examines the macro-economic trends that will shape world and U.S. energy supply and consumption decades into the future.
View the full published report, The Outlook for Energy: A View to 2040.Pictured, Kenneth Golden of XTO and OMA Energy Committee Chairman Bradley Belden, The Belden Brick Company
This week, the OMA Energy Committee looked at analyses of Ohio's energy efficiency laws with an eye toward their improvement.
R. Neal Elliott, Associate Director for Research, American Council for an Energy-Efficient Economy (ACEEE), reviewed findings from a study commissioned by the OMA that quantifies the effect of energy efficiency on Ohio’s electricity pricing. View the full report.
OMA energy counsel from Bricker & Eckler described how Ohio's energy efficiency programs work, how they are paid for, and how they are monitored. The legal team provided an analysis of options to make Ohio's energy efficiency programs more beneficial for manufacturers. Among the policy options outlined were: a cap on energy efficiency riders, an industrial self-direct program that allows large electricity users to reserve funding for internal energy efficiency projects, and third-party administration of energy efficiency programs as an alternative to management by the utilities.
OMA members may want to come or phone in to the OMA Energy Committee on Wednesday, May 22 to hear a special presentation by ExxonMobil subsidiary, XTO, about long-term energy projections. The ExxonMobil energy research is among the most highly regarded in the industry.
The committee will also hear updates from PUCO Chairman Todd Snitchler and it will consider the pending Statehouse review of advanced energy standards.
American Municipal Power (AMP) this week cancelled plans to build a natural gas peaking facility located on the grounds of FirstEnergy’s existing Eastlake Plant. AMP said the reason for the action was financing uncertainty, some of which comes from the federal “sequester.”
Under the original plan, FirstEnergy was to “supervise construction of four combustion turbine units that would be capable of producing 873 megawatts. AMP was to provide the construction financing and own 75 percent of the generation output upon completion, while FirstEnergy would fund and own the remaining 25 percent of the output in 2016.”
Eastlake is located in the capacity-constrained northern Ohio region; the project would have helped mitigate some of the constraint.
The three-year forward-looking PJM capacity auction is occurring right now. We’ll know in a couple of weeks what the capacity prices will be for 2016.
The Ohio Department of Natural Resources released Utica shale oil and gas production results: an increase of 93 percent for oil and 80 percent for gas from 2011 to 2012. Additionally, producing wells have increased from two to 87.
ODNR Director James Zehringer, ODNR Chief of Oil & Gas Rick Simmers, and JobsOhio Managing Director of Energy, Chemicals & Polymers David Mustine discuss (video) the state of shale, wells & fracking in Ohio.
The department noted that pipeline insufficiency and low market prices are affecting output: “Markets and pipeline capacity are limited so production is likely choked back. Once processing plants are up and running, the produced “wet” gas volumes will dramatically increase. Gas production is significant, even with the early production numbers from wells that are restricted due to market conditions.”
State officials estimate that Ohio will have 362 Utica shale wells in production by the end of this year, 662 in 2014, and 1,012 by 2015.
Public Utilities Commission of Ohio (PUCO) Chairman Todd Snitchler conducted a hearing to examine issues in the transition from coal to gas fired power plants, something he called the “dash to gas.” Snitchler wants to assure that gas power plants in the state do not face fuel shortages experienced in other states, a situation that prompted federal regulators to investigate the issue.
Ohio faces large scale retirement of coal fired generators. Replacement units are anticipated to be gas fired. An upgrade in natural gas pipeline infrastructure will be needed.
This week the PUCO approved a joint stipulation that authorizes Duke to increase its electric distribution service rates by $49 million annually. This increase will provide Duke with a 9.84 percent return on equity.
Duke initially requested an increase of $86.6 million annually.
The Public Utilities Commission of Ohio (PUCO) this week held a workshop to gather input on possible revisions to rules governing energy efficiency and alternative energy. Rules must reviewed every five years by agencies in charge of enforcement.
The workshop featured presentations relevant to rule language in Ohio Administrative Code chapters 4901:1-39 and 4901:1-40, including possible rule revisions resulting from the enactment of Ohio Senate Bill 315.
Here's a video recording of the workshop and a link to the handouts.
A representative of Babcock & Wilcox, a manufacturer operations in Barberton and Euclid, told members of a Senate panel this week about modular nuclear reactors and the use of such technology to meet the state’s advanced energy standards.
John Ferrara of mPower Generation, a Babcock & Wilcox subsidiary, described the work the company is doing on small modular reactors (SMRs). Ferrara told the panel that licensing and testing activities are underway; the units are expected to be in service in the 2020–2025 timeframe.
In testimony, Ferrara said, “This type of advanced, Generation III nuclear option is recognized in Senate Bill 221, and we encourage the state to continue its support of this concept as part of a diverse energy supply portfolio needed to support Ohio jobs and the Ohio economy.”
Jeff Blake of OMA member Parker Hannifin testified before the Senate Public Utilities Committee this week in support of the state’s energy efficiency standards. Blake presented four points:
(1) Efficiency brings more money back to the bottom line than cost control. Also, efficiency is in our control while cost and market conditions are not.
(2) Incentives are a useful tool that help us move projects from concept to reality.
(3) These programs help provide jobs. Jobs for employers like Parker who make efficiency-related products, and jobs for the smaller engineering firms that design or install these efficiency measures.
(4) The future and the environment have to be considered. Energy resources are not infinite. Efficiency helps decrease the stress on energy resources and the environment.
The OMA this week released research on the economic effects of the state’s energy efficiency standards for electric utilities. The research finds that energy efficiency remains the least-cost strategy for constraining electricity costs. The study projects direct and indirect savings of almost $5.57 billion for customers in avoided energy expenditures and reduced wholesale energy and capacity prices, and assumes energy efficiency investments of $2.7 billion.
The OMA recommended several improvements to the operation of utility energy efficiency programs designed to protect large users of electricity:
- Large power user self-direct program: This proposal is modeled on a program of Puget Sound Energy, which our researchers think is probably the best program in the country geared to large industrials. Under the program, 90% of a larger user’s energy efficiency charge would be retained for use by the company; the other 10% would be used by the utility to manage the program.
- Cap on energy efficiency rider: Under this proposal, no customer could be charged more than $25,000 per month for energy efficiency programs.
Read an overview of the research here.
Panelists shared perspectives on energy efficiency standards this week at a jam-packed meeting of the Senate Public Utilities Committee. Chaired by Senator Bill Seitz (R – Cincinnati), the committee is considering revisions to the standards.
FirstEnergy is advocating essentially for elimination of the standard. "Ultimately businesses and consumers should be allowed to make their own decisions on how to meet their specific energy needs," said FirstEnergy Executive Vice President and General Counsel Leila Vespoli, who concluded testimony by saying, "We cannot afford arbitrary and overly prescriptive requirements that raise electricity prices."
Testifying on behalf of Advanced Energy Economy Ohio, John Seryak said the energy efficiency standard has created an infrastructure that saves electricity consumers money. Seryak stated that the direct savings from the energy efficiency standard and price mitigation effects outweigh the program costs.
A witness from the hospital industry testified that “without the mandated efficiency standards, meaningful efficiency programs and their benefits would not exist in the capacity they do today.” A group of northeast Ohio manufacturers also filed testimony in defense of the energy efficiency standard.
A final hearing will be held on April 23, after which legislation will be drafted.
Here is a good recorded webinar (scroll down to ‘Past Webinars’) from the Ohio University Consortium for Energy, Economics & the Environment (CE3), Ohio’s Transmission & Distribution Future. The panel of experts include Todd Snitchler, Chairman, Public Utilities commission of Ohio, and Pablo Vegas, President and COO, AEP Ohio.
Ohio’s energy infrastructure as well as its energy policy decisions have a significant bearing on the reliability and affordability of power. “This is a good, informative discussion on the topic,” said OMA’s Managing Director, Public Policy, Ryan Augsburger.
On March 20, 2013, the Public Utilities Commission of Ohio (PUCO) issued its entry regarding FirstEnergy’s 2013-2015 energy efficiency and peak demand reduction (“EE/PDR”) plan. The PUCO is requiring that FirstEnergy bid its efficiency resources into the PJM Base Residual Action.
FirstEnergy has indicated that it might appeal this order. If it does, it’ll side step the obligation for this year’s auction, thus depriving the auction of a valuable energy resource.
Buried in the 4,200 page state budget is a provision to extend electric service rate discounts for certain customers. Known as “reasonable arrangements,” the customer discounts must be approved by the Public Utility Commission of Ohio.
The provision is supported by the state’s top energy regulator, Todd Snitchler, PUCO chairman. In his testimony, Chairman Snitchler described the extension to 2018 as a transition to market-based pricing. The proposal would socialize the discount costs across all Ohio utility customers, rather than just the customers in the utility service area, as is current law. This issue will be on the agenda for the OMA Energy Committee on May 22.
PJM Senior Vice President for Markets Andrew Ott appeared before the Ohio Senate Public Utilities Committee this week to “describe the evolution of supply mix driven by U.S. EPA regulations, state policies and shale gas developments.” Ott also discussed the development of increasing levels of demand response and energy efficiency as well as renewables. The Senate panel is considering whether to continue or revise Ohio’s current energy efficiency and renewable energy standards.
Committee Chairman Senator Bill Seitz (R - Cincinnati) asked how much of a price suppression effect Ohio's energy efficiency requirements had on the wholesale electricity market. Ott testified that energy efficiency standards have had a "modest" effect, but added that it would likely increase as the requirements ratchet up in coming years.
Geologists at the Ohio Department of Natural Resources released a new map of the Utica shale play. They think now that it extends west into Allen, Putnam and Wood counties. The play might reach into Logan, Union, Delaware, and Fairfield counties. The geologists see a “sweet spot” along the borders of Marion and Wyandot counties. More good news for Ohio’s energy future.
Asked about the ability of utilities to meet energy efficiency standards, Public Utilities Commission of Ohio (PUCO) Chairman Todd Snitchler said, "In my opinion the success of each utility's energy efficiency program depends largely upon its design and management. A well-designed, well-managed program will yield positive results and build confidence among customers. A poorly managed program will yield the opposite."
Next week, the Senate panel is scheduled to hear a presentation from Andrew Ott of PJM Interconnect.
Member manufacturers are invited to join the OMA energy efficiency work groups, which provide a forum for learning about and sharing best practices in combined heat and power, waste heat recovery, and energy efficiency.
Senator Bill Seitz (R-Cincinnati) introduced Senate Bill 58 as a placeholder to guide Senate review into energy efficiency standards and renewable energy standards. Senator Seitz chairs the Senate Public Utilities Committee which will be meeting next week to hear a presentation from PUCO Chair Todd Snitchler. Appearing this week at the OMA Government Affairs Committee, the Senator reflected on comments received from groups, including the OMA, and invited industry input throughout the legislative process.
DP&L is currently receiving a $73 million annual rate stability charge (RSC). In its Electric Stability Plan filed on December 12, 2012, DP&L requested the Public Utilities commission of Ohio (PUCO) to approve a nonbypassable, annual service stability rider (SSR) amount of $137.5 million, which would replace the existing RSC.
Rate analysts working with the OMA Energy Group have calculated that 90 percent of sampled OMA members and 60 percent of sampled OMA members by load would have at least a 100 percent increase in rates.
OMA Energy Group, the OMA’s service for energy intensive manufacturers to have direct participation in PUCO proceedings and litigation, has submitted testimony in opposition to DP&L’s request for SSR.
Manufacturers planning to upgrade their hydraulic injection molding machines to all-electric equivalents this year should consider applying to AEP's pilot incentive program. AEP will reserve $0.05/kWh saved for projects based on savings estimates, and will pay $0.07/kWh upon verification of savings.
AEP is limiting applications to 10 facilities for this pilot program, and all applications are due by April 30, 2013. A savings calculation is required for the application. OMA's energy efficiency partner, Go Sustainable Energy LLC, is available to assist with the savings calculation and application. Contact John Seryak at Go Sustainable Energy.
And, manufacturers' HVAC and lighting systems are eligible for AEP's Retro-commissioning program. Retro-commissioning targets low-cost/no-cost operations or controls changes. Incentives of $0.13/kWh saved, capped at $0.10 /ft2, are available for projects which payback in less than 2 years, including lighting controls, economizers, supply air temperature resets, demand control ventilation, and even scheduling changes and temperature setbacks. More information is on AEP's website or contact OMA's energy efficiency engineer, John Seryak.
OMA is offering members from all energy-supply territories in the state the opportunity to participate in one – or both – of two energy work groups in conjunction with OMA’s consulting energy efficiency engineer, John Seryak of Go Sustainable Energy LLC. Participating members will have access to the most up-to-date information, contacts, and opportunities in Ohio in the areas of combined heat and power (CHP) and waste heat recovery (WER) or energy efficiency.
Here's information that describes this opportunity for plant engineers and facility staff of OMA members.
Senator Bill Seitz (R- Cincinnati) plans to introduce a bill which will serve as a vehicle to focus on possible changes to the state’s energy efficiency standard for electric utility companies. He asked interested parties for suggested topics for his committee, the Public Utilities Committee, to study.
The OMA shipped Senator Seitz a letter with a few suggestions. The OMA thanks the senator for leading an open, deliberative process for review of the standards.
These are the meeting materials that support the February 21, 2013 OMA Energy Committee meeting. The meeting starts at 10:00 a.m.
Senator Bill Seitz (R – Cincinnati), chairman of the Senate Public Utilities Committee, announced his plans to "begin a meaningful review of the energy efficiency and renewable portfolio standard issues last addressed by Senate Bill 221 in 2008 and Senate Bill 315 in 2012." He intends to introduce legislation and conduct hearings.
In his memo to interested parties, Senator Seitz invites input regarding various provisions of Ohio's energy efficiency policy, including: "Whether the annual targets for energy efficiency should be frozen in place given the changes occurring since 2008; whether the “3% cost cap” contained in the legislation should be revised, and whether it has been properly interpreted by the PUCO, and whether and to what extent utilities should be free to exceed the 3% cost cap if they wish to do so; and whether and to what extent the cost incurred by utilities in complying with the energy efficiency/renewable portfolio standard mandates are or should be bypassable or non-bypassable charges," among other provisions.
Interested members should contact OMA's Ryan Augsburger, who will be coordinating manufacturers' response. Additionally, members can register for either in-person or phone participation in the OMA Energy Committee on February 21.
While available to a wide variety of manufacturers, not just AEP Ohio customers and not just central Ohio based companies, AEP has gone on record as supporting the E3 program that helps manufacturers improve energy and operational efficiency.
OMA engineering consultant, John Seryak, of Go Sustainable Energy LLC, says the best candidates for E3 include small to mid-size manufacturers interested in identifying energy efficiency opportunities, reducing or reselling their waste stream, and identifying water-saving opportunities.
For more information about related services and available grant funding, contact Brandi Whetstone, Mid-Ohio Regional Planning Commission; her number is (614) 233-4174.
Which technologies will be necessary to ensure plentiful, affordable energy for Ohio for the long-term?
Andrew Thomas, Executive in Residence at the Energy Policy Center of the Levin College of Urban Affairs at Cleveland State University, describes the opportunities of distributed generation for large consumers, including energy intensive manufacturers, and the utilities’ financial challenges (standby costs) to supply backup power to these consumers if their onsite generation fails.
State agencies charged by the legislature released a report this week on expanded use of compressed natural gas (CNG) and natural gas vehicles (NGVs).
The agencies recommended: “Increased and expanded usage of CNG and NGVs should be encouraged and actively pursued by the state and political subdivisions whenever it is economical and practical to do so. As a result of the momentum generated thus far, the state should immediately establish an advisory group comprised of stakeholders and interested parties, made up of both public and private entities, for the purpose of strategizing and determining how best to advance CNG and NGV development in Ohio.”
This advisory group would look at issues of: fleet transition, infrastructure expansion, incentives, financial assistance, and education.
American Electric Power (AEP) has requested permission of the Public Utilities Commission of Ohio (PUCO) to charge customers for repairs resulting from a series of storms in June and July last year. The reimbursement request of $61.8 million would be recouped from customers over one year. The OMA Energy Group will be intervening in the proceedings on behalf of manufacturers.
Meanwhile, another case is pending at the PUCO that would determine a funding formula for electric utility distribution investments. Manufacturers in the AEP service area that have experienced ongoing reliability issues are encouraged to contact OMA’s Ryan Augsburger to describe service interruptions and business impacts; the data could be useful in protecting manufacturing's interests in the case.
Manufacturers who have filed for an exemption from First Energy's DSE2 rider because of their documented energy efficiency projects are required to file an annual report with FirstEnergy by January 31, 2013.
The one-page form requests verification that the energy savings that qualified your company for the rider exemption are ongoing. Failure to file on time will result in the DSE2 rider being added to your bill.
Members who have filed for this exemption should have received the annual report form by email from FirstEnergy’s Rachel Greer; her phone number is (330) 384-5534.
Manufacturers who have filed for an exemption from First Energy's DSE2 rider because of their documented energy efficiency projects are required to file an annual report with FirstEnergy by January 31, 2013. The one-page form requests verification that the energy savings that qualified your company for the rider exemption are ongoing. Failure to file on time will result in the DSE2 rider being added to your bill. Members who have filed for this exemption should have received the annual report form by email from FirstEnergy’s Rachel Greer; her phone number is (330) 384-5534. If you need further information or assistance, contact OMA’s John Laughman.
The Turning Point solar project announced in October 2010 to much fanfare is on life support today. This week, the Public Utilities Commission of Ohio (PUCO) voted 3-1 to strip the Turning Point Solar project from an AEP case.
Although PUCO staff determined the project was necessary, the commissioners felt otherwise. The commissioners said that AEP needed to do more to justify Turning Point. Turning Point was at one time envisioned to be one of the largest solar generating facilities east of the Mississippi River. This week’s decision prevents AEP from funding the project through charges on consumers' utility bills and appears to put a hold on the project.
OMA Connections Partner, Duke Energy, compiled the costs associated with lighting up your home or office this holiday.
Assuming a cost of 10 cents per kWh, operating an average of five hours per day, a display that uses 10 25-bulb strings of C7 lights would cost an estimated $19 dollars per month, while a similar display using C9 bulbs might cost $26 per month.
Ten sets of 100 mini-lights lights operating at the same rate would cost $6 per month.
The newer, light emitting diode (LED) holiday lights use only 0.04 watts per bulb, or 1/10 the amount of miniature bulbs. Ten sets of 100 LED bulbs would cost only 60 cents per month to operate.
Duke Energy – and all investor-owned utilities - has resources to help you with your real lighting and energy conservation projects. Contact OMA’s John Laughman so we can connect you.