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News and Analysis

Study: Electricity Cost Increases Lower Manufacturing Productivity

November 21, 2014

A recent study by Cleveland State University shows that an increase in energy costs have a direct effect in lowering manufacturing productivity.

The study finds:  “An increase in the industrial electricity price by 1 cent per kilowatt-hour is likely, in 99% of cases, to decrease average manufacturing productivity in the five selected states,4 on average, by $2,527 of annual gross state product per employee. The productivity change associated with the industrial electricity price change has low elasticity: 2.2%/16.3%=0.13. The measure of elasticity below 1 is known as inelastic response. This means that for 1% increase of industrial electricity prices, manufacturing productivity drops by 0.13%.”

The OMA has submitted the study to state and federal officials to demonstrate the likely effect of electricity cost increases caused by proposed environmental regulation: less productivity, less economic output, fewer jobs.

Is the Electricity Grid Ready for Winter?

November 21, 2014

PJM’s president and CEO, Terry Boston, says it is.

The publication Platt’s reports:  “Transmission enhancements within PJM allow the grid operator to move power within its region better than a year ago, and improved coordination among generators and natural gas pipelines should ease gas supply concerns of some generators, Boston said…

With winter approaching, “we’re in much better shape than last year,” including the addition of dual-fuel capabilities at some power plants, Boston said. Adding the ability to burn fuel oil or some other fuel at a gas-fired power plant probably is less expensive for plant owners than signing firm gas supply contracts to ensure the facilities will be available during winter peak demand season, he said.”

Upcoming FERC Meetings in Ohio to Scope Rover Pipeline Project

November 21, 2014

At the November meeting of the OMA Energy Committee, members heard a presentation by Gretchen Krueger of Energy Transfer Company, the developer of the Rover Pipeline project.  The project will transport natural gas through Ohio from the Utica and Marcellus region.

Federal government approval is necessary for the project.  This week the U.S. Federal Energy Regulatory Commission (FERC) began a series of public scoping meetings in Ohio and other affected states.

As the project will be an economic boon for Ohio, manufacturers are encouraged to attend a hearing and/or offer written comment.  This FERC public notice contains the calendar of upcoming field hearings, including Defiance on December 2, New Washington on December 3, and Navarre on December 4.

Contact OMA’s Ryan Augsburger for more information or assistance on how to participate in the comment process.

Legislative Energy Study Committee to Meet

November 21, 2014

Chairmen Sen. Troy Balderson (R – Zanesville) and Rep. Peter Stautberg (R – Cincinnati) this week issued a public notice convening the “Energy Mandates Study Committee” on Monday, November 24, 2014.

The committee was created by SB 310 which passed earlier this session and is comprised of state representatives and state senators.  It is charged with studying Ohio’s renewable energy, energy efficiency, and peak demand reduction mandates.  A presentation by the Public Utilities Commission of Ohio is planned.

Millions in “MGP” Costs Might be Passed to Consumers Soon

November 14, 2014

Together with the Ohio Consumers’ Counsel and Kroger, the OMA is in litigation appealing a Public Utility Commission of Ohio decision to allow Duke Energy to collect millions of dollars from customers for old, long out of use “manufactured gas plants” (MGPs).

The Supreme Court of Ohio has issued a ruling that requires the appellant to post a bond in the amount of $2,506,295 with the Clerk of the Court in order to continue a stay of collections.  If the appellants fail to post the bond by November 15, 2014, the stay will be lifted and Duke will begin to collect from customers $55.5 million in costs associated with the MGPs.

Duke would continue collections until such time as the litigation is concluded, sometime next year.

Meanwhile, rumors are afloat in the Statehouse that utilities are looking for a lame duck amendment that would statutorily allow for collections of these (useless to customers) MGP costs. 

OMA: Make Electricity Bill Rider Cost Disclosures “Apples to Apples”

November 7, 2014

The OMA Energy Group, a subsidiary membership group of the OMA, this week filed comments to a proposed Public Utilities Commission of Ohio (PUCO) rule concerning disclosure to customers of the costs of renewable energy resource, energy efficiency savings, and peak demand reduction requirements.  The energy group urges the PUCO to assure that disclosures are true “apples to apples” comparisons, in order to inform consumer decision-making.

The comments note:  “The energy efficiency/peak demand reduction (EE/PDR) riders have historically shown extreme volatility in some utility territories.  This illustrates that the EE/PDR rider reflects recovery of compliance costs, not actual compliance costs.  The difference between recovery of rider amounts and actual compliance costs is not insignificant to consumers. EE/PDR riders have shown to have spiked (most notably in FirstEnergy’s service territories in fall 2012), followed by declines so steep they often result in credits to consumers (again, most notably in FirstEnergy’s service territories in early 2013).”

“The rider spikes and crashes affect consumer decisions.  For example, anecdotally, many mercantile customers were informed of 2012 rider spikes and encouraged by some utilities and consultants to self-direct projects to gain rider exemption, only to forego the coming credits in 2013. Customers acting on the price signal of a rider spike may have lost revenue,”  wrote the energy group.