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Manufacturers Testify on Importance of State Energy Policy

April 8, 2011

Manufacturers Testify in Support of Strickland Electricity Bill

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Manufacturers and their allies in the Coalition for Affordable Power testified this week in support of Senate Bill 221, the electricity restructuring bill of Governor Strickland. The testimony was given to the Senate Energy and Public Utilities Committee.

AK Steel’s Alan McCoy, co-chair of the Coalition, told the committee, “For electricity… there is no transparent forward market in Ohio, or anywhere in the country. There is no electrical power equivalent to the London Metal Exchange, where daily auctions set the price for the various ferro-alloys we purchase. There is no electrical power equivalent to the published natural gas pricing at Henry Hub, Louisiana.  Thus, there is no predictability, nor is there any prospect for predictability in the future, for the cost of electricity in Ohio.”

McCoy noted: “Today, we can’t predict with any accuracy whatsoever what the price of electricity in Ohio will be on Thursday of this week, much less five years from now.” 

Dave Ciarlone of Alcoa testified: “Businesses need rules that are clear, stable and predictable…Large, capital projects require years to pay out their full return. In order to risk the investment, businesses need to trust that the rules will not undergo significant change without warning. Unlike utilities, we have no guaranteed rate of return.”

Ciarlone related “Early this year, an Alcoa executive asked me for a long-term forecast of electricity prices in Ohio. Thinking of the present uncertainty in Ohio, I explained that not only was the forecast unknown, it was unknowable because no one knows what rules to assume after 2009.”

Both Ciarlone and McCoy called for cost-based regulation of electricity generation, in order to establish an economic environment that invites investment into Ohio.

Jim Doyle from Rose City Manufacturing in Springfield stated: “The message I want to share with you is that the environment in which small-to-medium manufacturers operate today is brutal, as evidenced by the continual loss of manufacturing jobs and plant closings.  During our daily struggles to remain viable, the fact that our electric power costs in Ohio have been affordable and predictable, and the service extremely reliable, has been a big plus. Losing that would be devastating.”

Counsel for the Coalition, Dave Boehm, debunked various utility claims, including a claim that the bill would lead utilities to financial ruin.  He said: “The worst that a utility could do under (the bill) is receive a rate that would reward the utility for providing electricity by giving it all of its costs plus a reasonable rate of return on its power plants.  Under traditional utility regulation this was typically a return on equity of about 11 to 11½% after taxes.”

He continued: “For some (utilities) that is not enough, they want more. We ask you to remember where that additional money will come from. It will not just be from big industry. It will also be from the thousands of employees of industry and the thousands of small businesses where they shop. It will be from residential customers all over the state.”

PUCO Staff’s FirstEnergy Report

Energy Management 2007 Archive

January 20, 2011

Energy Management 2007 Archive

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OMA Testifies Before Legislative Auto Committee

September 11, 2009

OMA Testifies Before the House Alternative Energy Committee

Homepage » Communities » Energy Management » Archive » 2007 » OMA Testifies Before the House Alternative Energy Committee

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OMA Energy Committee Chair Jim O’Neill, Whirlpool Corporation, testified before the House Committee on Alternative Energy this week on the benefits of distributed generation. Distributed Generation refers to a company’s ability, through various technologies, to produce electricity onsite.

O’Neill focused on the benefits that can be achieved through a robust system of distributed generation including, increased reliability of electricity service and a diversification of a companies energy portfolio. The educational testimony was intended to educate the committee on various forms of distributed generation and spark interest in removing regulatory barriers to “self-help” options available to industry. During testimony, the chairman of the House committee asked the OMA if it would be able to provide information related to the potential for distributed generation projects in Ohio. The OMA will be polling its members on this issue and relaying the information upon compilation.

OMA Public Policy Director Shares Manufacturers’ Views on Energy Strategy

December 14, 2007

OMA Public Policy Director Shares Manufacturers’ Views on Energy Strategy

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OMA Director of Public Policy Services Kevin Schmidt has prepared a Powerpoint presentation on pending electric restructuring legislation, SB 221, which he is giving to various audiences.

Schmidt’s presentation is a great tool for manufacturers to get an overview of the electricity restructuring issue.  Feel free to use it as a resource to use in communicating with individuals or groups to gain support for passage of the bill.

OMA Testifies in Support of Energy Resource Diversification

December 13, 2007

OMA Testifies in Support of Energy Resource Diversification

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Testifying before the House Public Utilities Committee on behalf of the OMA, Michael Zimmer called Senate Bill 221, the Governor’s energy bill, a “jobs bill.”

By protecting electricity consumers from a non-functioning electricity market, the legislation protects jobs in energy-consuming industries.  By calling for development and deployment of advanced energy technologies in the state, the bill protects jobs in Ohio’s innovative manufacturing base.

“We need all forms of clean, reliable energy supply.  We want energy security.  We see the benefit of supply diversity.  We desire the jobs, health and economic development.  We would rather pay U.S. suppliers,” said Zimmer.

Zimmer is an attorney from the D.C. office of the Thompson Hine law firm who has extensive national and international experience in energy policy.

Maryland PSC Report
“Options for Re-Regulation and New Generation” is the first in a series of interim reports by the Maryland Public Service Commission to the Maryland General Assembly regarding the state of the electricity markets in Maryland at the end of 2007.

An Economic Mess that Ohio Can Avoid

December 7, 2007

An Economic Mess that Ohio Can Avoid

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Maryland went to market with electricity.  The result is a mess.

“Electricity industry needs some re-regulation, lawmakers are told Maryland residents face the prospect of power shortages and higher electricity rates unless the state moves to reimpose some regulation on the industry, members of the state Public Service Commission concluded in a preliminary report to lawmakers yesterday,” reports the Baltimore Sun.

“Senators are told that deregulation can’t meet state’s power needs. Utility regulators Tuesday presented lawmakers with a new model for electric regulation in Maryland, reinforcing the widespread view in Annapolis that competitive markets have failed to deliver benefits to consumers,” the Sun reports in a separate story.

Please contact your state representative to ask that the legislature pass SB 221 so that Ohio can avoid a similar crisis.

Electricity Coalition Calls for “Just and Reasonable” Rates-Again

December 7, 2007

Electricity Coalition Calls for “Just and Reasonable” Rates—Again

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Counsel for the Ohio Coalition for Affordable Power, David Boehm, testified again before the Ohio House Public Utilities Committee this week.  His message: there is no free or competitive market for electricity in Ohio or anywhere else in the U.S.

“The ‘market’ for electricity is actually a federally regulated wholesale system that sets prices based not on the interaction between suppliers or purchasers, but rather a federally regulated mechanism that rewards all generators with the price of the most costly generation,” Boehm said.  “Thirty-three states remain regulated at the state level and uniformly enjoy the competitive advantage of more affordable electricity than their federally regulated peers.”

To stay on top of this issue, OMA members should sign up for the OMA Electricity Brief at My OMA .

OMA Communicates Concerns about Alternative Energy Bill

November 30, 2007

OMA Communicates Concerns about Alternative Energy Bill

Homepage » Communities » Energy Management » Archive » 2007 » OMA Communicates Concerns about Alternative Energy Bill

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While high-profile deliberations on electricity restructuring legislation continues in the Ohio House Public Utilities Committee, another House committee is debating a separate piece of legislation that is designed to create a renewable portfolio standard (RPS) and mandate costly green energy generation.

While the OMA recognizes the need for Ohio to diversify is energy portfolio (98% of which is currently generated by coal and nuclear sources), the organization is concerned about certain provisions of the bill.  The OMA recently communicated these concerns to state Rep. Jim McGregor (R-Gahanna), chairman of the House Alternative Energy Committee.  In the letter, OMA Public Policy Services Director Kevin Schmidt cautioned that the renewable energy portfolio standard contained in the bill may abruptly increase the costs of electricity without providing commensurate benefits to electricity consumers.  The bill also creates an inflexible environment that is not responsive to emerging technology.

OMA public policy staff will continue to monitor developments on House Bill 357 and update members as action warrants.

Energy Attorney: Electricity Restructuring Bill Fair, Simple, Urgently Needed

November 30, 2007

Energy Attorney: Electricity Restructuring Bill Fair, Simple, Urgently Needed

Homepage » Communities » Energy Management » Archive » 2007 » Energy Attorney: Electricity Restructuring Bill Fair, Simple, Urgently Needed

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Hearings on key electricity restructuring legislation (Substitute SB 221) continued this week in the Ohio House Public Utilities Committee, with the focus centering on electric security plans, market options and generation.  Energy attorney David Boehm represented the Ohio Coalition for Affordable Power, of which the OMA is a founding member, on a panel of presenters that included regulators, a utility representative and consumer advocates.

In his testimony, Boehm provided committee members an overview of rate-making methodologies, including an argument as to how SB 221 provides mechanisms for fair and reasonable rates for consumers and adequate returns for utilities.  Boehm said Sub. SB 221 is “imminently fair, relatively simple and urgently needed.”

Two more hearings will be held this year – December 5th and 12th.  Hearings are scheduled through January of 2008.  The OMA has plans to have subject-matter experts testify at the remaining hearings to help educate and inform the committee members tasked with managing this critical legislation.

Rate shocks, market manipulation and profit windfalls

November 30, 2007

Rate shocks, market manipulation and profit windfalls

Homepage » Communities » Energy Management » Archive » 2007 » Rate shocks, market manipulation and profit windfalls

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News accounts out of Maryland and Texas tell of rate shock, market manipulation and profit windfalls, all of which could become reality in Ohio in little more than a year unless the General Assembly acts to prevent it.

Recent articles from the Baltimore Sun, as well as a three-part series from the Galveston Daily News (Deregulation Increases Pay, Prices, Profits; Critics Say Mammoth Buyout Ensures High Price; and What Went Wrong In Offering Texans a Choice? speak to the dysfunctional nature of deregulated power markets and their impact on consumers.