News and Analysis
Duke Energy Says Some Motor Rebates Expire End of First Quarter 2011
Attention manufacturers in Duke Energy territory! Motor incentives for some motors are being removed from the Duke Energy Smart $aver® Prescriptive Incentive Program effective March 31, 2011. This is in response to government regulation which makes what were previously considered high efficiency motors the new standard. Duke Energy will honor its motor incentive program through March 2011, at which point it is estimated that manufacturer and supplier inventories of less efficient motors will be depleted.
The efficiency standards for general purpose 200 horsepower motors are regulated under the Energy Independence and Security Act of 2007, which takes effect this month. These motors must now be manufactured to meet NEMA Premium Efficiency Standards, which is the current high efficiency level that the Duke Energy Smart Saver Prescriptive incentives were built upon.
Specific types of motors may still be eligible for Duke Energy incentives under its Smart $aver® Custom Program, including 1-200 HP general purpose motors exceeding NEMA Premium Efficiency Standards as well as ECM (Electronically Commutated Motor) Case, cooler and freezer motors. Here are the details about qualifying motors and how to claim your incentives.
PUCO Moves to Protect Rate Shopping in AEP’s Territories
The PUCO issued an entry this week that protects the ability of customers to shop for their electricity supplier. Earlier this year AEP had filed an application with the Federal Energy Regulatory Commission (FERC) to dramatically increase capacity costs that, in most shopping customers’ contracts, are pass-throughs to the customers.
The PUCO’s entry this week clarifies the state’s position on capacity costs in a way that protects customers from price increases. An analysis of the entry prepared by OMA’s counsel, Bricker & Eckler LLP, can be found here.
PUCO Chairman Alan Schriber to Retire
Public Utilities Commission of Ohio (PUCO) Chairman Alan Schriber announced that he will step down from the Commission effective December 31st of this year. Chairman Schriber provided excellent leadership at the PUCO for the past 12 years. He guided Ohio through the deregulation of electricity markets, the 2004 rate stabilization plans that protected Ohio from rate spikes, and SB 221 which provided a long-term framework for stable electricity prices in Ohio.
Since Commissioner Lemmie’s term ends next year, Governor-elect Kasich will have two appointments to make to the Commission in the near future.
Co-Generation Decision: Power Siting Board to Regulate Manufacturers?
On December 1, the Ohio Supreme Court issued a 5-1 decision reversing and remanding an Ohio Power Siting Board (OPSB) decision that granted the Middletown Coke Company a certificate to construct a cogeneration facility. The facility would produce both purified coal (coke) and more than 50MW of electricity.
According to the opinion, the OPSB now has jurisdiction over manufacturing facilities that co-generate more that 50MW.
“As manufacturers are increasingly looking to use waste heat and steam to generate power, an additional layer of state regulation by the power siting board is unwelcome,” said the OMA’s Ryan Augsburger in commenting on the ramifications of the decision. OMA’s law firm has prepared a summary of the court action. The matter will be discussed by the OMA Energy Committee.
House Committee Approves $600 Per Year Rider on Manufacturers’ Electricity Bills
The House Alternative Energy Committee passed HB 301 this week which will extend a $.09 monthly rider on residential bills – $50 a month for manufacturers – for the Advanced Energy Fund through 2013. The Advanced Energy Fund has been used over the past 10 years to stimulate the market for renewable energy products.
The OMA communicated to the bill sponsor as long ago as last December that Ohio’s renewable portfolio standard, which creates state mandated demand for these products, already meets the policy goal behind the fund, and that the rider should sunset. The OMA will continue to communicate on this issue to the full House and the Ohio Senate throughout the lame duck session.
OMA Achieves Benefits for Manufacturers in AEP Case at PUCO
The OMA signed onto a settlement agreement with AEP this week. The settlement included the unresolved 2009 rate issues. The settlement contains provisions that require AEP to invest at least $43 million dollars in projects that will directly benefit AEP’s Ohio customers. With that figure as a floor, it is likely that customers will realize in excess of $73 million.
Parties in the case had pegged AEP’s liability anywhere between $23 and $156 million, a wide discrepancy with PUCO staff favoring the lower ranges. In recent weeks it has become clear that the PUCO desires to resolve this case quickly. Moreover, PUCO staff had refrained from declaring whether direct refunds were due to customers at all, adding to the significant uncertainty over possible direct refunds to customers.
With these considerations in mind, the OMA achieved a settlement that benefits manufacturers, rather than spending unnecessary money, time and resources on attorneys’ litigation theories. Importantly, the settlement does not limit the OMA from challenging AEP’s earnings for 2010 or 2011, nor does the settlement set precedent for other utilities who might be exposed to the test.
Electricity intensive OMA members are encouraged to participate in subsequent proceedings by joining the OMA Energy Group. Click here for information on an upcoming webinar discussing the OMA Energy Group. Or, call me to set up a time to talk about how your company can protect your energy management needs via the OMA Energy Group.
To Diversify or Not, and At What Cost?
Political transition periods sometimes expose themes that foreshadow future public policy. Some in Columbus hope to revisit and revise the state’s electricity policy which was supported by the OMA and enacted in 2008.
“Senate Bill 221 has largely been successful in protecting against price spikes while giving a foothold to more diverse energy sources, including renewable energy,” said the OMA’s Ryan Augsburger. This week a Cincinnati Enquirer op-ed called for a repeal of the state’s renewable energy portfolio standards.
In an effort to comply with the requirements, utilities have already begun to diversify generation. Just this week, AEP announced it would buy 99 megawatts from a planned wind farm in Paulding County. AEP has previously announced plans to purchase wind power from Indiana and solar power from a planned SE Ohio solar project. Meanwhile, FirstEnergy last week dropped plans to convert an aging coal plant to biomass (wood) stating that it would purchase renewable energy credits instead.
Manufacturers are increasingly eager to supply products needed in new generating capacity whether wind, solar, nuclear, biomass, clean coal, fuel cell, etc. The balancing factor is price. Clearly energy is a top public policy issue for manufacturers. Join the conversation in the OMA energy community.
FirstEnergy Not Burning Wood
FirstEnergy recently announced it is discontinuing plans to retrofit its Burger Plant in Shadyside, Ohio, to burn biomass. According to FirstEnergy, the retrofit no longer makes sense due to its costs and the current marketplace for electricity.
The original decision to burn biomass was in response to a federal regulations , and to Ohio’s renewable energy mandate.
While this decision will have negative effects on the Belmont County economy, it will be welcomed by Ohio’s paper and wood products industry, which has been concerned about new costly competition for raw materials.
Click here to read an article from the Hannah Report on the issue.
Duke Energy Files Its Next Rate Case
This week, Duke Energy Ohio filed its Market Rate Offer case (MRO) with the Public Utilities Commission of Ohio (PUCO) which will set electricity rates for 2012 and beyond.
According to the filing, rates would be set through a federally-regulated auction process. This process has been considered favorable to electric generators.
Other parts of the MRO include new charges on customer bills to recover costs associated with compliance with Ohio’s renewable energy mandates and with charges Duke incurred when it switched from MISO to PJM (entities that dispatch energy and manage the flow of electricity regionally).
Contact Kevin Schmidt at the OMA to find out how you can influence the direction of Duke’s plans to control your costs.
Supply Opportunities for Solar Project
At the OMA Energy Committee this week OMA members met the developers of a major, recently-announced solar project and began discussions about the supply chain needs of the project. In addition to the developers, representatives of the OEMs that will build the solar panels (Isofoton) and tracking system (Prius) were on hand to discuss their supply needs.
These manufacturers, which are locating their North American manufacturing and headquarters in Ohio, noted that the Ohio project is just one they are planning to supply. They foresee continued demand for their product in North America.
The OMA will be working with these firms to disseminate information to interested members regarding part needs and specifications. Contact Kevin Schmidt if you would like to learn more. Meeting materials can be found here.