Legislation necessary to head off rate spikes

Published 12:00 am Tuesday, November 6, 2007

A measure to head off the uncertainty about what will happen to electric rates beginning in 2009 passed unanimously out of the Senate last week.

Most consumers likely do not care where and how their electricity is generated. They care about the cost and the fact it works when they need it.

That is why one of the key aspects of this legislation was the provision that establishes the framework for determining what the price will be starting in 2009 for electricity provided by the investor owned utilities, or IOUs.

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These IOUs provide about 90 percent of the electric to Ohio residents. American Electric Power and Duke Energy are two examples of IOUs who serve this region.

The balance of the electricity is provided by municipal electric companies and rural electric cooperatives like Adams Rural Electric and South Central Power.

Co-ops and municipal electric companies are not affected by this legislation.

Beginning in 2009, IOUs will charge their customers the rate authorized by the Public Utilities Commission in 2008. The PUCO will maintain its present regulatory oversight of the IOUs. Rates can and will go up, but they will be approved by the PUCO.

This legislation was necessary to head off potential spikes in rates that could have occurred in 2009 when IOUs would have been able to begin charging market rates for electricity.

The companies were given the authority to move to market rates by legislation passed in 1999. Some states in similar situations saw their rates jump as much as 70 percent.

Amended Substitute Bill 221 passed after 15 hearings and numerous negotiating sessions over a six-week period. Sen. Bob Schuler introduced the bill at the request of the governor, and guided it through the legislative process. He is Chairman of the Energy and Public Utilities Committee.

I was one of the three senators most involved in this initiative, as I participated in the 15 hearings and the separate negotiating sessions. There were frequent meetings with various stakeholders, including the administration, large industrial energy users, consumer groups and investor owned utilities, or, IOUs.

The plan keeps a concept introduced in the governor’s version and popular around the country called a Renewable Portfolio Standard. It requires 25 percent of the electric produced in 2025 be from advanced energy alternatives such as clean coal technology, as well as renewable sources such as wind and solar. More than 80 percent of the electricity produced used in Ohio comes from coal-fired generating plants.

The bill is headed to the House Public Utilities Committee, which is expected to begin hearings this week. If the House keeps to the schedule outlined by the Speaker, a vote on the House version of the bill will come in late January or early February.

Sen. Tom Niehaus represents Ohio’s 14th District.