Ohio energy policy: Incoherent, asymmetrical, and special interest driven
The lack of coherent state energy policy and asymmetrical alignment of risks and rewards left a vacuum that made Ohio fertile ground for the HB6 bailout and bribery scandal.
The national debate over energy policy in recent years has revolved around two quite different, although not irreconcilable policy objectives: transitioning the energy sector into a more environmentally benign direction, and increasing overall efficiency and productivity through competition where viable, or through regulation where necessary.
Neither of those objectives are present on any coherent way in what passes for energy policy in Ohio.
Regarding the energy transition, three legislative enactments of recent years reveal the lack of coherence as well as the influence of special interests.
First, HB 6 itself — billed by the governor and legislative leaders as a means of addressing climate change by supporting non-carbon-emitting nuclear power plants — is, in reality a carbon emitter’s dream bill that subsidizes aging, inefficient coal plants, eliminates energy efficiency and renewable mandates, and made the siting of wind turbines more difficult.
When the scandal surrounding HB 6 emerged, the legislature and governor moved to repeal the nuclear provisions of the bill, but maintained the coal subsidies, and failed to restore the mandates for efficiency and renewables, making it utterly transparent that abating climate change was never part of the agenda.
Recently the legislature also passed a measure declaring natural gas — an emitter of methane and carbon — to be a “green” resource. While a case can certainly be made that natural gas displacing coal has been a net plus for the environment, only in the world of the absurd can gas be deemed “green.”
Regarding competition and productivity, two statements reveal the lack of any knowledge or even inquisitiveness by critical leaders.
The first comment was that of Gov. Mike DeWine in the context of the passage of HB 6, asking then-PUCO Chair Sam Randazzo, whom FirstEnergy later admitting bribing $4 million, if First Energy needed the money.
The second was a recent comment by Ohio Senate President Matt Huffman that he was open to ending the coal subsidies if the plants were no longer losing money.
Neither of these key policymakers asked the critical questions of why the plants might be losing money, whether they can be made more efficient, or what could be done to make them more efficient.
Particularly troublesome is that fact that neither of these two market-oriented Republicans bothered to ask the obvious: namely what subsidies would do to the robustness of the competition in the generating market.
Nor did they inquire as to the obvious asymmetry in a subsidy regime where consumers, not investors, bear the risk of losses.
Increasing productivity and efficient markets appears to be of little interest to key policy makers in the state.
Funneling captive consumer dollars to favored interests seems the most powerful driver of policy in Ohio.
Ashley C. Brown served for 10 years as a PUCO Commissioner. He recently retired after 28 years as Executive Director of the Harvard Electricity Policy Group at Harvard University’s Kennedy School. He is co-author of The World Bank’s Handbook on Evaluating Infrastructure Regulation, and has advised governments and conducted training in more than 25 countries on energy markets and regulation.
This commentary was republished from the Ohio Capital Journal under a Creative Commons license.
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