How politics adds to Ohio’s electricity problems

By Jeffrey Tomich | 06/27/2024 06:55 AM EDT

The state faces a huge power supply crunch. Lawmakers who fought for years to pass an efficiency bill to shave off peak demand finally got their way.

FILE - Mike DeWine speaks, Jan. 14, 2019, in Cedarville, Ohio. Ohio's Health Department has backed off proposed rules that would have restricted gender-affirming care for adults. The new proposal Wednesday, Feb. 7, 2024 comes after gathering public comment on a proposal released last month. Transgender people and their healthcare providers feared the original rules would have left thousands of patients scrambling to find care — and facing health risks in the meantime. The proposed rules are also relaxed for requirements for treatment for minors, some of which was banned by a law adopted last month when the Legislature overrode Gov. Mike DeWine's earlier veto. (AP Photo/John Minchillo, Pool)

Ohio Gov. Mike DeWine signed an energy bill in 2019 that became the subject of a bribery scandal. Pool photo by John Minchillo

Columbus, Ohio, bears little resemblance to New York City. But it soon could by at least one metric: power demand.

Ohio’s largest utility, American Electric Power, already has agreements with Big Tech data centers that will more than double the area’s peak demand by the end of the decade. And another 30,000 megawatts of potential data center demand — six times the existing peak use level — is on the table.

“Right now, in our queue, demand is the equivalent of three New York Cities,” AEP Ohio President Marc Reitter said in an interview.


For central Ohio and data center hot spots, the booming technology sector is both economic gold and a power grid dilemma, promising jobs and an expanded tax base but requiring big additions to electricity infrastructure. Interest from technology companies grew to a point last year that AEP put a moratorium on new customer contracts, and last month the utility sought to require them to provide financial guarantees as a prerequisite for service.

But the potential surge in power demand also shines a light on state energy policy — or the lack of it — since bribery-tainted H.B. 6 was signed into law by Republican Gov. Mike DeWine in 2019.

After a political tussle in the state General Assembly that has gone on for two years, the GOP-led Ohio House on Wednesday passed by a vote of 50-45 an energy efficiency bill aimed at easing electricity costs and reducing peak demand.

H.B. 79, a measure that explicitly provides Ohio utilities the ability to run energy efficiency programs, has taken a circuitous route to passage. After a 14-3 committee vote to send it to the floor, House Speaker Jason Stephens kept it off the calendar despite bipartisan support.

AEP, along with Duke Energy, Dayton Power & Light and businesses including Nestle and Trane Technologies, have supported the bill — a rare instance when utilities and environmental advocates have been on the same side of an energy issue in Ohio.

“For once, we have them all singing off the same song sheet,” said Republican state Rep. Bill Seitz, a colorful Cincinnati-area lawmaker who has led the charge to pass H.B. 79.

Seitz was chief critic of Ohio’s previous energy efficiency mandate and co-sponsored legislation to repeal it. But he helped craft the current bill, which includes opt-outs for homeowners and sets the monthly fee on utility bills at $1.50.

“When demand is high and supply is low, prices go up — you don’t have to be Milton Friedman to figure that out,” he said during the floor debate. “Or you have scarcity and brownouts and blackouts.”

During the floor debate, legislators pointed to warnings by regional grid operator PJM Interconnection that the failure to deal with diverging electricity supply and demand could lead to energy shortages. That could send wholesale electricity prices skyrocketing, Ohio officials have warned.

To be sure, energy efficiency alone won’t come near addressing the potential new power demand facing AEP and other utilities in Ohio. The bill’s proponents say it’s a first step toward reducing electricity usage.

“The idea is to focus on things like smart thermostats and other technology controls that help people reduce energy usage, and especially at peak times,” said Robert Kelter, a senior attorney for the Environmental Law & Policy Center.

The bill is now before the state Senate.

Koch-affiliated group flexes some muscle

Some consumer and environmental advocates, however, point to opposition from the Ohio chapter of Americans for Prosperity, a conservative group affiliated with petrochemical billionaire Charles Koch and the late David Koch, which as recently as last month issued a “key vote alert” urging House members to vote against it.

In 2023 and again last month as the House neared a potential vote on H.B. 79, AFP wrote to lawmakers saying the bill would create a new mandate raising energy prices and eliminating consumer choice.

“The legislature has packaged this bill as an energy efficiency program, when in reality it will create a new and burdensome mandate for consumers,” AFP-Ohio State Director Donovan O’Neil said in the letter.

An AFP spokesperson didn’t respond to an email request to comment on the bill.

On the House floor, critics said $1.50 a month would be too much for lower-income Ohioans to pay.

“This is a huge energy tax increase on the people of Ohio,” said state Rep. Scott Wiggam (R).

State Rep. Bride Rose Sweeney (D), a co-sponsor of H.B. 79, has heard the criticism from conservative opponents and declined to comment on why Republican leadership took two years to call the bill for a vote.

“Once people understand that this a benefit to ratepayers, we will be successful,” she said in an interview before the vote.

“This is something that can really have an impact on consumers, lowering energy bills, and allow us to be more responsible stewards of the planet that we live on,” she said.

In addition to helping address a looming supply crunch, H.B. 79 would also address a provision in H.B. 6 that eliminated Ohio’s energy efficiency standard.

Energy efficiency was a partisan fight in Ohio for years before H.B. 6. The efficiency standard, enacted by a near-unanimous vote of lawmakers in 2008 required utilities to achieve annual percentage reductions in customer energy use cumulatively totaling 22.5 percent by 2025.

A measure signed into law in 2014 froze the efficiency standard for two years and allowed large industrial power users to opt out of participating in utility programs. Two years later, Republican Gov. John Kasich vetoed a bill to eliminate the efficiency standard altogether, saying the measure would have harmed consumers.

But efficiency law opponents got their way in 2019 when a provision to eliminate the energy savings standard was included in H.B. 6., the legislation at the center of the largest public corruption case in Ohio’s history.

While parts of H.B. 6 have since been repealed, others haven’t — including the section that eliminated Ohio’s energy efficiency requirement. And the Buckeye State, which ranked in the top 20 nationally for energy efficiency policy a few years ago, slipped to 44th in the latest rankings by the nonprofit American Council for an Energy-Efficient Economy.

Sweeney, who voted against H.B. 6, said H.B. 79 can help reverse the trend and “right one of the wrongs” from the law enacted by DeWine five years ago.

‘Consistent with common sense’

Unlike the 2008 law, H.B. 79 isn’t a mandate. Residential and small businesses could opt out of participating in — and paying for — utility-run efficiency programs. The bill caps monthly fees for residential participants, and it requires state regulators to audit programs to ensure they’re cost-effective.

The bill would require utilities to target energy savings of at least 0.5 percent a year, just one-third of what utilities in neighboring Michigan are required to do under the Clean Energy and Jobs Act signed last year by Gov. Gretchen Whitmer (D). It’s less than the 2 percent reduction that would have been required under the previous Ohio standard.

According to efficiency advocates, utility-run programs that include efficiency “kits” with LED lightbulbs, weatherstripping and power strips consistently show benefits to consumers that outweigh the costs, even to those who don’t participate. That’s because reducing energy use, especially at peak times, can eliminate the need to build generating capacity and additional transmission and distribution.

“It’s consistent with studies, and it’s consistent with common sense,” said Kelter of the Environmental Law & Policy Center.

While AEP supports H.B. 79, AEP’s Reitter said he couldn’t estimate what the bill’s impact would be on energy demand long-term.

The utility, he said, is focused on getting approval for its proposal at the Public Utilities Commission of Ohio to better help manage future data center demand. Because there’s no electricity generation located within AEP’s Columbus, Ohio, service territory, ample transmission capacity is needed to import power from elsewhere in the region.

And building new lines to serve fast-growing power needs takes time. If the utility invests hundreds of millions of dollars in new transmission, the AEP Ohio president said there need to be assurances that customers will be there for the long-term to help shoulder the costs.

“The objective here was to achieve certainty from a planning perspective,” he said. Because of the costs and time needed to build transmission, “we need to make sure this load man actually shows up.”

Reporter Joel Kirkland contributed