CLEAN POWER PLAN

Ohio PUC chairman seeks balance in tackling carbon emissions

As Ohio pursues parallel -- and contrary -- paths in response to U.S. EPA's Clean Power Plan, one central person who will help determine the state's energy future is Asim Haque, chairman of the Public Utilities Commission of Ohio.

But the quirky energy politics of this purple state are not going to make it easy.

Haque on May 9 was elevated to chairman of the commission by Gov. John Kasich (R) following the resignation of Andre Porter. Haque had been appointed to the commission in 2013 and was reappointed earlier this year to serve until 2021. He identifies with neither major political party and calls himself an independent.

Kasich has made a political departure from Republican gospel by publicly acknowledging the need to combat climate change, Haque noted in a recent interview with EnergyWire. "But while one can believe in climate change, how to attack it can vary from person to person," he said. "What we don't want to have happen is for there to be dire economic consequences associated with either legislation or regulation to curb carbon emissions. So trying to find that balance is challenging."

Republicans in the Ohio Legislature have been pushing for legislation that would require an agency to get approval from lawmakers before submitting a state plan to comply with the federal carbon rule for power plants. GOP leaders also want to extend a freeze on renewable energy and efficiency standards until 2020. Lawmakers adjourned before sending a bill to Kasich.

In contrast, the state's dominant electric utilities, American Electric Power Co. and FirstEnergy Corp., are shutting coal plants and switching to natural gas or renewable power. They're also offering customers more options for energy efficiency. AEP boasts in a new corporate sustainability report that its carbon dioxide emissions are down 39 percent from 2000 and will continue to decline.

"We've been constantly pursuing this parallel path" of suing EPA over the Clean Power Plan and "trying to determine what intelligible compliance will look like for the state," Haque said.

The Clean Power Plan, which was put on hold by the U.S. Supreme Court in February until an appeals court can sort through challenges to the rule, would cut national power-sector emissions 32 percent below 2005 levels by 2030.

"From the governor's perspective, we don't think this thing is legal," Haque said. "It's federal overreach, and it violates the Federal Power Act. At the same time, we want to be proactive in our thinking in the event that we are forced to comply."

Haque asserted Ohio state agencies haven't spent a lot of time on the rule. "That doesn't mean that we don't continue to educate ourselves," he added. "We're very interested in the outcome of the PJM [Interconnection LLC] modeling. We're very interested in the outcome of grid reliability studies. I still read many things on a week-to-week basis associated with the Clean Power Plan and potential compliance."

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Ohio would need to lower its power-sector carbon emissions rate 36 percent by 2030. That's a tougher goal than the roughly 28 percent decrease the state was assigned in EPA's draft rule.

"The honest-to-goodness truth is that we just can't dedicate the type of resources to continuing meetings or conducting more analyses," he said.

Carbon rule is a 'driver for change'

Even with a slowdown of state work on the plan, Haque said he believes the Clean Power Plan "could act as a driver for change."

Utilities in the state are gravitating toward cleaner energy sources, he said. "The difficulty comes when you have a state that is heavily reliant on coal or if you have utilities that are highly invested in the coal industry," Haque said.

"What will be the drivers for them in the end? Of course the driver for them will always be financial; but if they have invested deeply in the coal industry, then they are going to continue to try and monetize those investments until it becomes completely uneconomical for them," Haque said.

Haque's analysis may be validated at the Edison Electric Institute (EEI) conference in Chicago, where the executives of investor-owned utilities gather to grapple with industrywide issues. He led a panel yesterday that started with the assertion that "the long-term transition to a low-carbon energy future continues uninterrupted, driven by technology, economics and public policy."

"If you haven't picked up on that tenor from the clean energy movement and the desire of consumers to have cleaner power, I think you're not paying close enough attention to what's going on in the industry," Haque said.

"Whether you want to try and push against it or not, the clean energy movement is happening, and it's happening because utilities are listening to their consumers who are saying we want cleaner energy," he said.

"Also, it's the right thing to do," he said. "Let's not just say that the clean energy advocates have bullied their way to the table. I think the social principle that they are advocating is the right thing to do, but it has to be balanced and tempered with these other major [commission] policy considerations of delivering reliable power and cost-effective power. That's where things get challenging."

A 'cool' opportunity

Haque, 36, is a lifelong Ohioan and the son of Indian immigrants who moved to the United States in the 1950s. His father is a physicist who worked for NASA, and his mother is a pediatrician. Like him, his two older sisters are also attorneys.

He is married to a physician and is the father of a 1-year-old son who "takes a lot of our time. My wife is finishing up her training. She works a ton, so I am the very active dad and spend a lot of time taking care of my son," he said.

Haque practiced law before the PUC as a private attorney, representing carmaker Honda Motor Co. He figured he was on the way to a "35-year career to develop the necessary 401(k) and all the great stuff necessary to live out your retirement years happily," he said.

But then one day in 2013, he was having lunch with his friend Porter, with whom he had worked at the law firm Schottenstein, Zox & Dunn Co. LPA and who was about to leave the PUC to run the Ohio Department of Commerce for Kasich.

"After we got to talking, he said, 'Hey, would you be interested in this job at the commission?' I chuckled about it because I'm not political at all. I have zero political backing," Haque said.

"It just turned out they were looking for someone without industry connections, without political ties, who was just going to come to the job with the analytical ability necessary to do the job and was a fair broker.

"This concept of just serving the state honestly was the primary driver. I just thought it felt like a cool opportunity. I thought to myself, if I don't take this up, then I'm going to regret it," Haque said.

Stop 'playing defense'

Now that he is chairman, Haque will be interacting with the governor's office, other state regulators and members of the Legislature and shaping the energy agenda for the PUC and the state.

The commission spent much of the past two years on a sweeping settlement involving efforts by AEP and FirstEnergy to keep aging and unprofitable coal plants operating, but the deals also included commitments from the utilities on renewables, efficiency, smart grid and energy storage. The Federal Energy Regulatory Commission voided those PUC orders and sent the matter back.

"I really felt like the commission had been playing defense for the last two-plus years on these cases," he said.

For Haque, going on offense means the PUC has to "start talking about the distribution grid and creating the grid of the future, a smart grid that will promote a better future for our consumers. I think that needs to be the focus now going forward," he said.

But "there's no way anything gets done without the cooperation of three distinct groups," he said. The first are policymakers and the regulatory community. Next are "the disrupters, the folks that are trying to bring this change and whatever that is. That could be clean disrupters; that could be grid modernization disrupters. Then the utilities themselves who own infrastructure," Haque said.

"That conversation would be in the context of a grid modernization docket; some form of Utility 2.0; not necessarily to emulate what New York has done, but to say here are some things that have been batted around in other states, what can we do, what will benefit the state of Ohio and then take action," he explained.

"This needs to be a public discussion. It's not a discussion that I want to have behind closed doors. I want to create an excellent record and bring experts from other states to meet with policymakers and stakeholders.

"But before we can move on to the next iteration, we need to get [the AEP and FirstEnergy] cases done and put them in the rearview mirror," he said, something he hopes can happen this fall.

Haque says he doesn't have a role model to help guide him at the commission.

"I'm really making it up as I go along," he said. "I am very much just using my natural instinct to try to do what's best for the state. I think where I'm situated is relatively unique. Meaning in this position without political affiliation.

"There is probably more that I can offer to citizens in the state of Ohio, but I think that that would require me to make a political leap at some point," he said. "I have to be a little realistic about it. I just don't know that I'm ready to do that just yet, meaning I think I'd have to pick a team eventually here."

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