By Rob Nikolewski
June 6, 2015
The renewable mandates in Ohio may be in a state of suspended animation, but the debate isn’t letting up.
One year ago the Buckeye State became the first in the nation to freeze its renewable portfolio standard — a policy in place in 30 states that calls for the greater use of cleaner energy sources such as wind and solar.
Supporters of Ohio’s standard — known as the RPS — want legislators in Columbus to bring back the requirements, saying they help the environment and create jobs. But a peer-reviewed economic study released last week predicts the standard will cost Ohio electricity customers up to $1.92 billion between now and 2026.
The Institute of Political Economy at Utah State University compiled the study, which looked at the impact of renewable standards in a number of states, including Ohio.
“This study, one of the strongest and most widely examined ever conducted on RPS, shows there is significant evidence to suggest RPS mandates were not helping local economies. Rather, they were causing economic damage to families and businesses,” Ryan Yonk, one of the authors of the report and an economic professor at Utah State, said in a news release announcing the study’s findings.
Yonk is also the founder of Strata Policy, a think tank based in Logan, Utah, that espouses free-market solutions to economic and environmental issues.
The study’s authors say the methodology included an examination of household income and overall economic activity associated with renewable standards in states and claims Ohio’s RPS will lead to a decrease in investment of about $52 million and a loss of $258 million in personal income between now and 2026.
“Renewable portfolio standards have been vogue for the last 10 or so years, but nobody’s really taken a hard look at what the effects are of these things in the wider economy,” Yonk told Watchdog.org. “Our results show strong, negative effects. When you look at Ohio income in comparison to states that don’t have RPS, it’s about $3,800 less per household, over $1,500 and change per person when you compare the two across the timeline.”
But defenders of the Ohio renewable standard — and energy efficiency mandates that accompanied it — say the plans were helping the state’s economy before they were suspended.
“Those two policies together have done exactly what they promised to do,” said Trish Demeter, managing director of energy clean air programs at the Ohio Environmental Council.
“They reduced air emissions and greenhouse gas emissions coming from Ohio’s power sectors, they have diversified our energy portfolio tremendously,” Demeter said in a telephone interview. “They have saved customers over $1 billion on their energy bills since 2009, particularly on the energy-efficient standard, and they have spurred economic development opportunities in the state that wouldn’t have happened otherwise.
Some states have renewable standards that are voluntary; but in most states — including Ohio — the RPS is mandatory.
The Utah State study comes as legislators in Ohio await a report from the Energy Mandates Study Committee, formed late last year to study alternative and energy efficiency standards in the state.
Originally put into place in 2008, the Ohio Renewable Energy and Energy Efficiency Portfolio Standard insisted utilities derive 25 percent of their power from renewable sources by 2025. The Ohio standard also mandated utilities improve energy efficiency by 22 percent by 2025 and cut peak demand by nearly 1 percent per year through 2018.
But lawmakers in Columbus last year passed a measure, eventually signed by Republican Gov. John Kasich, to suspend the state’s clean energy mandate because critics said it led to higher electricity rates and proved too expensive for businesses, leading to job cuts.
They also say the 2008 mandates are outdated, since they were written largely before the state experienced a boom in natural gas development in eastern Ohio.
Supporters of the Ohio Renewable Energy and Energy Efficiency Portfolio Standard say the freeze has choked off investors in clean energy.
“Because the Legislature has made so many changes to make large-scale renewable and large-scale wind power possible, companies (with aggressive sustainability goals) are looking at Ohio and thinking, man, we’re in the Dark Ages,” Demeter said. “So we need to get with the program.”
The Energy Mandates Study Committee report is due by Sept. 30, and its findings figure to go a long way toward deciding what happens to the state’s renewable requirements when the two-year freeze comes to an end in December 2016.
The Utah State-Institute of Political Economy study predicts the Ohio RPS will “cause significant macroeconomic repercussions,” including the loss of 3,590 jobs and a decrease in investment by $52 million.
“I haven’t read the report,” Demeter said, “but the university itself has some notoriety around the nation about being fairly skeptical about the renewable power and renewable energy standards. So that’s why I’m very skeptical about their results, because it seems to be part of a larger agenda.”
Yonk defended the study, saying it went through a blind peer-review process in which the authors didn’t know who the reviewers were, and vice versa.
“The results are what the results are,” Yonk said. “They’re not conjured out of thin air. They’re the result of very respected methodology.”
Yonk said the study concentrated on the economics of the Ohio standard and did not look at health-related effects of the RPS.
“What we found was consistent, relatively significant in terms of size, negative economic effects,” Yonk said in a telephone interview. “I can’t speak to the health effects because I haven’t done that study.”
“The more renewable power that we deploy here locally, the cleaner our air is and the less public health care costs we have,” Demeter said.
“This is part of being able to provide actual information to folks when they’re looking at public policy,” Yonk said. “The answers for what the right public policy is in the hands of the policymaker.”
Ohio’s RPS freeze is in effect until Dec. 31, 2016, at the latest. If no changes are made by then, the provisions of the original RPS will snap back at the start of 2017.
“I don’t think we can anticipate that the standards will come back at the same level that they have been before they were frozen,” Demeter said. “I think I would be naïve to say that, oh yeah, they’ll totally come back. That may not be likely but we may see voluntary standards, we may see lower targets, we may see a totally different model for how utilities are being compelled to invest in renewables and efficiencies, I just don’t know.”