By Jeremy Pelzer
October 16, 2015
COLUMBUS, Ohio — As Ohio lawmakers debate a halt to the state’s energy mandates, there’s one thing they are lacking: independent forecasts about how the standards would impact ratepayers and the state economy.
The fate of Ohio’s renewable-energy and energy-efficiency standards could decide the future of the state’s nascent wind and solar industries and affect residents’ utility bills for years to come.
But as Republicans in the Ohio General Assembly are urging that the mandates be indefinitely frozen, both supporters and opponents are relying on data from previous years, reports from other states, and studies by agenda-driven organizations to back up their assertions.
The case for stopping the mandates
Late last month, Republican leaders of a legislative study committee recommended that a current two-year-long freeze on the standards should be extended indefinitely. The standards, passed in 2008, give utility companies in Ohio until 2026 to slash customers’ power usage by 22 percent and get 12.5 percent of their power from solar, wind, and other renewable sources.
If the mandates are left in place, the GOP study group’s report asserted, they will cost ratepayers almost $2 billion and increase the state’s unemployment rate by 10 percent
These claims came from a single study done by a group of free-market professors at Utah State University and a non-profit think tank called Strata. Some of the authors have testified against energy mandates in several states and have received funding from the Koch Brothers, prominent conservative donors who oppose renewable energy incentives.
The study’s authors reached their conclusions after looking at all 31 states with energy mandates and finding that, overall, their economies suffered after they were put into effect.
Pro-renewable activists say that conclusion is flawed because more than a third of those states – including Ohio – passed their mandates between 2007-09, right before or during the global financial crisis. The Utah State study, critics say, unfairly places all the blame on the energy mandates instead of the unrelated nationwide recession.
But Ryan Yonk, the lead author of the report, defended the report’s methodology, saying he and his co-authors designed their calculations to minimize the effect of the recession and other outside economic factors.
They were able to do that, Yonk said, by examining the economic conditions of each state with an energy mandate for four years before and four years after they were passed, then using that data to create a statistical benchmark.
As for criticism about the professors’ conservative donors, Yonk said they get funding from a “variety” of places, including the U.S. Department of Energy and several banks.
The donors don’t control the studies they do, Yonk said. And while he and his colleagues “approach the world from a market-based perspective,” Yonk said, they release their findings whether or not they differ from their initial suppositions.
“We don’t engage in research for sale,” he said. “Where the data leads us is where we end up.”
Because the issue of energy mandates is so politically charged, a number of independent energy economists and experts contacted by Northeast Ohio Media Group declined requests to examine the validity of Yonk’s study.
The case for keeping the mandates
Democrats and pro-renewable energy groups, meanwhile, point to studies in the past few years predicting that the cost of wind and solar energy will continue to fall nationwide. They cite research showing that other states have benefited from similar energy mandates.
They also note that utilities in Ohio have reported their energy-efficiency programs have, so far, saved more money than they cost.
Supporters of the standards say they expect such trends will continue in Ohio if the mandates are left in place. But there has been no research specific to Ohio that backs up their assumptions.
Gabe Elsner of the Energy and Policy Institute, a Washington, D.C.-based pro-renewable energy think tank, yielded that it’s not a “100-percent certainty” that Ohio’s mandates will save money in the years to come. But what is known, Elsner said, is that “energy efficiency is by far the cheapest producer of electricity” and that the cost of renewable energy is going down.
“If we expect that trend to continue – which most economists and financial institutions and investors do – than it’s just going to continue being a better investment going into the future,” he said.
Noah Dormady, an assistant professor at Ohio State University’s Glenn School of Public Affairs, said in many ways, Ohio doesn’t need an independent study to forecast the impact of its energy mandates. Other states have seen benefits from their mandates, Dormady said, and utilities admitted to the Public Utilities Commission of Ohio back in 2009 that their energy-efficiency plans are cost-effective.
In addition, Dormady said that it can be difficult to forecast exactly how the mandates will affect Ohio’s economy and energy rates, because there are so many factors to account for – from the price of land for solar farms to whether nuclear power or Canadian hydropower counts as renewable energy.
No local analysis? No problem
Ohio policymakers have discussed energy mandates for years, yet they have never turned to in-state experts to analyze the impact of such policies, said Scott Miller, director of Ohio University’s Consortium for Energy, Economics, and the Environment.
“It seems that’s the kind of information they would want to have at their fingertips,” Miller said. “Wouldn’t it be good to have a couple of unbiased studies that could look at the kinds of things that you’re interested in here?”
Miller questioned the wisdom of lawmakers relying solely on past experiences or other states to predict the future, because Ohio is the only state so far to freeze its energy mandates.
“There’s no model for that,” he said.
The legislative study committee asked the PUCO to forecast the costs of Ohio’s energy-efficiency standards, but PUCO Chairman Andre Porter told the panel in a letter that his agency “does not have the capability” to independently prepare such a report.
State Rep. Michael Stinziano, a Columbus Democrat who served on the 13-member Energy Mandates Study Committee, said during 12 months of committee hearings, panel members didn’t hear any new information that wasn’t already available.
“I think that some members already had conclusions, regardless of what the research was going to show,” Stinziano said.
Asked why the Democrats’ study group report didn’t cite any independent research, Stinziano said they were only trying to raise questions for the majority Republicans to consider.
“I don’t think we put forward stringent standards and said this was the go-to number,” he said.
State Rep. Kristina Roegner, a Summit County Republican who co-chaired the study committee, said she felt the Republicans on the panel had enough reliable information to firmly support their recommendations.
While the GOP’s study group report only referenced one study – Yonk’s – that made predictions about the future effect of the mandates, Roegner noted that the report also referenced the fees Ohio utility customers already pay for such mandates – which range from an average of 27 cents per bill to $1.31 per bill, depending on the utility.
As the mandates aren’t even fully implemented yet, Roegner said, it’s reasonable to infer that Ohioans will pay even more in the coming years unless lawmakers act.
“I think one of the most accurate ways to look at the future is to look at the past,” Roegner said.
Elsner criticized the study group’s report, saying it didn’t mention that the mandates are expected to lower electricity costs beyond what the fees are.
Roegner added that lawmakers also recommended an indefinite freeze because of President Obama’s Clean Power Plan, which — if it survives a legal challenge — will require Ohio to reduce power plant carbon emissions by 37 percent between 2012 and 2030.
Despite the study group’s recommendation, it’s unclear whether Ohio lawmakers will vote to indefinitely freeze the state’s energy mandates. Republican Gov. John Kasich’s administration has balked at a freeze, calling it “unacceptable.”
Unless lawmakers and Kasich can find agreement, Ohio’s energy mandates will resume in 2017.