Gov. Ted Strickland offers utility proposal (Plain

Gov. Ted Strickland offers utility proposal

Governor hopes plan will avoid big price spikes

Thursday, August 30, 2007

John Funk Plain Dealer Reporter

Columbus -- Your electric bill for years to come will be decided over the next four months, along with Ohio's energy-intensive industrial future.

Yes, rates will probably go up, but how much or how soon is anyone's guess.

Gov. Ted Strickland on Wednesday unveiled the broad outline of administration proposals designed to block utilities from tying retail rates to volatile wholesale markets when the current rate caps expire at the end of 2008.

The plans must now be converted into specific legislative language and sent to the General Assembly for hearings when lawmakers return in a couple of weeks. Though the proposal reads like a regulatory revolution, Strickland said he can get it passed by year's end.

Whether that happens will depend on the good will of Republican leaders who control the legislature. Yesterday, they appeared to be open to it.

"We look forward to receiving the proposal in bill form and evaluating its ramifications on all stakeholders and on our continued effort to create jobs and revitalize the economy," Senate President Bill Harris and House Speaker Jon Husted said in a prepared statement.

The governor and other state officials hope to avoid enormous price spikes like those seen in other states that "deregulated," or loosened control over power prices.

But Strickland is proposing that Ohio do more than just return to regulation, which would be all but impossible, anyway, because of actions the utilities have taken under the existing deregulation.

His proposals, he said, are designed to expand the state's industrial economy, protect existing jobs and generate thousands of new ones - making the governor sound an awful lot like former Gov. James A. Rhodes, who also had roots in Ohio's Appalachian coal country and whose commitment to job creation kept him in office four terms.

"This is not a plan for utilities, not a plan for manufacturers," Strickland said in a speech to about 100 in the atrium of Ohio's historic Statehouse. "It's a plan for Ohio, a plan to protect existing jobs and attract new jobs."

The new jobs would come from a buildup of "advanced energy technologies" such as wind turbines and nuclear reactors.

The governor would push the state's power companies to embrace renewable technologies such as wind, solar and geothermal to generate electricity. He also would make it easier for businesses and even households to generate their own power with such technologies.

Simultaneously, the plan is designed to be attractive to utilities and big labor because it endorses the construction of new nuclear power plants, high-tech coal-fired power plants and high-tech retrofits of older coal plants to clean up emissions - all of which would be paid for by customers over time, a system that worked well for about 60 years before it was abandoned in 1999.

"We could assume that the energy we rely upon now will always be sufficient," Strickland said, noting that Ohio ranks fifth in the nation in energy consumption and that affordable energy is the lifeblood of the state's economy and its people.

"Or we can admit to an undeniable truth, that our energy sources must be broadened and modernized, that we must adopt more efficient practices, that our regulation policies must be made sensible and fair, and achieve a secure future for Ohio."

If the proposal becomes law, at least 25 percent of all power sold in the state in 2025 would have to have been generated either with renewable technologies or so-called "advanced energy" technologies, including newly designed nuclear reactors and coal plants that first convert coal to a synthetic gas and clean it up before burning it and then, in theory at least, inject the CO2 deep underground.

With a nod to the growing evidence that carbon dioxide produced by power plants, industry and automobiles is changing the global climate, Strickland said the state would back pilot projects to capture carbon dioxide and have it injected deep underground.

His plan also would require that every power plant in the state make a full annual report of its "greenhouse gas emissions" - that is, carbon dioxide.

"Coal has been and will be an integral part of Ohio's economy," Strickland said. "By using clean coal technology, we can take steps to reduce the carbon impact of coal. By injecting carbon dioxide deep into the earth instead of sending it into the atmosphere, we can significantly reduce the effect of coal on our climate."

The plan also includes a mention of a provision to encourage utilities to help customers use less electricity - by "decoupling" rates from consumption, meaning a household electric bill might not decrease by decreasing how much power is used.

The proposal uses a lot of carrots and a stick to solve the thorniest of issues - somehow regulating the price of electricity from power plants that at least one utility, FirstEnergy Corp. of Akron, has moved into non-regulated subsidiaries.

Utilities could bring their plants back under state control - and into rates - by negotiating their worth with the Public Utilities Commission of Ohio, under the plan.

If they want to stay on course to sell power in the open market, they can, the governor said, but they will be required first to supply power to the Ohio ratepayers who paid for the plants and sell it at rates reflecting what it cost to generate the power.

As for linking retail rates to wholesale market rates, each utility would be required to first prove to the PUCO that there actually is a competitive wholesale market in the region, the governor said.

Ohio Consumers' Counsel Janine Migden-Ostrander was concerned that the governor's plan gives too much power to the PUCO. "Our concern is that the commission over the last eight years has not been very consumer-friendly," she said.

The Ohio Manufacturers' Association has pushed for a return to full regulation, but President Eric Burkland praised the governor's plan.

"Gov. Strickland has proposed a comprehensive, thoughtful and deliberative plan that will benefit all consumers and help our state's economy," Burkland said. "The governor clearly shares our goal of placing consumers on equal footing with utility companies."

Initial reaction by the utilities was muted, with Akron-based FirstEnergy Corp. and Columbus-based American Electric Power saying the 11-page plan lacked sufficient detail to know exactly what it means.

"The plan talked about a lot of big principles and seemed to offer something for all the stakeholders - that utilities get a fair return and customers low prices," said Kevin Walker, president and chief operating officer of AEP Ohio. "As an aspiration it is something we can agree with, but the devil is in the details."

FirstEnergy's take was about the same.

"The governor presented a very complex plan but not many details," spokeswoman Ellen Raines said. "We certainly agree with the goal of providing price stability to customers over the long term."

To reach this Plain Dealer reporter: jfunk@plaind.com, 216-999-4138

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