Once more the Ohio Legislature plans to deal with electricity supply.
Once more they will complain about the high cost of clean energy.
Once more they will be wrong.
For the last several years the Legislature has focused on discouraging clean energy to the exclusion of the bigger problem of soaring residential rate increases. We have seen an almost annual chopping away at the clean-energy requirements in existing law. At one point the legislature even declared blast furnace exhaust gas to be renewable energy. This concentration on renewable energy ignores the average Ohioan, who is more concerned about the size of his electric bill than the number of wind farms in the state.
We need to know why electric bills almost continually go up. Electricity doesn’t change; when we pay our bills, we are not buying new and improved electricity. Actually the electricity that comes to our outlets is the same product that our parents bought, and our grandparents, and our great grandparents. If the product doesn’t change, shouldn’t the price remain about the same?
When Ohio’s clean energy bill was passed nine years ago the average electricity rate was around ten cents per kilowatt-hour (kWh). It is now around 12.5 cents, a 25 percent increase. It was rising at twice the rate of inflation before a small decrease last year. Household electric costs are now $300 more than they were when that clean energy bill was passed. It so happens that state income taxes have been reduced by about $300 for the typical family. Their tax relief has gone to the electric company to pay their higher bills.
The obvious logic is that clean energy caused the rate increase. But clean energy costs are reported on our electric bills, where we can see that they are a very small part of the problem.
Renewable energy has become increasingly attractive because of sharp price decreases. According to the 2016 Wind Market Report, real prices for electricity from new wind farms are about 3.5 cents per kWh in our part of the country, while the PUCO Apples-to-Apples web site shows that the generation part of Ohioans electric bills averages over 5 cents per kWh for a combination of coal, gas, and nuclear power – a thirty percent savings from wind over old-fashioned technology.
This price advantage has been recognized by many large companies, such as Apple and Google, who have made major commitments to renewable energy. Amazon’s commitment to renewable energy is seen here in Ohio, where they will be purchasing a large part of the state’s wind output. If wind was as expensive as the opponents claim, Wall Street would be reacting strongly and driving down the price of the stocks of these companies This has not happened.
Clean energy opponents still maintain that wind energy is expensive. To do so, they rely on a theory called levelized cost of energy (LCOE). Opponents’ cost estimates for wind are much higher that the price currently being charged by wind farms. If these theorists are correct, wind farms are losing 50 to 80 cents on the dollar. No explanation has been offered for this discrepancy between theory and reality.
Opponents also claim that the clean energy requirements are mandates on electric companies that inhibit the free market. This claim is only true for the generation part of providing electricity. In fact, consumers have a choice of generating company, and prices for this part of electric bills have moderated. There is no choice for the transmission and distribution parts of our bills, and this is where the large price increases have been concentrated.
Finally, opponents claim that subsidies give renewables an unfair advantage over fossil fuels. The subsidy is a federal issue, which the legislature has no control over. It is worth noting that most experts agree that wind would be competitive without the subsidy and that solar is getting there. The subsidies operate to lower our prices.
Electricity is a necessity. The legislature needs to stop blaming clean energy for excessive price rises and insure that average Ohioans are being treated reasonably.