Ohio’s investor-owned utilities administer and are initiating energy efficiency programs under a regulated structure with oversight by the Public Utilities Commission of Ohio (PUCO). In 2008, the state passed a law that establishes an EERS with energy savings goals for electric utilities and allows for cost recovery and decoupling.
Rules for implementing the lawl were published by the PUCO in July 2009. The rules require utilities to propose energy efficiency plans and file annual status reports with the commission. Ohio is early in a transition to greatly increased energy efficiency spending and savings.
According to the Energy Information Administration, Ohio electric utilities claimed savings of 530,062 MWh in 2009, an almost ten-fold increase from 2008. The Consortium for Energy Efficiency reported electric program budgets for 2010 to be $152.8 million, a figure that stood at $18.6 million in 2009. Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables.
For further reading, in March 2009, as part of the State Clean Energy Resource Project, ACEEE completed the report Shaping Ohio's Energy Future: Energy Efficiency Works (E092).
Passed in 2008, SB 221 called on utilities to develop electric efficiency programs to meet newly proposed energy and peak demand savings targets. Utility programs have been submitted to the Public Utility Commission of Ohio (PUCO), which has approved plans for three out of Ohio's four major investor-owned utilities (Duke Energy, American Electric Power and First Energy). Eligible efficiency measures and programs for each utility were determined at the proceedings. This legislation also explicitly includes demand-response programs and transmission and distribution system improvements.
The distribution utilities administer their own energy efficiency programs with oversight from the PUCO. The PUCO may also modify the utilities' proposed programs. Ohio natural gas utilities also run efficiency programs.
Additionally, under the new bill, a mercantile customer, which is a commercial or industrial customer that consumes more than 700,000 kWh per year, may enter into a special arrangement with an electric utility to integrate the customer’s demand reduction, demand response, or energy efficiency programs with those of the electric utility. If the specified reduction levels are met, the customer can request exemption from the cost recovery mechanism.
According to the Energy Information Administration, Ohio electric utilities reported efficiency program savings of 530,062 MWh in 2009. Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables.
At AEP there is a self-direct program that offers customers an incentive for previously implemented energy efficiency measures. The one-time incentive is 75% of what the measure would cost under AEP programs and has a maximum limit of $225,000. Projects must have been implemented after Jan. 1, 2008 and must produce 100% of stated energy savings and/or peak demand reductions over a five-year period. Customers taking the incentive are still eligible to participate in the utility's other energy efficiency programs because they are still paying the cost-recovery mechanism (CRM) fee. More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.
The Ohio Energy Resources Division oversees the Advanced Energy Fund, which supports energy efficiency programs throughout the state. These mostly commercial and industrial projects are funded by a utility rider of $0.09 per billing period for every customer (residential and non-residential) of the four investor-owned utilities in Ohio.
The Advanced Energy Fund, instituted in 1999, supports an Energy Efficiency Revolving Loan Fund that is administered by the state. A universal service rider, a type of surcharge, supports the Ohio Energy Loan Fund, providing low income bill assistance and efficiency incentives. The charge is $0.0001758 per kWh and adds up to $15 million per year to the fund.
Under the new rules, the electric utilities will file their long-term forecast and benchmark report. Once the reports and forecasts are approved, the utilities may then apply to recover the costs of their energy efficiency programs. In the past, energy efficiency programs have been funded through a cost rider. The Consortium for Energy Efficiency reported that $152.8 million was budgeted for 2010 electric programs and $11 million for natural gas programs.
Reported budgets for energy efficiency programs for 2011 are in the State Spending and Savings Tables.
Summary: 22% by 2025 (0.3% annual savings in 2009, ramping up to 1% in 2014 and 2% in 2019)
Senate Bill 221, signed into law May 1, 2008, included both an Energy Efficiency Portfolio Standard (EEPS), and Alternative Energy Portfolio Standard (RPS), among other provisions. For efficiency, it requires a gradual ramp up to a cumulative 22 percent reduction in electricity use by 2025. Beginning in 2009, the Act requires electric distribution utilities to implement energy efficiency programs that achieve energy savings equal to at least three-tenths of one per cent of sales. The baseline for which energy savings is calculated against is the average number of total kilowatt hours sold by electric distribution utilities during the preceding three years.
Failure to comply with energy efficiency savings requirements results in forfeiture on the utility. The amount is either that prescribed by the legislature or the existing market value of one renewable energy credit per MWh of undercompliance or noncompliance. Any revenue from forfeiture is credited to the Advanced Energy Fund. The commission may amend the benchmarks if, after application by the electric distribution utility, the commission determines that the utility cannot reasonably achieve the benchmarks due to regulatory, economic, or technological reasons beyond its reasonable control. Utilities must annually submit energy efficiency status reports and according to Ohio Administrative Code Section 4901:1-39-06(B), Commission Staff is required to review the reports and file its finding and recommendations regarding program implementation and compliance with applicable benchmarks.
The EEPS applies to Ohio’s investor-owned utilities and retail suppliers.
Ohio has no Natural Gas EERS.
With the exception of Duke, all of Ohio's electric utilities recover program costs and lost revenues resulting from its portfolio of energy efficiency programs through the DSM rider. Dayton Power & Light had their electric security plan approved by PUCO, which extends their existing generation rate plan through Dec. 31, 2012. Duke operates the Save-A-Watt program through which it recovers lost revenues. (Docket 08-920-EL-SSO)
In November 2011, both Duke Ohio and AEP Ohio agreed provisionally to forgo collection of lost revenues and develop a decoupling mechanism for total rate recovery for residential and small commercial customers. PUCO must approve and finalize the agreements. AEP: Docket 11-0351-EL-AIR; Duke: Docket 11-3549-EL-SSO.
In the Public Utilities Commission of Ohio’s (PUCO) rules, the commission may provide for decoupling and an electric distribution utility may submit an application for approval of a revenue decoupling mechanism to the PUCO. Rather than true decoupling, the gas utilities have all been allowed to implement straight-fixed-variable rate designs. Rule: ORC §4928.143(B)(2)(h); Duke riders: Docket Nos. 06-0091-EL-UNC, 06-0092-EL-UNC, and 06-0093-GA-UNC.
Incentives may be approved on a case-by-case basis. First Energy and AEP have had performance incentives approved. The recovery mechanism is an annually reconciled rider which includes conditioned adjustments for shared savings with a maximum 10% shareholder incentive if at least 65% of targeted savings are achieved. Duke Energy has a program called Save-A-Watt which limits the incentive to 15% of program costs (Docket 08-920-EL-SSO). Columbia Gas also filed for a shared savings mechanism in September 2011, which was subsequently approved in December 2011(Docket 11-5028-GA-UNC).
Ohio’s investor-owned utilities are required to prepare and implement energy efficiency plans. On April 15 of each year, each electric utility must file its long-term forecast and benchmark report regarding compliance with baselines and benchmarks for energy efficiency and peak reduction programs with the Public Utilities Commission of Ohio.
The evaluation of ratepayer-funded energy efficiency programs in Ohio relies on regulatory orders (Green Rules as adopted by the Commission in Case No. 08-888-EL-ORD).Evaluations are administered by both the utilities and the Public Utilities Commission of Ohio. Rules and requirements for these evaluations are drafted in the Draft Technical Reference Manualand the Draft Technical Reference Manual Docket: Case No. 09-512-GE-UNC. Evaluations are conducted statewide and for each of the utilities. Ohio uses two of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC) and Utility/Programs Administrator (UCT) test. Ohio specifies the TRC to be its primary test for decision making. The benefit-cost tests are required for portfolio and customer project level screening, and are stated in Case No. 09-512-GE-UNC.