Have you ever heard a more awkward phrase? Does it make any sense to you? Let me explain.
HB 247 is pending legislation that is going through a stakeholder comment process. The point of the bill is to allow electric distribution utilities, which are regulated monopolies, to sell or provide behind the meter services like energy management, demand response, battery storage, solar, and a host of other stuff. On one level, it sounds reasonable for a utility to do this kind of stuff, but on another not so much.
In Ohio, the only regulated part of an electric utility is the distribution company. This is the wires and the bills. All the electricity is provided by marketers – unregulated providers; well, sort of unregulated in that the price isn’t regulated but delivering the power when promised is regulated, while the price is set by the market or an auction. Transmission costs are sort of competitive, but generally get folded into generation charges.
This means the big boys – AEP, FE, DP&L, Duke – no longer make money off of powerplants or selling electricity, at least through the regulated distribution part of the utility, the part that is still a monopoly. But behind-the-meter services have always been competitive, or at least off-limits for regulated utilities in Ohio. HB 247 would change all that. While it appears the bill would require those benefiting from the products and services to pay for them, it would also let distribution utilities get in the business of financing, equipment warranty and repair services, and physical security or cybersecurity roles, among other things (as determined by the PUCO – always dangerous).
Two problems:
1) Because regulated utilities have lots of cash flow and can borrow money much more cheaply than almost any corporation, they can probably beat most competitors in the behind-the-meter market and establish a monopoly.
2) Ratepayers will be on the hook if distribution companies make bad business decisions.
OPAE is most concerned about the second issue. Customers pay for everything when it comes to regulated monopoly distribution utilities. So, if they the utilities lose money because of investments in customer-focused products and services, you and I and out our clients will be on the hook.
OPAE is also interested in promoting community solar, a low-cost option that can save customers money over the long-term. HB 247 erects so many barriers to community solar, it really cannot work. So that’s another problem.
The lobbyist community is not convinced this bill will pass in any form. The Senate has no comparable legislation. Instead, it is focusing on energy policy at the 30,000-foot level. I’m reminded of a comment an old friend at DOE once made: “states are where the rubber hits the road; DOE is where the rubber hits the sky.” The Senate exercise is where it hits the sky. If I were a betting man, I’d put my money on nothing happening.
There is also a bill that contends it will revamp the Public Utilities Commission of Ohio and the Office of the Ohio Consumers’ Counsel. It doesn’t have any provisions, so there’s nothing to criticize yet. However, given that it is sponsored by Rep. Vitale, who thinks our clients should be cold because it will motivate them to work, I expect OPAE will oppose whatever is suggested.