House Bill 389 (“HB 389”) was introduced on September 21 with bipartisan sponsorship. Representatives Seitz and Leland introduced HB 389 to authorize electric distribution utilities (“EDUs”) to offer a voluntary portfolio of energy efficiency programs. The programs would be offered to residential and small commercial customers on an opt-out basis. Mercantile customers are automatically excluded from participation but can opt-in if they choose.

If passed, HB 389 would enable EDUs to offer a portfolio of energy efficiency programs with a limited budget. The budget for the programs would be prohibited from exceeding 2.25% of the EDU’s annual total operating revenues for the previous year as reported in its FERC financial report, FERC Form 1, Account 400. EDUs could increase the budget through bidding efficiency incentives bid into the PJM market.

HB 389 also provides incentives for those EDUs which achieve the target savings of .5%. Incentives must not exceed 10% of net program costs on an after tax basis. However, unlike the previous efficiency portfolio programs, incentives earned by the utilities do not count against the programs overall budget. This will ensure that customers will receive the maximum savings under the portfolio’s budget.

EDUs who intend to offer energy efficiency programs must first get their portfolios approved by the Public Utilities Commission of Ohio. If, after the opt-out period, an EDU’s portfolio is undersubscribed compared to their estimates, EDUs will have the ability to adjust the portfolio’s budget to ensure that no residential customer will pay more than an average of $1.50 per month to fund the programs.

The Commission will review portfolio programs to ensure they are cost effective and pass the utility cost test. Additionally, the portfolio cannot achieve more than 30% of its planned annual gross savings through residential programs which only deliver behavioral energy savings. HB 389 will also require that at least 15% of a portfolio’s budget for residential programs be dedicated to serving low-income Ohioans, which the bill defines as those customers with an annual income at or below 200% of the federal poverty level.

Finally, the bill requires that each portfolio will be reviewed annually and adjusted as necessary to achieve the proper savings and ensure cost effectiveness. Every five years EDUs will be able to propose a new portfolio.

OPAE supports this legislation and will be presenting in-person proponent testimony at an upcoming Statehouse hearing.