Home > Regions > North America > Ohio Statehouse Update: Week in review — October 28, 2011

Ohio Statehouse Update: Week in review — October 28, 2011

1.  Issue 2 support down in polls, fundraising

In 11 days, Ohio will decide the fate of Issue 2, the controversial collective bargaining law approved by the state legislature earlier this year. We Are Ohio, the group pushing for referendum of Senate Bill 5, reported it has raised $19 million since July. Conversely, Building a Better Ohio, a group in support of maintaining the law, raised $7.5 million during that time.

According to a Quinnipiac University poll released earlier this week, Ohio voters support the repeal of Senate Bill 5, 57 percent to 32 percent.

The poll found the following Ohio voter opinions on public employee issues:

  • Oppose: 61 to 32 percent a ban on public employee strikes
  • Oppose: 56 to 36 percent limits on public employee unions from bargaining over health care
  • Oppose: 51 to 42 eliminating seniority as the sole factor when determining layoffs
  • Support: 49 to 40 percent merit-based pay increases rather than seniority-base increases
  • Support: 60 to 33 percent requiring public workers to pay at least 15 percent of their health insurance premiums
  • Support: 57 to 34 percent requiring public workers to pay at least 10 percent of their wages for their pensions.

2.  Committees study electricity regulation

The Senate Energy and Public Utilities Committees will join House Public Utilities Committee efforts to hold a series of electricity oversight hearings. The House Committee previously heard testimony from large industrial energy users and the Public Utilities Commission of Ohio (PUCO). Next week the committees will hear from a representative of PJM, a regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia, as well as representatives of the renewable energy industry.

In a joint meeting of the two committees this week, testimony was provided by Dominion Virginia Power and the Energy Association of Pennsylvania to discuss regulations in each respective state.

Bob Blue, senior vice president for law, environment and public policy at Dominion Virginia Power, described the state’s experience with electric deregulation in the 1990s. At that time many industrial customers believed that deregulation would result in lower prices through competition as well as new investments in generation capacity.

According to Blue, neither new capacity nor competition materialized. No new baseload capacity was added within the state, and ultimately, Virginia became the second largest importer of electricity in the state, behind only California.

Blue said the legislature approved reregulation for the state in 2007 to encourage investments in new infrastructure, promote energy independence for the state, and avoid substantial price spikes for all customers.

President and CEO Terrance Fitzpatrick of the Energy Association of Pennsylvania provided a different perspective with regard to electric regulation. The Commonwealth approved its electric competition law in 1996. Fitzpatrick said competitive electricity markets have worked for the benefit of customers in his state. As proof, he pointed out that more than 50 percent of the state’s load is currently purchased from competitive suppliers.

Fitzpatrick noted that state electric prices are currently two percent lower than the national average; compared with 1996 electricity prices in Pennsylvania, which were 15 percent above the national average. According to his testimony, 10,000 megawatts of new generation have been added in Pennsylvania since restructuring. In addition, the operating efficiency of power plants has increased significantly. He said competitive markets preserve a stable environment for investments in generating plants and encourage development of needed electricity infrastructure.

3.  Investor-owned utilities testify

The House Public Utilities Committee invited Ohio’s major investor-owned electric utility companies to provide testimony at its meeting on October 19, 2011.

Leila Vespoli, executive vice president and general counsel for First Energy, encouraged the committee to adopt a policy in support of competitive markets, saying they deliver the lowest price over the long-term to customers. First Energy separated its generation and distribution operations so its power plants are no longer owned by electric distribution companies. She said this ensures the company’s generation-related investments and the risk associated with building new capacity is borne by shareholders, not by customers.

Senior Vice President Arthur Meyer testified on behalf of Dayton Power & Light (DP&L). He said the company is currently monitoring developments of the AEP and Duke standard service offer filings under review by PUCO. Each filing respectively contains a transition to a competitive market, where the companies must transfer generating assets to an affiliate. DP&L is operating under an electric security plan until 2012.

Meyer encouraged legislators to pass legislation ensuring cost recovery on a non-bypassable basis of all newly constructed generating facilities. Additionally, he said the costs of capital improvements to existing generation facilities resulting from new federal and state environmental mandates should be recoverable.

Joe Hamrock, president and chief operating officer for AEP Ohio, also encouraged a cost-recovery mechanism for new generation investment. He said Ohio’s current framework for regulating electricity suppliers creates a risky environment for investments, particularly as compared to surrounding states.

Hamrock said a robust competition among multiple, strong and qualified companies is necessary for competitive markets to work. He warned that without such competition a single provider would dominate the market and set its own prices.

Keith Trent, group executive and president of Duke Energy’s Commercial Businesses echoed Hamrock’s sentiments that Ohio is poorly positioned in terms of competitiveness, future investment and job creation when compared to other states’ ability to build new energy infrastructure. He encouraged lawmakers to adopt a cost-based capacity plan that would require regulator evaluation and approval.

4.  Governor releases plan for turnpike lease proceeds

While acknowledging that a decision has not been made whether the state will lease the Ohio Turnpike, Governor Kasich released his plan for additional revenue should a lease take place. He said proceeds would be used to improve highways, including a focus on Northern Ohio, neglected local projects adjacent to the Turnpike, local bridges across the state, and local transit programs.

The plan said the Ohio Department of Transportation (ODOT) will soon lack adequate funds to support investment in major new projects or even maintain the state’s current system and that creative ideas are needed to leverage every asset and resource available. According to Kasich, funds would be distributed statewide, but a majority would go to the regions where residents have supported the road most over the years.

The Ohio Department of Transportation and the Office of Budget and Management previously requested letters of interest for the development and evaluation of options for leveraging the Turnpike. The agencies have chosen five finalists that will provide presentations in November.

For more information, please contact:

Michael Caputo
(non-attorney professional)
216.348.5770
mcaputo@mcdonaldhopkins.com

Rebecca M. Kuhns
(non-attorney professional)
614.458.0043
rkuhns@mcdonaldhopkins.com

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