New energy-savings law in Ohio sparked utility to try light-bulb plan

By Marc Kovac

COLUMBUS — More than a few customers were left scratching their heads over FirstEnergy’s plan to deliver light bulbs to residences and businesses.

The company said the plan was needed to meet state-mandated energy efficiency requirements, and it cited a state law enacted last year that allows it to recover from customers the costs of the compact fluorescent bulbs and the energy savings from their use.

So what exactly were lawmakers thinking when they passed their much-touted energy bill?

John P. Hagan, former state representative who was chairman of the House’s public utilities committee that oversaw deliberations on the energy bill, said he did not envision the forced delivery of light bulbs as a probable outcome.

“It’s a kind of nonsensical approach,” said Hagan, a Republican from the Alliance area and a FirstEnergy customer. “There’s got to be better baby steps than shipping $21 shipments of two light bulbs to people and [making them] pay for the energy reduction.”

The situation stems from lawmakers’ attempts to avoid spikes in Ohioans’ electricity bills.

In 1999, the Legislature moved to deregulate the electricity marketplace in Ohio. Proponents at the time believed the move would lead to more competitive prices.

But that was not the case in some states that completed the switch to a deregulated market. Customers in places such as Illinois and Maryland saw big increases in their electric bills — 55 percent and 72 percent jumps, respectively, according to statistics released by the governor’s office at the time.

In Ohio, rate stabilization was scheduled to end after 2008, meaning customers faced a fully deregulated marketplace in 2009 without some type of legislative action.

And last year, lawmakers and Gov. Ted Strickland finalized electric re-regulation to avoid the double-digit spikes, with an eye toward promoting energy efficiency and renewable technologies.

It makes sense to promote energy efficiency, Hagan said.

“The most economical energy is the energy you don’t use,” he said. “We all know what the implications are of producing electricity. There’s a downside. None of it’s free, none of it’s pollution- free, whether it’s windmills or solar panels. In the production of those products, there’s costs to the environment.”

“I think the intent [of the energy bill] was to try to help the utilities be able to initiate efforts to help people reduce their energy costs,” said Senate President Bill Harris, a Republican from Ashland.

As part of the energy bill, the state is requiring power companies to meet energy-efficiency mandates, reducing usage by 22.2 percent by the end of 2025. But power companies have fixed costs in providing energy to customers, which is why provisions were included allowing them to charge for energy-efficiency initiatives and for the decrease in customers’ electricity use.

“As a power company, you have to run a wire out to my house, you have to have the generation capacity and you have to be able to deliver that product on my demand,” Hagan said.

“There’s infrastructure and maintenance of infrastructure that is required in order to have a wire to your house. That costs money. Now, logically, if I’m able to help you reduce your gas consumption or electric consumption by 50 percent, and if all of my rate is based on consumption, the utility company is going to be a big loser in the overall picture.

“There has to be a mechanism to be able to recover those costs that are fixed costs. The companies have to remain viable.”

Lawmakers didn’t spell out exactly how utilities were to meet the energy efficiency reductions. The energy bill gave PUCO authority to review and approve companies’ plans for meeting its mandates.