| Senator Mumper Discusses Energy Bill |
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| Written by Chad Wilkinson | |
| Saturday, 10 May 2008 | |
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As legislators, we face the challenge of addressing our constituents’ current needs and planning for the future of the state at the same time. All the while, we must deal with the sometimes harsh realities of the economy and the environment as we try to turn the obstacles they might present into opportunities for Ohioans. An example of this process is found in the recent passage of Senate Bill 221, known around the Statehouse as the energy bill. In September of 2007, S.B. 221 was introduced to the General Assembly with the hope of protecting consumers from the possible consequences of the electricity industry’s rate deregulation and of addressing the future of energy in the state. The impetus was a growing concern that, when the set of rate stabilization plans between the Public Utilities Commission of Ohio (PUCO) and electricity companies expired in 2009, Ohioans would be subject to major spikes in their utility bills.
Initially, state leaders considered following the same path other states had taken – removing PUCO control and placing the electricity industry in an open market. While this action would theoretically have increased competition among energy companies, thereby pushing down prices, the market unfortunately never came to be. As a result, the 17 states that deregulated their electricity rates experienced overwhelming increases in their utility bills. For example, First of all, when the state’s rate stabilization plan ends, utilities must enter one of two agreements with the PUCO – an Electric Security Plan (ESP) or a Market Rate Option (MRO). Much like the current state-regulated system, the ESP requires that electricity companies negotiate rates, which are based on criteria such as the companies’ last baseline rates, with the PUCO. In addition, this plan allows the PUCO to intervene, should a utility’s rates surpass existing market rates. Utilities that choose to file an MRO will enter the unregulated electricity market. Nevertheless, so that the burden of significant rate increases will not be placed on consumers, the PUCO will continue to oversee aspects of the MRO. For instance, before going to market, a utility company must prove to the PUCO that competitive market criteria exist. Moreover, during a period of 10 years, the PUCO will still regulate the rates of a predetermined percentage of the utility’s power. Finally, S.B. 221 allows high energy users to negotiate special contracts with utilities, which will allow entities, such as small businesses, to continue to meet their energy needs and thrive. In addition to addressing
Throughout numerous committee hearings, legislators considered the perspectives of homeowners, businesses, utility companies and policymakers and tried to reach the most practical and beneficial solution possible for |
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