Negotiations to resume on energy legislation

From the Cleveland Plain Dealer
Negotiations to resume on energy legislation
Posted by rroguski April 17, 2008 01:00AM

Columbus -- Ohio House Speaker Jon Husted will continue today to negotiate changes to his energy and utility regulation bill, after nearly a week of stormy negotiations that dominated Statehouse politics.

The Kettering Republican says he hopes by Tuesday to have ironed out issues that mushroomed into major problems the longer talks went on this week.

Among the most thorny issues still on the table Wednesday night:

• A rule allowing FirstEnergy Corp. to keep charging a residual generation rate to consumers who buy from outside suppliers next year.

The Akron-based utility has argued that it would still be obligated to supply power if independent marketers failed to provide enough power.

Leigh Herington, executive director of the Northeast Ohio Public Energy Council, testified this week before the House Utilities Committee that NOPEC will not be able to attract new suppliers unless the language is stripped out of the bill allowing FirstEnergy to collect the residual generation charges.

In other words, consumers who buy power from outside suppliers should have to pay only FristEnergy's distribution rate, not any part of its generation rate, he said.

• A Senate requirement that wind and solar development be halted if the construction costs of the green energy drove up a utility's generation rates by more than 3 percent. Advocates of green energy say they can live with the limit because the power from renewable projects will represent only a fraction of the total power generated and its cost will be blended with power from traditional power plants.

Still, the last House version did not include explicit language but instead authorized the Public Utilities Committee of Ohio to decide the issue on a case-by-case baisis.

• A demand by American Electric Power that it be allowed to begin basing its rates on wholesale market prices at a faster rate than allowed in the bill.

As last written, the legislaiton would allow AEP to begin basing just 10 percent of its total sales on market rates next year and 10 percent additionally every year for five years. At that point the state could stop the progression and force the company back under traditional regulation.

The underlying issue behind the struggles is how quickly the state's utilities can begin basing their rates on wholesale market prices.

Strickland may have lost the battle with FirstEnergy even before he unveiled his original bill last September.

The company argues that since it moved ownership of its power plants to unregulated -- though wholly owned-- subsidiaries, the state cannot regulate the generation portion of its rates.

Despite the assertions of FirstEnergy executives, however, most of the players in this week's Statehouse drama do not think the company would actually want to sell all of its power outside the state.

Husted's problems holding his version of the bill together began a week ago when he unveiled the House rewrite of the bill

Within a day, Gov. Ted Strickland threatened a veto if it ever reached his desk.

What followed were five days of around-the-clock negotiations with the administration as well as the Senate, plus volley after volley of complaints and proposed amendments from utilities, consumer groups and industrial power users.

In short, the process overwhelmed the bill.

After midnight Monday, the House Utilities Committee approved the measure as Husted had drafted it -- but not before Democratic members walked out and Husted had a face-to-face stalemate with Strickland.

Husted on Tuesday night said the legislation has become unrecognizable even to him, but he nevertheless scheduled a House session for 1:30 p.m. Wednesday, which was delayed until 9 p.m.

Husted cancelled that session in the late afternoon and issued a statement saying he intended to keep working on the legislation before Tuesday's regularly scheduled session of the House.

Earlier in the day, Senate President Bill Harris, an Ashland Republican, said he did not intend to convene the Senate again this week just to consider Husted's legislation.

In an interview, Harris also said he thought rather than have the Senate debate the measure he would send it directly to a conference committee of the two chambers.

By law, the Senate president and House speaker each choose three members to meet and iron out the differences in a bill.