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State Energy Efficiency Policy Database

Ohio

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Summary

Ohio’s investor-owned utilities administer energy efficiency programs under a regulated structure with oversight by the Public Utilities Commission of Ohio (PUCO). In 2008, the state passed a law that establishes an EERS with energy savings goals for electric utilities and allows for cost recovery and decoupling. Rules for implementing the law were published by the PUCO in July 2009.  The rules require utilities to propose energy efficiency plans and file annual status reports with the commission. With these actions Ohio greatly increased its commitment to customer energy efficiency programs. Funding for programs has grown dramatically along with the savings achieved as a result of these programs. 

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Customer Energy Efficiency Programs

With passage of SB 221 in 2008, Ohio established the foundation for the full range of customer energy efficiency programs now available. This act called on utilities to develop electric efficiency programs to meet newly proposed energy and peak demand savings targets. This legislation also explicitly includes demand-response programs and transmission and distribution system improvements.  

Ohio’s regulated distribution utilities administer their own energy efficiency programs with oversight from the PUCO. The PUCO may also modify the utilities' proposed programs. Ohio natural gas utilities also run efficiency programs. Under the PUCO rules, the electric utilities file their long-term forecasts and benchmark reports. Once the reports and forecasts are approved, the utilities may then apply to recover the costs of their energy efficiency programs. 

Large customers have self-direct options. Under SB 221, a mercantile customer, which is a commercial or industrial customer that consumes more than 700,000 kWh per year, may enter into a special arrangement with an electric utility to integrate the customer’s demand reduction,demand response, or energy efficiency programs with those of the electric utility. If the specified reduction levels are met, the customer can request exemption from the cost recovery mechanism.  

 One of the state’s utilities, AEP, has a self-direct program that offers customers an incentive for previously implemented energy efficiency measures.  The one-time incentive is 75% of what the measure would cost under AEP programs and has a maximum limit of $225,000.  Projects must have been implemented after Jan. 1, 2008 and must produce 100% of stated energy savings and/or peak demand reductions over a five-year period.  Customers taking the incentive are still eligible to participate in the utility's other energy efficiency programs because they are still paying the cost-recovery mechanism (CRM) fee. 

Financing options also are available to customers. The Advanced Energy Fund, instituted in 1999, supports an Energy Efficiency Revolving Loan Fund that is administered by the state.  A universal service rider, a type of surcharge, supports the Ohio Energy Loan Fund, providing low income bill assistance and efficiency incentives. The charge is $0.0001758 per kWh and adds up to $15 million per year to the fund.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

Links:

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November 8, 2013


Energy Efficiency Resource Standards

Summary: 22% by 2025 (0.3% annual savings in 2009, ramping up to 1% in 2014 and 2% in 2019)

Senate Bill 221, signed into law May 1, 2008, included both an Energy Efficiency Portfolio Standard (EEPS), and Alternative Energy Portfolio Standard (RPS), among other provisions.  For efficiency, the law requires a gradual ramp up to a cumulative 22 percent reduction in electricity use by 2025. Beginning in 2009, the Act requires investor owned utilities and retail suppliers to implement energy efficiency programs that achieve energy savings equal to at least three-tenths of one per cent of sales. The baseline for which energy savings is calculated against is the average number of total kilowatt hours sold by electric distribution utilities during the preceding three years.

Ohio’s EEPS also includes peak demand reduction targets of 0.75% annually through 2018. In 2018, the legislature must make recommendations for future peak demand reduction targets.

Failure to comply with energy efficiency savings requirements results in forfeiture upon the utility.  The amount is either that prescribed by the legislature or the existing market value of one renewable energy credit per MWh of undercompliance or noncompliance. Any revenue from forfeiture is credited to the Advanced Energy Fund. The commission may amend the benchmarks if, after application by the electric distribution utility, the commission determines that the utility cannot reasonably achieve the benchmarks due to regulatory, economic, or technological reasons beyond its reasonable control. Utilities must annually submit energy efficiency status reports and according to Ohio Administrative Code Section 4901:1-39-06(B), Commission Staff is required to review the reports and file its finding and recommendations regarding program implementation and compliance with applicable benchmarks. 

Ohio has no Natural Gas EERS.


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August 9, 2013


Alternative Business Models

With the exception of Duke, all of Ohio's electric utilities recover program costs and lost revenues resulting from its portfolio of energy efficiency programs through the DSM rider. Dayton Power & Light had their electric security plan approved by PUCO, which extends their existing generation rate plan through Dec. 31, 2012. Duke operates the Save-A-Watt program through which it recovers lost revenues. (Docket 08-920-EL-SSO)

In November 2011, both Duke Ohio and AEP Ohio agreed provisionally to forgo collection of lost revenues and develop a decoupling mechanism for total rate recovery for residential and small commercial customers. PUCO must approve and finalize the agreements. AEP: Docket 11-0351-EL-AIR; Duke: Docket 11-3549-EL-SSO.

In the Public Utilities Commission of Ohio’s (PUCO) rules, the commission may provide for decoupling and an electric distribution utility may submit an application for approval of a revenue decoupling mechanism to the PUCO.  Rather than true decoupling, the gas utilities have all been allowed to implement straight-fixed-variable rate designs. Rule: ORC §4928.143(B)(2)(h); Duke riders: Docket Nos. 06-0091-EL-UNC, 06-0092-EL-UNC, and 06-0093-GA-UNC.


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August 9, 2013


Reward Structures for Successful Energy Efficiency Programs

Incentives may be approved on a case-by-case basis. First Energy and AEP have had performance incentives approved. The recovery mechanism is an annually reconciled rider which includes conditioned adjustments for shared savings with a maximum 10% shareholder incentive if at least 65% of targeted savings are achieved. Duke Energy has a program called Save-A-Watt which limits the incentive to 15% of program costs (Docket 08-920-EL-SSO). Columbia Gas also filed for a shared savings mechanism in September 2011, which was subsequently approved in December 2011(Docket 11-5028-GA-UNC). 


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August 21, 2013


Energy Efficiency as a Resource

Ohio’s investor-owned utilities are required to prepare and implement energy efficiency plans. On April 15 of each year, each electric utility must file its long-term forecast and benchmark report regarding compliance with baselines and benchmarks for energy efficiency and peak reduction programs with the Public Utilities Commission of Ohio.

For further reading, in March 2009, as part of the State Clean Energy Resource Project, ACEEE completed the report Shaping Ohio's Energy Future: Energy Efficiency Works (E092).


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August 11, 2013


Evaluation, Measurement & Verification

The evaluation of ratepayer-funded energy efficiency programs in Ohio relies on regulatory orders (Green Rules as adopted by the Commission in Case No. 08-888-EL-ORD).Evaluations are administered by both the utilities and the Public Utilities Commission of Ohio. Rules and requirements for these evaluations are drafted in the Draft Technical Reference Manualand the Draft Technical Reference Manual Docket: Case No. 09-512-GE-UNC. Evaluations are conducted statewide and for each of the utilities. Ohio uses two of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC) and Utility/Program Administrator (UCT) test. Ohio specifies the TRC to be its primary test for decision making. The benefit-cost tests are required for portfolio and customer project level screening, and are stated in Case No. 09-512-GE-UNC.


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August 21, 2013