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Energy Efficiency Policies and Practices in Ohio

Utility Sector

Utility sector policies are those policies that directly affect the way that the state's electricity and natural gas utilities do business and serve the energy needs of their customers.  These policies include utility forecasting and planning requirements for energy efficiency, requirements for energy efficiency delivery to customers, regulatory mechanisms to determine utility revenues for energy efficiency services, processes for working collaboratively with other utilities and energy stakeholders to advance energy efficiency, requirements for evaluating energy efficiency programs and portfolios, and policies to promote the development of the next generation of energy grids.


Resource Planning

Ohio Administrative Code 4901:5-5 requires that electric utilities file an annual Long Term Forecast Report. This report includes a resource plan (4901:5-5-06) that includes a ten-year long-term forecast of energy needs (4901:5-5-06(A)(6)(d)) and should include a discussion of how demand-side programs can help meet those needs (4901:5-5-06(3)(e)(ii)).

► Overview of Resource Planning policies in the Midwest


Energy Efficiency Standards

Electricity

2014's SB 310 put a two year "freeze" on the energy efficiency ramp-up schedule specified by 2008 SB 221. 

In 2008, SB 221 established renewable energy and energy efficiency portfolio standards for the investor-owned electric utilities in Ohio.  The energy efficiency requirements (Ohio Revised Code 4928.66) began in 2009, with a schedule that ramps up to 2.0% of electricity needs met through energy efficiency in 2019. Waste heat recovery/combined heat and power are included in the definition of energy efficiency measures that can be used to meet the targets (Ohio Revised Code 4928.66(A)(2)(c)).

PUCO rules for implementing SB 221 are found in Ohio Administrative Code 4901:1-39. Utilities file their energy efficiency program plans for a three year period (4901:1-39-04), and must file annual status reports (4901:1-39-05) including evaluation, measurement, and verification (EM&V) on all programs, to demonstrate their compliance with the annual targets.

Natural Gas

Ohio does not have a statewide energy efficiency portfolio standard for natural gas utilities.

► Overview of Efficiency Standards policies in the Midwest


Rate Structures & Incentives

Cost Recovery

PUCO rules in OAC 4901:1-39-07 allow utilties to submit a request for rate adjustment for cost recovery, lost revenue recovery, and shared savings mechanisms as part of their program plan, subject to annual reconciliation. Mechanisms for cost-recovery are approved on a case-by-case basis.

Lost Revenue Recovery

The Ohio PUC is authorized by legislation to develop rules for decoupling for electric distribution utilities (ORC 4928:66(D)). Rules in OAC 4901:1-39-07 allow utilties to submit a request for lost revenue recovery mechanisms, along with cost recovery and shared savings mechanisms as part of their program plan, subject to annual reconciliation.

An electric distribution utility may apply to PUCO for approval of a revenue decoupling mechanism; however gas utilities haven’t been allowed to implement a true decoupling mechanism, but have been permitted to use straight-fixed-variable rate designs.  These decisions are determined on a case-by-case basis for both electric and gas utilities. Duke Energy Ohio recovers lost revenues resulting from its portfolio of energy efficiency programs through the DSM rider. Dayton Power & Light currently has a case pending. AEP Ohio chose not to seek lost revenue recovery in their prior rate case.  

Utility Incentives

Rules in OAC 4901:1-39-07 allow utilties to submit a request for a shared savings incentive, along with rate adjustment for cost recovery and lost revenue recovery as part of their program plan, subject to annual reconciliation. Utility shared savings incentive mechanisms are approved on a case-by-case basis.

Noncompliance Penalties

Under ORC 4928:66(C) if a utility does not meet its energy efficiency requirement through either non-compliance or under-compliance, the Commission has the authority to order a forfeiture from the utility. If the utility was unable to meet its benchmarks "due to regulatory, economic, or technological reasons beyond its reasonable control" then the Commission can issue a waiver and lower the utility's compliance targets (OAC 4901:1-39-05(I-J)).

► Overview of rate structures & incentives in the Midwest


Stakeholder Collaboration

Utilties in Ohio run their own stakeholder groups, which may include industry, commercial groups, academics, nonprofits, housing advocates, government representatives, and chambers of commerce. They use these groups to advise the utility on proposed energy efficiency plans and programs. Ohio does not have a statewide stakeholder process.

► Overview of stakeholder collaboratives in the Midwest


Program Evaluation

Cost-effectiveness Testing

Utilities in Ohio are required by OAC 4901:1-39-03(A)(2) to use the Total Resource Cost Test (TRC) for evaluating the cost-effectiveness of energy efficiency programs for their program planning efforts. Additional tests, primarly the Program Administrator Cost Test (PACT) are used by utilities in their program evaluation, but the TRC is the only one required by the rules.

Net vs. Gross

Ohio utilities report Gross energy savings; they do not have a requirement for measuring free-ridership or spillover effects.

Technical Resource Manual

The PUCO held a workshop regarding the development of a statewide Technical Resource Manual as part of Case No. 09-512-GE-UNC.  A draft TRM was filed in August 2010, and a number of comments were filed in response, but there have been no further activities related to TRM development since that time.

► Overview of efficiency program evaluation in the Midwest


Smart Grid

The Smart Grid Information Clearninghouse identifies the following smart grid projects in Ohio:

Recovery Act-funded smart grid projects that benefit Ohio, as identified on SmartGrid.gov include:

► Overview of smart grids in the Midwest


 

Read the report that accompanies these pages:
Energy Efficiency Policies, Programs, and Practices in the Midwest:
A Resource Guide for Policymakers (2014 Edition)

►more information about the Resource Guide