Ohio PUC chief says state in good position if Clean Power Plan stay lifted
Ohio is well positioned to try and plan for implementation of the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan if it survives legal challenges, even though it opposes the rule, Asim Haque, chairman of the Public Utilities Commission of Ohio (PUCO), recently told Daily Energy Insider.
The Supreme Court issued a stay in February of the Clean Power Plan, which aims to reduce carbon pollution from power plants, but some U.S. states are preparing to comply with the rule in the event the stay is lifted.
Haque, who was sworn in as chairman of the PUCO in May, will take part in a panel discussion about the Clean Power Plan at the Edison Electric Institute’s annual convention in Chicago this week.
Haque recently spoke with Daily Energy Insider about the Clean Power Plan, clean energy and challenges facing Ohio electric utilities. Comments have been edited for length.
How is the Public Utilities Commission of Ohio preparing to meet the Clean Power Plan’s requirements despite the stay?
What the Ohio commission has done is work with other agencies in the state, including the Ohio EPA and the attorney general’s office, in total concert to really move down two parallel paths. On one path, we have been litigating the rule. We have been one of the states trying to stop the implementation of this rule. That is for a variety of reasons, one of them being from the power side. We believe this is federal overreach and violates potential provisions of the Federal Power Act.
The other path is trying to figure out what intelligible compliance will look like for the state of Ohio. We want to make sure that if the rule does survive a legal challenge that we as state agencies are prepared to move forward. With the proposed rule, we submitted very comprehensive comments to the U.S. EPA. Our comments were primarily based upon the concept of cost and how much it would cost the consumers of the state of Ohio if the Clean Power Plan was implemented as proposed. Based upon our modeling that our internal staff conducted, we believe those costs to be hefty.
We made some more technical arguments in those comments, which we felt were reflected in the final rule the U.S. EPA introduced. I have been vocal about giving the U.S. EPA credit for really trying to go out and listen to states and their concerns. I think they tried hard to ensure, whether it is through our national trade association NARUC (National Association of Regulatory Utility Commissioners), or even state by state, they were trying to be responsive to questions and concerns.
The final rule is, in my opinion, while similar, also quite different from the proposed rule in a few ways. The proposed rule treated natural gas-fired generation one way and the final rule treated it another way. In the proposed rule, we felt like natural gas was very much seen as a solution. In the final rule, natural gas was seen as a solution/concern. The final rule establishes these trading mechanisms that weren’t otherwise codified in the proposed rule. In the final rule with those trading mechanisms, you really had to start your analysis over.
We feel very educated about the final rule and asked ourselves important threshold questions, and have conducted some high level analysis in the midst of conducting some modeling and trying to be as influential as possible.
The rule is stayed right now, and if the stay were to be lifted, Ohio would be in a good position to try and plan for implementation based upon a lot of the work that we’ve done up to this point.
What is happening in Ohio in terms of clean energy initiatives?
As a result of the Clean Power Plan and other major cases that we’ve had in front of us, I have incorporated as a policy piece the concept of cleaner generating resources and cleaner technology even on the distribution side. I very much have adopted what is a policy principle into the core of economic regulation. I think based upon consumer sentiment in my dealings with the Clean Power Plan and in my dealings with some really big cases in Ohio here, we now need to think about planning for the future with this kind of clean energy policy piece in mind.
The legislature has its renewables and energy efficiency mandates that it is presently wrestling with. The commission has in a recent order signed off on AEP (American Electric Power) constructing 900 megawatts of renewables.
My hope is to have a very robust dialogue surrounding the future of electricity in this state. The concept of clean energy will be incorporated into that dialogue in tandem with the concept of grid modernization. And through our various orders, we have signed off on construction of some renewables. In a FirstEnergy Corp. case we signed off on, FirstEnergy committed to a 90 percent reduction in CO2 emissions by 2045.
What are the biggest challenges facing Ohio electric utilities today?
What we have been wrestling with is our investor-owned utilities that also own generation are finding their generation to be uneconomical in the wholesale marketplace. That is the primary issue we’ve been dealing with in the past few years. Also, the next challenge is trying to figure out, based upon this modernized grid, how to launch the endeavors and how to do so economically where the utilities feel comfortable making these investments. The latter is a conversation that we hope to have soon.
What are your biggest priorities as PUCO chairman?
First priority is getting these big cases out of the way to deal with these generators, at least from the utility perspective, as being perceived as uneconomical in the marketplace. These have been the PPA (purchase power agreement) cases that have been pending at the commission for some time. We made decisions and FERC essentially told us to go back to the drawing board on the primary mechanism that was articulated in those cases. I would like to get these cases done judiciously and fairly, and from that move on to the broader conversation about the future of our industry.
