Tom Knox at Columbus Business First just outlined a little-known but incredibly significant part of SB 310 that will have wide-ranging implications for the future of Ohio’s clean energy industry.
From the post:
The bill would allow utilities under a renewable-energy contract to be released from the agreement “if there is a change in the renewable energy resources requirements,” according to the latest version of Senate Bill 310, passed by the Ohio Senate last week and being heard Tuesday in the House Public Utilities Committee.
If American Electric Power Company Inc. (NYSE:AEP), for example, signed a 20-year purchase agreement with a wind turbine company to provide some power for its customers, any future change in renewable energy requirements would allow AEP to void its contract.
While it would not affect existing renewable energy contracts, such as FirstEnergy Solutions’ deal to purchase power from the Blue Creek Wind Farm, it would apply to any new renewable energy contracts signed by one of the four investor-owned utilities after SB 310 becomes law. As Knox notes,
Without a two-decade guarantee of revenue, financial backers of wind projects would be hard-pressed to put up money.
“That is the ultimate done deal, it’s over, kiss all wind renewables gone,” said Jereme Kent, general manager of Findlay-based wind company One Energy LLC. “Even if wind was half the price, you could not sign a contract with that provision.”
With all of the attention surrounding the other God awful provisions in SB 310, including the two-year freeze and the elimination of the requirement that 50% of renewable energy is produced in Ohio, this small clause, buried on line 950 of the legislation (PDF), has been overlooked. Here’s the actual text in question:
Sec. 4928.642. Every contract to procure renewable energy resources or renewable energy credits entered into by an electric distribution utility or an electric services company on or after the effective date of S.B. 310 of the 130th general assembly shall contain a change-of-law provision. Such a provision shall provide that the parties to the contract are released from their obligations under the contract if there is a change in the renewable energy resource requirements, governed by section 4928.64 of the Revised Code.
Without question, these 80 words inject so much uncertainty and chaos into Ohio’s burgeoning renewable energy industry that they may effectively strangle it in its crib. It’s hard to see any utility-scale renewable energy project getting financing when the utility can simply renege on its deal if any changes are made to SB 310 going forward.
Interestingly, this section was not included in the original form of SB 310 (PDF), as it was introduced to the Senate in March. Rather, someone slipped it in behind closed doors when the GOP leadership rewrote the bill last week.
Given the hands on-role that Governor Kasich played in changing the bill, I can’t help but wonder whether or not he was involved in inserting this section or was aware of it before the bill reached the Senate floor. Either way, the existing of this provision and the Governor’s apparent indifference (if not approval) for it clearly belies his supposed support for the 25,000 clean energy jobs in this state.
In his official statement with Senate President Faber last Thursday, the Governor claimed that SB 221’s standards “are now emerging as a challenge to job creation and Ohio’s economic recovery.” That could not be farther from the truth. The real challenge to job creation and economic growth is SB 310 itself.
The stakes just got even higher in this fight. You can no longer pretend to back clean energy and the jobs and economic development it creates if you support SB 310.