Budget would charge Ohio consumers for industrial energy discounts
On Thursday, members of a H0use subcommittee questioned Public Utilities Commission (PUCO) Chairman Todd Snitchler about language in Governor Kasich’s two-year budget (House Bill 59) that would allow utility companies to recover costs associated with rate discounts they provide to large energy users from consumers outside of their territory.
Currently, utilities like First Energy or AEP can negotiate “reasonable arrangements” with large industrial users — oil refineries or auto factories, for example — who consume large amounts of energy. These arrangements allow the industrial users to pay a discounted rate, typically in exchange for a plant expansion that creates jobs and boosts the local economy. In exchange, the cost of the discount is spread across the bills of all the other consumers within the utility’s service territory.
HB 59 includes a change that would allow those costs to be picked up by utility customers all across the state. For example, if First Energy decides to enter into a reasonable arrangement with a factory in Northeast Ohio, the cost of this rate reduction could appear on the bill of customers in Southeast Ohio.
The policy shift caught the attention of subcommittee members. Reps. Mike Ashford and Denise Driehaus both asked Chairman Snitchler whether this policy is fair to ratepayers in other utility territories who are unlikely to share in the expanded economic activity, even while picking up the tab. [Read more…]