Ohio Committee Recommends Freeze On Energy Mandates, Just Because
Last week, a special committee created last year in Ohio to consider the costs and benefits of the state’s renewable energy and energy efficiency mandates released its “findings.”
It had none – at least none pertaining to whether the benefits exceeded the costs of the mandates.
“While the committee’s initial task was to complete a cost-benefit analysis, the study includes absolutely no analysis of the benefits from investments in energy efficiency,” said Maggie Molina, a director of utility policy at the American Council for an Energy-Efficient Economy (ACEEE), one of the most widely recognized authorities on the economics of energy efficiency. “They only look at the costs.”
But it gets worse. Remarkably, despite the lack of any meaningful findings, the committee recommended that the state suspend the mandates immediately and indefinitely.
“By not basing their recommendations on an actual cost-benefit analysis of energy efficiency, the committee’s study is shockingly incomplete,” said Molina.
Reducing peak demand yields huge economic benefits for ratepayers. It may cost money to reduce peak demand, but the alternative to paying someone to reduce demand – i.e., supplying more electricity to serve the incremental load – would also cost money. One of the rationales for performing a cost benefit analysis is identifying the cheapest of the two options.
It turns out that reducing consumption of electricity is commonly less expensive than expanding the supply of electricity. In 2013, the ACEEE evaluated the benefits provided by Ohio’s energy efficiency mandate and found that it would save ratepayers almost $5.6 billion in avoided energy expenditures, reduced wholesale energy prices and capacity prices.