Senate Energy Committee favorably reports substitute Senate Bill 2 after sixth hearing

The Senate Energy Committee on Thursday favorably reported substitute Senate Bill 2 to the Committee on Rules and Reference after its sixth hearing, advancing legislation that revises electric rate-making, limits certain utility ownership of behind-the-meter generation and directs school energy-efficiency funds to the facilities construction commission.

The measure cleared the committee on a voice and roll-call sequence after proponents and opponents testified for and against the bill. Vice Chair Landis moved to report the substitute bill to Rules and Reference; the clerk recorded multiple "Yes" votes and the chair announced the bill had sufficient votes to advance.

The bill as worked on in committee (substitute 0333-5 with amendment O2-63 adopted in committee) tightens language on future test years for rate cases, moves the school energy-efficiency money to the school energy program under the facilities construction commission, and clarifies that behind-the-meter generation projects owned by utilities may continue only if they are in operation before the bill's effective date, according to a committee explanation.

Frank Stregari, vice president of external affairs for AEP Ohio, testified in opposition, saying the bill would undo agreements formed under Ohio Revised Code 4928.47 and could "unlawfully impair contracts." Stregari said AEP used that statute to enter into agreements to serve large mercantile customers and that the current bill would restrict such agreements to facilities already in operation before the bill's effective date. "This removes, restricts the customer choice that I spoke to earlier and is a setback to the ability of the state to compete nationally for economic development projects," he said.

Stregari also warned that the bill would immediately eliminate recovery for costs associated with OVEC generation and urged a transition rather than immediate cessation, saying an immediate write-off would force AEP Ohio to recognize approximately $52,000,000 in unrecovered costs. "An immediate end to the current law recovery will substantially impair the ability of Ohio's utilities to invest in Ohio's electricity grid," he said.

Proponent witnesses, including Kim Boiko, testifying on behalf of the Ohio Manufacturers Association, and Melville Nickerson of NRG, supported the committee's changes. Boiko said the version reported by the committee "does not repeal 49 28.47" and emphasized that utilities are not guaranteed ownership under that statute; she urged the committee to preserve competitive markets and called for stronger language to require annual true-ups. "With these important changes made to version 5, the OMA is pleased to support the bill," she said.

Robert Kelter, managing attorney at the Environmental Law & Policy Center, supported eliminating electric security plans and riders and urged clearer annual true-up procedures so the Public Utilities Commission of Ohio can scrutinize utility spending. "The utility has the burden of proof to demonstrate all spending is used and useful," Kelter said, proposing explicit hearing and filing timelines to ensure meaningful review.

An interested party witness from the Energy Policy Network highlighted regional reliability concerns and recent generation retirements. Randy Imager noted that Ohio utilities have closed baseload plants in recent years and cited Federal Energy Regulatory Commission and PJM analyses showing elevated risk of shortfalls during peak demand. He recommended preserving and repowering existing baseload plants where feasible and ensuring replacement capacity is in place before retirements.

Committee members asked witnesses about who ultimately bears costs and whether the bill would foreclose options for economic development customers. Several senators pressed AEP's witness on contract impairment, customer choice and how immediate changes could affect rates and utility financing. AEP said it supports some elements of the bill, including more frequent rate cases and annual audits, but urged a transitional approach on OVEC cost recovery and protection for contracts entered before any effective date.

After testimony and discussion, the committee adopted the amendment O2-63, which added provisions on nontraditional billing, flexible payment schedules and expedited disconnection procedures for mercantile customers, and then voted to report the bill to Rules and Reference. The committee also gave Legislative Service Commission staff permission to harmonize amendments as needed for the substitute bill before it proceeds.

The committee recorded individual affirmative votes during the roll call, and the chair announced the bill will be sent to Rules and Reference; the chair held the roll open until noon for any members who had checked in but not yet voted. With the committee action complete, the committee adjourned.