Ohio Renewable Mandates Driving Up Electricity Prices

Ohio Renewable Mandates Driving Up Electricity Prices
January 27, 2014

James M. Taylor

James M. Taylor is managing editor of Environment & Climate News, a national monthly... (read full bio)

Renewable power mandates are driving up Ohio’s electricity prices, U.S. Energy Information Administration data show. Electricity prices in Ohio have risen more than twice as fast as the national average since Ohio enacted the mandates in 2008. The sharp price increases occurred despite promises during 2008 legislative hearings that renewable power mandates would have little or no impact on electricity prices.

In 2008 the Ohio legislature passed legislation creating the state’s renewable power mandates. Under the mandates, Ohioans must purchase 25 percent of their electricity from designated alternative sources by the year 2025, including 12.5 percent from designated renewable sources.

Sharply Rising Prices
Since 2008, U.S. electricity prices have risen by 3.2 percent, from 9.81 cents per kilowatt hour to 10.13 cents per kilowatt hour (data through October 2013, the most recent month for which the U.S. Energy Information Administration, or EIA,had published data at press time).

In Ohio, by contrast, electricity prices have risen 8.7 percent since 2008, from 8.44 cents per kilowatt hour to 9.18 cents per kilowatt hour.

The rise in Ohio electricity prices tells only part of the story. Federal taxpayers (including Ohioans) provide substantial subsidies to renewable power producers, most notably through the wind power production tax credit. These additional costs are hidden, and are not reflected in the price consumers see in their electric bills.
 
Directly Traceable to Renewables
The rise in Ohio electricity prices closely tracks and is directly traceable to the increasing generation of costly renewable power, electricity experts affirmed during March 2013 hearings before the Ohio Senate Public Utilities Committee. Andrew Ott, senior vice president for markets at PJM Interconnection, which coordinates electricity transmission in Ohio and 12 other states, testified wind power is two to three times more expensive to produce and deliver to Ohioans than electricity from conventional sources. Wind power comprises nearly all renewable power generation in Ohio. 

Ohio Households Taking Financial Hit
The rapid increase in electricity prices is imposing real financial hardship on Ohio families. Had Ohio’s electricity price increases been limited to the national average since 2008, the state’s electricity consumers would have paid $4.3 billion less for their electricity.

With 4.6 million households in the state, the average Ohio household has paid $955 more in electricity costs (over $190 per household per year) than they would have if the state’s electricity prices rose at the same pace as in the rest of the nation.

James M. Taylor (jtaylor@heartland.org) is managing editor of Environment & Climate News.

James M. Taylor

James M. Taylor is managing editor of Environment & Climate News, a national monthly... (read full bio)