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Iberdrola Renewables built these wind turbines as part of the Blue Creek Wind Farm in Van Wert, Ohio. Gov. Kasich’s veto of a bill delaying state mandates on renewable energy is only the first step toward developing more wind farms. The legislature two years ago changed property setback standards that the industry says has made building new wind farms impossible. (Karen Schiely)

By John Funk, The Plain Dealer 

Gov. John Kasich today jumped into the breach between conservative lawmakers and green industries and their environmental allies with a veto of legislation that would have made state renewable and efficiency standards voluntary for the next two years.

The veto of House Bill 554 means Ohio’s traditional utilities as well as any other power company selling electricity here must supply an annually increasing percentage of power generated by wind, solar and other renewable technologies until that percentage is 12.5 percent in 2027.

The standard has been frozen at 2.5 percent since 2014 while lawmakers studied the issue. The veto means the standard grows by 1 percent  to 3.5 percent in 2017 and then annually by 1 percent for several years until it reaches 12.5 percent in 2027.

To comply with the standards, power companies can build their own wind and solar installations or contract to buy the green power from independent companies that build them. Most power companies have bought the power.

Lawmakers in 2008 put the mandates in place — in a near unanimous vote of approval — in order to jump-start the renewable energy industry, which then grew as expected until bitter legislative debates in 2013 and the 2014 freeze.

Kasich had repeatedly pledged during his presidential bid that Ohio would support wind and solar, that he would not allow more conservative lawmakers to extend the two-year freeze, and that making the standards voluntary was unacceptable.

In his message to lawmakers accompanying the veto, Kasich wrote that HB 554, as it was passed, ran the risk of eliminating the “energy generation options . . . most prized by the companies poised to create many jobs in Ohio in the coming years, such as high technology firms.” He was referring to companies such as Amazon and Google.

Kasich was also critical of the impact the legislation would have had on businesses that work in the broad energy efficiency markets, whose technologies, he said, have helped Ohio businesses and consumers save more than $1 billion.

The veto also means FirstEnergy, American Electric Power and the other traditional utilities must offer customers energy-efficiency programs in order to meet   increasingly stringent standards to help them reduce power consumption by using new technologies. AEP never shut down its programs; FirstEnergy did. The Akron-based company is still negotiating with regulators about a new efficiency program but expects approval next month.

“FirstEnergy supported sensible modifications to Ohio’s energy efficiency mandates out of concern for the rising compliance costs that were being passed on to our customers,” said Todd Schneider, spokesman. The program will meet or exceed the standards, he added.

Schneider said the company has been neutral about whether the renewable mandates should be goals or mandates.

The efficiency standards require that by 2027, utilities reduce peak demand by 22 percent compared with the highest demand in 2009. The standards increase 1 percent annually until 2020 and then by 2 percent annually through 2027.

The state’s largest industries were able to win the right to opt out of the efficiency programs two years ago by arguing that they were more expert at efficiency than the utilities. Large commercial customers would have been permitted to leave efficiency programs under the vetoed bill.

As expected, reaction from a coalition of environmental groups was positive if not enthusiastic.

“Governor Kasich’s veto sends the signal that Ohio is back in the clean energy game, and ready to deliver good jobs and a healthy environment to businesses and families,” said Samantha Williams, Staff Attorney for the Natural Resources Defense Council.

“While the lawmakers who fast-tracked this legislation seem determined to freeze Ohio in the past, the administration wisely sees that embracing the clean energy shift that is already under way can only help the state move forward. Jobs and investment are coming to the region–the governor is right to steer them to Ohio.”

Reaction was also positive from a coalition of businesses that had opposed extending the freeze.

A group of seven companies, including Nestle, Whirlpool, GAP and energy bar maker Cliff Bar with operations in Ohio had written to Kasich urging him to veto the bill.

The governor “has sent a clear market signal that clean energy jobs, investment and innovation are welcome in Ohio, the seven said in a joint statement issued by CERES, a non-profit national clean energy group that served as a spokesman for the group.

The governor also won praise from one group that has worked hard but only occasionally in public for renewables and efficiency.

The Ohio Conservative Energy Forum, a Republican organization supported by Christian groups and led by Kasich ally Mike Hartley, saw the veto has a step toward a more comprehensive energy debate in 2017.

“Next year provides a real opportunity for Ohio to address its energy portfolio in a way that will support economic development, the co-existence of renewable and traditional energies — and benefit rate payers,” said Hartley in an interview following the veto.

The thorough debate that Hartley envisions would occur as American Electric Power and FirstEnergy push lawmakers to “re-structure” the industry or, more bluntly, return to some sort of regulation guaranteeing that customers subsidize their aging coal-fired power plants that cannot compete with gas-fired plants now dominating wholesale markets.

Reaction from Sen. William Seitz, a Cincinnati Republican and the driving force behind legislative efforts since 2013 to modify or scrap the state’s  energy and efficiency mandates was quick and somewhat bitter.

“It is apparent that Gov. Kasich cares more about appeasing his coastal elite friends in the renewable energy business than he does about the millions of Ohioans who decisively rejected this ideology when they voted for President-elect Trump,” he wrote in an email immediately after the release of the veto.

While praising Trump and his “amazing Cabinet of free market capitalists,” Seitz vowed to make another effort in the coming year to get rid of the standards.

“We will do our part by launching a full-scale effort next session to totally repeal these [former Gov. Ted] Strickland-era mandates. With veto-proof majorities next session, we are optimistic of success.

Seitz’s position implied that the lawmakers will not convene an emergency session this week to override the veto.  But John Fortney, spokesman for the Senate’s GOP leadership, said a special session on Thursday had not been ruled out.

House Speaker Cliff Rosenberger will decide on Wednesday whether to call a special Thursday session, said Brad Miller, House spokesman.

Rosenberger did issue a statement, leaving no doubt that 2017 will be an energy debate year, though maybe not what Mike Hartley of the Conservative Energy Forum had in mind.

“I am disappointed that Governor Kasich has expressed disagreement with the majority of his Republican colleagues in the legislature. Through today’s actions, it is clear that serious differences of opinion exist between the House and the administration on issues such as energy policy and taxation. Make no mistake, many of these policies will continue to be priorities among our caucus as we head into the next General Assembly, and I look forward to working with the administration on those issues.”

Ohio Consumers’ Counsel Bruce Weston had testified against some aspects of the bill and had written directly to Kasich in an effort to help persuade him to veto the bill if it could not be modified.

Weston’s concerns are more consumer-orientated than environmentally focused.  He has testified before lawmakers that the utilities had found ways to substantially increase profits by offering energy efficiency programs. HB 554 would have added to their profits at the expense of consumers, he told lawmakers.

“The Governor’s veto will help protect Ohioans’ electric bills,” Weston said in a statement after the veto. “I look forward to working with legislators in the future toward maximizing consumer benefits from energy efficiency, while limiting the costs and profits that utilities’ charge consumers for energy efficiency programs. Our goal is to reduce what Ohioans pay for electricity.”

FirstSolar, the state’s only solar panel manufacturer, praised Kasich for the veto.

“As a major employer in northwest Ohio and a center of solar technology innovation, we commend Governor John Kasich for his veto of HB 554,” said Mike Koralewski, Sr. Vice President of Global Manufacturing at First Solar. “Our Perrysburg facility is the largest solar photo-voltaic (PV) module manufacturing site in the United States.

“The work we do here enables our company to deliver an economically attractive alternative to fossil fuels for large-scale power generation.

“Governor Kasich’s decision will help ensure that Ohio can leverage increasingly competitive, locally manufactured utility-scale solar projects that customers large and small demand in greater numbers every year.”

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