Inclusion Through
Exclusion:
Exempting Mercantile
Customers to Encourage Them to Contribute to Energy Efficiency Goals
By Zach
Myers
JD
Candidate, 2014
Georgetown
University Law Center
There is an ironic tension between
the concepts of ‘exemption’ and ‘integration’ in Ohio Rev. Code Ann. § 4928.66(A)(2)(c) (2008). The statute creates an “exemption” that
“integrat[es]” mercantile customers into a utility’s energy efficiency program.[1] Mercantile customers are thus “included in the
juridical order solely in the form of [their] exclusion.”[2] This linguistic tension between exempting
customers from a program, while also integrating them into that program is at
the heart of the conflict between private businesses interests, and the public
interest. Private businesses are
interested in opting-out of utility riders without incurring legal duties;
while, the public is likely best served by integrating businesses into the
utilities energy efficiency program to ensure that exempted funds are used to
reduce energy consumption. Whether the
essential nature of the program is one of ‘exemption’ or ‘integration’ is for
Ohio’s Public Utility Commission to determine over the coming months.
Public utility energy efficiency
programs have the potential to align private behavior with public interests. The Public Utilities Commission of Ohio likely
has the legal authority structure its energy efficiency rider exemption
according to ACEEE best practices. By so structuring its exemption, the
Commission can encourage large customers to contribute to energy savings goals;
and, thereby, align private customers’ behavior with the public’s interest.
Encouraging energy efficiency can
align the interests of individuals with the public’s interest, because
increased energy efficiency reduces the cost of service.[3] Saving
energy through energy efficiency investments is, on average, much cheaper for
public utilities than purchasing new generation.[4] “Saving a kilowatt hour through energy
efficiency improvements is easily one-third or less the cost of any new source
of electricity supply, whether conventional fossil fuel or renewable energy
source.”[5] Because increasing energy efficiency can be
much cheaper than building new generation, increasing energy efficiency can
reduce costs to consumers.
Not only does energy efficiency
reduce costs, it also tends to enhance energy system reliability, and reduces
emissions from fossil fuels.[6] Because increased energy efficiency reduces
costs of electrical service, increases reliability, and reduces fossil fuel
emissions, increasing energy efficiency is in the public interest.[7]
Despite the public benefits of
energy efficiency, utilities have a natural incentive to discourage demand-side
energy efficiency.[8] Utilities revenues are based on the volume of
electricity they sell. As a result, the less kWhs utilities sell, the less
revenue they receive.[9] Furthermore, unlike sales of kWhs, utilities’
fixed operating costs do not change.[10] Because fixed operating costs are high, kWh sales
have dramatic increasing marginal profitability.[11] Therefore, utilities have a strong incentive
to keep energy consumption high so that they can sell more electricity and
maximize profits.[12]
Many States have instituted
programs to correct utilities aversion to demand-side energy efficiency.[13] Effective cost recovery mechanisms can
compensate utilities for revenue foregone by increased energy efficiency.[14] Along, with recovering foregone revenue,
successful energy efficiency programs will encourage utilities to invest in
demand-side energy efficiency by setting performance targets and allowing utilities
to recoup the costs of energy efficiency investments.[15] By requiring utilities to meet energy-savings
performance targets, and compensating utilities for energy efficiency investments
(including lost revenue), a well-structured cost-recovery mechanism can align
the interests of the utility, with the public’s interest in increased energy
efficiency.[16]
Consistent with this approach, electric
utilities in Ohio must operate energy efficiency programs that meet
statutorily-set yearly energy savings goals (starting at .3% kw savings per
year and ending at 2% kw savings per year for every year after 2018).[17] The electric utilities may institute a
“revenue decoupling mechanism,” e.g. a rider, in order to offset the costs of
its energy efficiency program.[18] The Commission is responsible for reviewing
electric utilities decoupling mechanism.[19]
The Public Utilities Commission of Ohio has approved an energy efficiency cost
recovery mechanism to encourage its electric utilities to make energy
efficiency investments.[20]
About half the states that have an
energy efficiency cost recovery mechanism provide some type of “opt-out” or
“self-direct” option for large industrial customers.[21] Exemptions for such customers are sometimes
based on the unfounded assumption “that industrial companies are better at
acquiring energy efficiency than [public utilities] and will always acquire all
cost-effective energy efficiency on their own.”[22]
Mercantile
customers should be interested in increasing the energy efficiency of their
facilities, because doing so can reduce their electrical costs. As a result, there is a superficial alignment
between mercantile customers’ interest in reduced costs, and the public’s
interest in increased energy efficiency. However, energy efficiency investments are
only one among many types of cost-saving and business-expanding investments
which mercantile customers consider.[23]
Because energy efficiency investments
compete with other investment opportunities, there are significant opportunity
costs to financing increased energy efficiency.[24]
These opportunity costs may overcome the
public’s interest increasing energy efficiency absent regulatory intervention.[25]
The experience of utilities in Utah,
Wyoming, and Oregon suggest that this is the case. [26]
In those States, large industrial customers were prodded to invest in energy
efficiency to obtain a fee waiver.[27] The State’s found that even very sophisticated
customers failed to invest in many cost effective energy efficiencies.[28]
Furthermore, because opportunity costs
likely prevent many energy efficiency investments, it is invalid to assume that
exempted funds will be used to fund increased energy efficient investments
without encouraging customers to treat those funds as dedicated to energy
efficiency.[29]
While industrial companies likely
do not invest in every cost effective energy efficient practice, some
sophisticated customers do have knowledge, experience, and expertise about
their business that can be help the utility increase energy savings beyond what
the utility could do on its own. [30] Because some industrial customers have such
expertise, a well-structured and administered “self-direct” program can yield
greater energy savings from large, sophisticated customers than would otherwise
be achieved through a generalized public program.[31]
In an attempt to realize the
benefits of industrial self-direction, the Ohio legislature authorized the
Commission to exempt “mercantile customers” from energy efficiency programs.[32] “Mercantile
customers” are customers that consume “more than seven hundred thousand
kilowatt hours per year.”[33]
In order to exempt mercantile customers the
Commission must determine that that exemption “reasonably encourages such
customers to commit” “demand-response or other customer-sited capabilities to”
the “utility’s energy efficiency … or peak demand reduction programs.”[34]
Recently, the Commission has approved
a new “pilot program” for an exemption from its energy efficiency cost recovery
mechanism, and is evaluating “the appropriate level and length for energy
efficiency exemptions” under Ohio Rev. Code
Ann. § 4928.66(A)(2)(c).[35]
The Commission will also “review
the experience of other jurisdictions which have enacted similar self-direct
programs.”[36]
The Commission is considering the
recommendations of the American Council for an Energy Efficient Economy
(“ACEEE”). ACEEE has promulgated, inter alia, the following best practices
for incorporating mercantile customer efforts into a utilities energy
efficiency program:
1. Develop
a program structure that encourages large customers to treat the exempted rider
money as dedicated funds for energy efficiency.
2. Include
a mechanism to recoup funds if large customers do not use exempted rider funds
to pay for modifications that increase energy efficiency.
3. Retain
a portion of energy efficiency rider for administrative costs of the
self-direct program, and for certain prioritized costs.
4. Disallow
credit for past energy efficiency investments.[37]
The Commission is interested in
whether it has the legal authority to implement these ACEEE best practices.
“Due deference should be given to statutory interpretations
by an agency that has accumulated substantial expertise and to which the
General Assembly has delegated enforcement responsibility.”[38]
Based on its expertise, the
Court has deferred to the Commission’s
discretion in determining how to achieve the goals of increased energy
efficiency and reduced peak consumption.[39]
Along with institutional deference based on expertise, the
Commission also has also been given discretion to structure rules for
exemptions by its organic statute.[40] Under § 4928.66(A)(2)(c), “any mechanism designed to recover the cost of energy
efficiency…may exempt mercantile
customers… if the commission determines that that exemption reasonably
encourages such customers to commit” capabilities to energy efficiency
programs.[41] "[U]sage of the term
'may' is generally construed to render optional, permissive, or discretionary
the provision in which it is embodied."[42] Because
the Commission ‘may’ exempt mercantile customers, the statute is
permissive or discretionary.[43] “When
a statute does not prescribe a particular formula, the PUCO is vested with
broad discretion.”[44] Because the language of the exemption
is permissive, the Commission has discretion to determine the appropriateness
of a mercantile exemption as an element of an energy efficiency cost recovery
mechanism.[45]
This
broad discretion is tempered by the requirement that the Commission only
approve a mercantile exemption if it “determines
that that exemption reasonably encourages” customers to commit their
capabilities to energy efficiency programs.[46]
a.
The Commission likely has the
authority to require the utility to encourage mercantile customers to treat
rider funds as exclusively tied to energy efficiency investments, because doing
so “reasonably encourages [mercantile] customers” to commit their capabilities
to the utilities energy efficiency program.[47]
The
Commission should require its utilities to use a disbursement device which
encourages customers to treat rider funds as exclusively tied to energy
efficiency investments.[48]
The utilities have several options for
meeting this requirement: dedicated escrow accounts, rebates
earned only upon project completion, and rate credits earned concurrently with
measurable energy efficiency investments or energy savings.[49]
Because
requiring the utility to encourage mercantile customers to treat rider funds as
exclusively tied to energy efficiency investments “reasonably encourages
[mercantile] customers” to commit their capabilities to the utilities energy
efficiency program, the Commission likely has the authority to do so.[50]
Decisionmakers
have a strong aversion to loss, and will likely be motivated more by the threat
of losing money than by the opportunity to gain money.[51]
Because people have a unique aversion to
loss, a credible threat to recoup rider funds is will “encourage” mercantile
customers to contribute their capabilities to energy efficiency goals.[52]
Mercantile customers will not treat
their obligations to invest in energy efficiency lightly if the utility has a
reliable mechanism in place to take-back exempted money when customers fail to
use their funds to increase energy efficiency.
The
Commission already requires utilities to “[i]dentify all consequences of
noncompliance by” mercantile customers who agree to integrate their
capabilities into the utilities energy efficiency programs.[53]
Because, utilities are already required
to “identify consequences of noncompliance,” requiring the utility to identify
a method of recoupment, is an incremental change to existing regulation.[54]
Because the existing regulation was well
within the discretion of the Commission, this incremental change is likely
permissible.[55]
Because a
recoupment method that retrieves funds from customers’ who fail to meet their
energy efficiency obligations “encourages [mercantile] customers” to commit
their capabilities to the utilities energy efficiency program, the Commission
has authority to require utilities to adopt such a method. [56]
Retaining a portion of cost recovery mechanism revenue from
exempted customers can maximize the public benefit of energy efficiency
programs.[57] Retained revenue from industrial customers can
be used for the administrative costs of overseeing a successful “self-direct”
energy efficiency program.[58] Maximizing energy savings from industrial
customers requires “reporting and savings validation” and “rigorous performance
requirements.”[59] To pay for this oversight, some revenue should
be retained from industrial customers via an energy efficiency cost recovery
mechanism.[60] Therefore, full exemption from the rider is
likely bad policy.[61]
Along with paying for administration of a self-direct
program, retaining revenue may best realize the public interests tied to
increased energy efficiency by funding “prioritized program costs,” such as
low-income programming.[62] Such programs may rely on cross-rate
subsidization to spread the benefits of energy efficiency equitably.[63]
Not only is it practical to retain funds from industrial
customers for administrative costs and prioritized program costs; doing so is equitable.
“All ratepayers enjoy the benefits of
energy efficiency in the form of lower demand for new resources, reduced
environmental impacts of energy supply, reduced power and fuel costs and other
factors.”[64] Industrial consumers should contribute to the
costs of energy efficiency programs, because they share the benefits of
increased energy efficiency.[65]
Because the public interest likely favors retention of a
portion of industrial consumers’ energy efficiency funds, the Public Utilities
Commission of Ohio is interested in whether it had the authority to adjust the
level of exemptions for “mercantile customers” under Ohio Rev Code Ann. § 4928.66(A)(2)(c).
i.
The Commission
likely has authority to adjust the level of exemption under Ohio Rev Code Ann. § 4928.66(A)(2)(c), because retention of a portion of the funds from mercantile customers
can still “reasonably [encourage mercantile] customers to commit their
capabilities” to energy efficiency programs.
Because a mercantile exemption
under § 4928.66(A)(2)(c) must reasonably encourage customers to commit their
capabilities to the utility’s energy efficiency goals, an exemption should be a
significant portion of the overall rider fee; because the bigger the exemption
level, the greater the incentive for mercantile customers to commit their
capabilities to the utility’s energy efficiency goals. On the other hand, even a relatively small exemption
from rider fees will likely “reasonably encourage” mercantile customers to
contribute their capabilities to the utility’s goals—this is especially true
given the current bifurcated structure of the law in which customers can
receive rebates under exemption under Ohio Admin. Code Ann. § 4901:1-39-05(G),
and then on top of the rebate receive a rider exemption under Ohio Admin. Code Ann. § 4901:1-39-08.[66]
Therefore, while a very high the exemption
level would create a very strong incentive for customers to commit their
capabilities to energy efficiency goals, even relatively modest proportions (e.g.
50% or 60%) will likely “reasonably encourage[] customers” to do so.[67]
Not only is a less
than full exemption sufficient to
“reasonably encourage[]” mercantile customers, but having the utility retain a
portion of the energy efficiency rider likely better encourages mercantile customers to contribute to energy
efficiency.[68] To encourage customers to commit their resources to utility
energy efficiency programs utilities are best served by well-structured
reporting, measurement, and verification procedures.[69]
However, administration of such
procedures cost money.[70]
Therefore, in order to effectively
encourage customers to commit demand response and other cited capabilities to
energy efficiency programs, the Commission may reasonably find that a portion
of the energy efficiency cost recovery mechanism fee should be retained by the
utility for the purpose of administering a structured energy efficiency
“self-direct” program.[71]
A rule requiring
retention of a portion of a utility’s energy efficiency cost recovery mechanism
is a reasonable interpretation of Ohio Rev. Code Ann. §
4928.66(A)(2)(c)’s requirement that a mercantile exemption “reasonably
encourage[] customers” to commit resources to the utilities energy efficiency
or peak demand reduction programs.
Not only does permitting retention
of a portion of an exempted company’s cost recovery mechanism fee meet the
requirement for mercantile exemptions under Ohio Rev. Code Ann. § 4928.66(A)(2)(c), it also meets the general
requirements for energy efficiency cost recovery mechanisms under Ohio Rev. Code Ann. § 4928.66(D).
Under Ohio Rev. Code Ann. § 4928.66(A)(2)(c) a mercantile
exemption is discussed as a potential component of a cost recovery mechanism (“Any mechanism
designed to recover the cost of energy efficiency … may exempt mercantile customers…”). Because a mercantile exemption is a component
of the cost recovery mechanism, the statute likely requires the exemption to conform
to the requirements for cost recovery mechanisms.[72]
Energy-efficiency cost-recovery
mechanisms must (1) provide “for the
recovery of revenue that otherwise may be forgone by the utility as a result of
… any energy efficiency or energy conservation programs” and (2) reasonably
align “the interests of the utility and of its customers in favor of those
programs.”[73]
Requiring retention of a portion of
the cost recovery mechanism fee is a reasonable method to recover “revenue
forgone by the utility to implement its energy efficiency program.”[74] Administrative costs are shared by all
customer classes, including exempted mercantile customers.[75] Because the utility must forego revenue to
monitor mercantile customer’s energy savings, retaining a portion of mercantile
customer’s fees is a fair method to ensure that the utility recovers revenue
forgone for administration of its energy efficiency program, and comports well
with the requirements of Ohio
Rev. Code Ann. § 4928.66(D).
Potentially limiting the Commission’s discretion is
the rule that “an administrative agency cannot ignore its own rules.”[76] The
Commission has so far implemented the Ohio
Admin. Code § 4901:1-39-08 exemption as a complete
exemption for an indefinite period.[77]
Because the Commission’s rules and orders treat the § 4901:1-39-08
exemption as an 100% exemption, the Commission must expressly overrule its
prior policy in order to change the level of the exemption.[78]
Orders of the Commission must be lawful
and reasonable.[79] Therefore in
its order overruling its past policy of full exemption the Commission should
explain that allowing the utility to retain a portion of the energy efficiency rider
can more effectively “encourage[]” mercantile customers to contribute to energy
efficiency goals. [80] It should also explain that the old policy
did not a poor job capturing revenue foregone by the utility to pay for
administration of its energy efficiency program.[81]
The
language of Ohio Rev. Code Ann. §
4028.66(A)(2)(c) is comparable to statutory language underlying exemptions to
fee riders in other jurisdictions in which utilities retain a portion of the
rider.
In Utah and Wyoming, Rocky Mountain Power retains 50%
of its fee from exempted customers.[82] Rocky Mountain Power is governed by
16 USC § 2621(d)(17) (2007). 16 USC § 2621(d)(17) requires that the
rates charged by any electric utility “(i) Align utility incentives with the
delivery of cost-effective energy efficiency; and (ii) Promote energy
efficiency investments.” This language
is very similar to the language of Ohio Rev.
Code Ann. §
4928.66(A)(2)(c)—Both statutes require that an exemption “encourage,”
“promotes,” or “align” mercantile customers with certain energy efficiency
goals.[83] Rocky Mountain Power permits retention of a portion of its utility’s cost
recovery mechanism based on statutory authority very similar to Ohio Rev. Code Ann. §
4928.66(A)(2)(c). This provides
persuasive authority that the Commission and do the same thing under the
authority of its similarly-worded statute.[84]
Because retention
of a portion of the funds from mercantile customers can still “reasonably
[encourage mercantile] customers to commit their capabilities” to energy
efficiency programs, the Commission
likely has authority to adjust the level of exemption under Ohio Rev Code Ann. § 4928.66(A)(2)(c).
A particularly
vexing problem facing the Commission is how to treat historic energy efficiency
investments. Granting credit for
historic investments may be politically expedient, because businesses feel that
it is fair to give credit to those who signed up early for the benefits of
energy efficiency.[85]
However, “giving such credit does not
acquire a single new kWh” of energy,[86]
because ‘encouraging’ past events is (so far) [87]
a physical impossibility.[88]
Instead, “offering such credit is
preferential treatment of a single class of customer” without “any energy
saving purpose.”[89] Because credit for historic investments has no
public benefit, and actually costs money that could be used for increased
energy efficiency in other sectors, it is particularly susceptible to criticism
for being a form of “corporate welfare.”[90]
Because the program is susceptible to such
criticism, the political expediency of garnering favor with businesses should
be weighed against the political cost of this preferential treatment. [91]
Despite the
undesirability of giving credit for past investments, the Commission may not
have the authority to permit an exemption based solely on prospective energy
efficiency investments. The Commission
has authority to authorize an exemption for “mercantile customers that commit
their demand-response or other customer-sited capabilities, whether existing or new, for integration
into the electric distribution utility's” energy efficiency program.[92]
The term “whether existing or new” may
mean that any exemption that the Commission authorizes must count both past
(“existing”) and future (“new”) investments.[93]
However, the term “whether existing or
new” may also grant the Commission discretion to determine for itself whether
to authorize an exemption based on past investments, or future investments, or both,
based on what will “reasonably encourage [mercantile] customers.”[94]
Therefore, the term is textually
ambiguous. The legislative record does
nothing to resolve this ambiguity.[95]
The Commission has
so far permitted the utility to credit historic investments, based on the
3-year-look-back measurement method. [96]
However, the commissioner has also
stated that there is a difference between what the Commission is authorized to
incentivize and that which the Commission must count under the 3-year-look-back
procedures.[97] Therefore, the 3-year-look-back requirement
for counting may not apply to incentivizing and likely does not
require the Commission to give credit for historic investments.[98]
Eventually, the
issue of whether to credit historic investments may become a moot point.[99]
At some point, all the relevant historic
investments will all be credited.[100]
At that point, mercantile customers will be forced to make new, prospective,
energy efficiency investments in order to qualify for the exemption.[101]
Because the
statutory term “whether existing or new” is ambiguous, and because the
Commission has recognized a distinction between what is counted under a
3-year-look-back and what is incentivized by a mercantile exemption, the
Commission likely does not have to permit exemptions based on historic energy
efficiency investments.[102]
However, the
Commission should consider seeking guidance or further legislation before
acting in this area of textual ambiguity.
Because the limiting language of
its organic statute calls for an exemption that “encourages” customers to
contribute to energy efficiency, the Commission likely has the legal authority
to implement the ACEEE best practices. If
the Commission implements ACEEE’s recommendations it will encourage large
customers to contribute to energy savings goals; thereby, aligning private
behavior with the public interest.
[1] Ohio
Rev. Code Ann. § 4928.66(A)(2)(c) (2008)
[2] Giorgio
Agamben, Homo Sacer: Sovereign Power and Bare Life 12 (1998).
[3] Anna
Chittum, Am. Council for an Energy
Efficient Econ., Implementing
Industrial Self-Direct Options: Who Is Making It Work?, Proceedings of the 2009 ACEEE Summer Study on
Energy Efficiency in Industry 4.14-4.27, 4.17 (2009)
http://www.aceee.org/sites/default/files-/publications/proceedings/SS09_Panel4_Paper07.pdf
[hereinafter Chittum, Implementing Industrial Self-Direct Options];
Anna Chittum, Am. Council for an Energy Efficient Econ.,
Follow the Leaders: Improving Large
Customers Self-Direct Programs 1 (2011)
http://www.aceee.org/sites/default/files/publications/researchreports/ie112.pdf
[hereinafter Chittum, Follow the Leaders].
[4] Katherine
Friedrich, et al., Am. Council for
an Energy Efficient Econ., Saving
Energy Cost-Effectively: A National Review o the Cost of Energy Saved Through
Utility-Sector Energy Efficiency Programs, Report U092 ii (2009)
http://www.aceee.org/sites/default/-files/publications/researchreports/U092.pdf.
[5] Id.
[6] Chittum,
Follow the Leaders, supra note 1, at 3.
[7] See id.
[8] Nat’l
Action Plan for Energy Efficiency Leadership Grp., Aligning Utility Incentives
with Investment in Energy Efficiency
ES-3 (2007)
[9] See id.
[10] Id.
[11] See id.
[12] Id.
[13] Chittum,
Implementing Industrial Self-Direct
Options, supra note 1, at 4.14.
[14] Nat’l
Action Plan for Energy Efficiency Leadership Grp., supra note 6 at 5-1; see,
e.g. Ohio Rev. Code Ann. §
4928.66(D) (Lexis 2008)
[15] Id. at 6-1; see e.g. Ohio
Rev. Code Ann. § 4928.66(D) (Lexis 2008).
[16] See id.
[17] Ohio
Rev. Code Ann. § 4928.66(A)(1)(a) (Lexis
2008).
[18] Id. at § 4928.66(D).
[19] Id.
[20] In
the Matter of the Application of Columbus Southern Power Company for Approval
of its Program Portfolio Plan and Request for Expedited Consideration; Case No. 09-1089-EL-POR Opinion and Order § VI, 2010-Ohio PUC LEXIS 516, *61-63 (2010).
[21] Chittum,
Follow the Leaders, supra note 1, at iii (“Forty-one states in the US
have some sort of a [cost recovery mechanism] in place. Of those, 23 have some
sort of opt-out or self-direct provision in place.”).
[22] Id. at 17
[23] Namrita
Kapur, et al., Envl. Def. Fund,
Show Me the Money: Energy Efficiency Financing Barriers and Opportunities 12
(2011) http://www.edf.org/sites/default/files/11860_EnergyEfficiency-FinancingBarriersandOpportunities_July%202011.pdf.
[24] Id.
[25] See id.; see also Stephen
Heins, Energy Efficiency and The Specter of Free-Ridership: Is a
Kilowatt Saved Really a Kilowatt Saved? (“Energy efficiency projects have
to compete with all other capital initiatives, including investments in new
production assets or processes, which are usually given first priority.”)
[26] See Chittum, Follow the Leaders, supra note 1, at 17.
(“[O]pt-out and self-direct programs have proven this to be true. In Utah,
Wyoming and Oregon, customers can opt out of all or part of their CRM fees if
the can prove that they have in fact done all cost effective energy efficiency…
To date, no company has taken advantage of these exemptions in any of these
states, because there are always some cost-effective projects that could be
identified during an energy audit.”) (citations omitted).
[27] Id.
[28] See id.
[29] Id.
[30] Id. at 11.
[31] Id.
[32] Ohio Rev. Code Ann. §
4928.66(A)(2)(c).
[33] Ohio Rev. Code Ann. §
4928.01(19)
[34] Id. at § 4928.66(A)(2)(c).
[35] In the Matter of a Mercantile
Application Pilot Program Regarding Special Arrangements with Electric
Utilities and Exemptions from Energy Efficiency and Peak Demand Reduction
Riders, Case No. 10-834-EL-EEC, Entry ¶ 5, 2010
Ohio PUC LEXIS 952, *3-4 (Sept. 15, 2010)
[36] Id.
[37] Chittum,
Follow the Leaders, supra note 1, at 21.
[38] Constellation NewEnergy, Inc. v. Pub.
Util. Comm., 104 Ohio St. 3d 530, 540, 2004-Ohio-6767, *51, 820 N.E.2d
885, 895 (citations omitted).
[39] In Re Columbus Southern Power Co., 129 Ohio St. 3d 46, 51-52, 2011-Ohio-2383, *30, 950 N.E.2d 164, 170.
[40] Ohio Rev. Code Ann. § 4928.66(A)(2)(c).
[41] (emphasis
added)
[42] In re Ormet Primary Aluminum Corp., 129 Ohio St. 3d
9, 12, 2011-Ohio-2377, *16, 949 N.E.2d
991, 995 (quoting State ex rel. Niles v. Bernard, 53 Ohio St.2d 31, 34, 7 O.O.3d 119, 372 N.E.2d 339).
[43] See id., 129 Ohio St. 3d at 12, 2011-Ohio-2377 at *16, 949 N.E.2d at 995; see also Columbus Southern Power Co., 129
Ohio St. 3d at 51-52, 2011-Ohio-2383 at *30, 950 N.E.2d at 170 (“4928.66(A)(2)(c)
permits the commission to ‘exempt
mercantile customers’ from paying energy-efficiency and peak-demand-reduction
charges if those customers ‘commit their demand-response or other
customer-sited capabilities’ toward the utility's energy-reduction goals.”)
(emphasis added).
[44] Columbus Southern Power Co., 129
Ohio St. 3d at 51, 2011-Ohio-2383 at *27, 950 N.E.2d at 169.
[45] Ormet Primary Aluminum Corp., 129 Ohio St. 3d at 12, 2011-Ohio-2377 at *16, 949 N.E.2d at 995.
[46] Ohio Rev. Code Ann. §
4928.66(A)(2)(c); see also S. 127-221
Final B. Analysis (Ohio 2008) (“any mechanism
designed to recover the cost of the act's energy efficiency … can exempt mercantile customers that
commit their demand-response or other customer-sited capabilities to the
electric distribution utility's … energy efficiency … programs, provided the PUCO determines that that
exemption reasonably encourages such customers to commit those capabilities to
those programs”) (emphasis added).
[47] Ohio Rev. Code Ann. §
4928.66(A)(2)(c).
[48] Id. at 21.
[49] Id.
[50] Ohio Rev. Code Ann. §
4928.66(A)(2)(c).
[51] See Richard H. Thaler & Cass Sunstein, Nudge:
Improving Decisions About Health, Wealth, and Happiness 37 (2008).
[52] See id.; Ohio
Rev. Code Ann. § 4928.66(A)(2)(c).
[53] Ohio Admin. Code § 4901:1-39-05(G)
(2009).
[54] See id.
[55] See Columbus Southern Power Co., 129 Ohio St. 3d 46, 51-52, 2011-Ohio-2383,
*30, 950 N.E.2d 164, 170.
[56] Ohio Rev. Code Ann. §
4928.66(A)(2)(c).
[57] Chittum, Follow the Leaders, supra note 1, at 8 (“At the
far end of the self-direct continuum are the more structured programs with high
levels of oversight… These programs
usually let a customer self-direct most of their CRM fees, but retain a portion of those fees to fund
administration of the program and other programs that serve other public
benefits, such as market transformation and low-income programs. Highly
structured and well administered programs with substantial oversight offer the
best examples of successful and effective self-direct programming.”).
[58] Id. at 21-23.
[59] Id. at 23.
[60] Id. at 21.
[61] See id. at 6, 19, 21.
[62] See id. at 21.
[63] See id.
[64] Id. at 18.
[65] Id.; see
also Chittum, Implementing Industrial
Self-Direct Options, supra note 1,
at 4.17 (“U.S. commercial and industrial electric customers pay about 40
percent of all collected PBF fees, but they experience over 62 percent of the
PBF-funded savings in all Consortium for Energy Efficiency (CEE)-member
programs… Thus, while the argument that PBF-paying customers are not seeing the
benefits of their contributions may be true for some individual customers, it
appears that overall, commercial and
industrial customers enjoy a larger percentage of the benefits than they pay
into the pool of funds.”).
[66]Ohio Admin. Code Ann. § 4901:1-39-08(H) (2009) (“Any request for an exemption may
be combined with any other reasonable arrangement, approved pursuant to Chapter
4901:1-38 of the Administrative Code…”); See
also In the Matter of the Application of Columbus Southern Power Company for
Approval of its Program Portfolio Plan and Request for Expedited Consideration,
Case No. 09-1089-EL-POR, Case No. 09-1090-EL-POR, Opinion and Order, 2010 Ohio PUC LEXIS 516, *33-34 (May 13,
2010) (discussing Options 1 and 2).
[67] See id. at § 4928.66(A)(2)(c).
[68] Anna
Chittum, Am. Council for an Energy
Efficient Econ., Follow the
Leaders: Improving Large Customers Self-Direct Programs 21 (2011)
[69] Id. at 8.
[70] See id at 21-23.
[71] See Ohio Rev. Code Ann. § 4928.66(A)(2)(c); Chittum,
supra note 38 (“At the far end of the
self-direct continuum are the more structured programs with high levels of
oversight… These programs usually let
a customer self-direct most of their CRM fees, but retain a portion of those fees to fund administration of the program
and other programs that serve other public benefits, such as market
transformation and low-income programs. Highly structured and well administered
programs with substantial oversight offer the best examples of successful and
effective self-direct programming.”) (emphasis added).
[72] See Ohio Rev. Code Ann. §§ 4928.66(A)(2)(c), (D).
[73] Ohio Rev. Code Ann. §
4928.66(D)
[74] See id. at § 4928.66(D).
[75] See Chittum, supra note 38, at 8, 21-23.
[76] State ex rel. Kroger Co. v. Morehouse (1995), 74 Ohio St.3d 129, 133, 1995 Ohio 300, 656
N.E.2d 936.
[77] In
the Matter of the Mercantile Customer Pilot Program for Integration of Customer
Energy Efficiency or Peak-Demand Reduction Programs, Case No. 10-834-EL-POR, Finding and Order ¶ 5, 2012 Ohio PUC LEXIS 775, *4-5 (Sept. 5, 2012)
(“The Commission has previously
found that, for purposes of the EEC Pilot a 100 percent rider exemption is
appropriate for so long as the mercantile customer demonstrates energy savings
at its own facility or facilities equal to or greater than the electric
utility's benchmark requirement (‘the Benchmark Comparison Method’”).
[78] See id.; Kroger Co., 74
Ohio St. 3d at 133, 1995-Ohio-300 at *8, 656
N.E.2d at 939.
[79] Ohio Rev. Code Ann. §
4903.13 (“A final order made by the public utilities commission shall be
reversed, vacated, or modified by the supreme court on appeal, if, upon
consideration of the record, such court is of the opinion that such order was
unlawful or unreasonable.”).
[80] See Ohio Rev. Code Ann. §§ 4928.66(A)(2)(c), 4928.66 (D), 4903.13.
[81] See Ohio Rev. Code Ann. §§ 4928.66(A)(2)(c), 4928.66 (D), 4903.13.
[82] Chittum,
supra note 38, at 41 (“If a customer can prove, using an
external auditor, that they have achieved all cost efficiency, they may receive
a 50% credit of all [cost recovery mechanism] charges for two years.”).
[83] See Ohio Rev. Code Ann. 4928.66(A)(2)(c); 16 USC § 2621(d)(17).
[84] See 16
U.S.C. § 2621(d)(17).
[85] See Anna Chittum, Am. Council for an Energy Efficient Econ.,
Follow the Leaders: Improving Large
Customers Self-Direct Programs 19 (2011)
http://www.aceee.org/sites/default/files/publications/researchreports/ie112.pdf
[hereinafter Chittum, Follow the Leaders].
[86] Id.
[87] Stephen Hawking, Space and Time Warps (accessed December
19, 2012) (“…rapid space-travel, or travel back
in time, can't be ruled out, according to our present understanding”).
[88] Id.
[89] Id.
[90]
Ralph Nader, Cutting Corporate
Welfare 30 (“a program is
considered corporate welfare if its public cost outweighs its public
benefits”); CATO Institute, CATO Handbook For Policymakers (“Many
federal programs are sustained by special-interest groups working with
policymakers seeking narrow benefits at the expense of taxpayers and the
general public.”); see also, e.g. Office of Air and Radiation, U.S.
Environmental Protection Agency Office of Environmental Justice In the Matter
of the Fifth Meeting of the National Environmental Justice Advisory Council, 9 Admin. L.J. Am. U. 623 (describing a situation in
which an energy efficiency program was accused of being “corporate welfare”);
Alliance for Materials Mfg. Excellence,
Policy Brief (in which an industry group deflected criticism claiming
that its members received “corporate welfare” from a DOE energy efficiency
investment program).
[91] See id.
[92] Ohio Rev. Code Ann. §
4928.66 (A)(2)(c).
[93] See id.
[94] See id.
[95] The
term did not supplant previous language in a meaningful way, and the term was
not meaningfully discussed by the Senate’s or House’s Bill Analyses. See S.B. 221 As Pending in the H. Pub.
Utils. Comm., 127th Gen. Assemb. (Ohio 2008); S. 127-221 S. Final B. Analysis (Ohio 2008).
[96] In the Matter
of the Adoption of Rules for Alternative and Renewable Energy Technology,
Resources, and Climate Regulations, and Review of Chapters
4901:5-1,4901:5-3,4901:5-5, and 4901:5-7 of the Ohio Administrative Code,
Pursuant to Amended Substitute Senate Bill No. 221, Case No. 08-888-EL-ORD,
Entry on Rehearing ¶ 17 (Oct. 15, 2009); see
also In the Matter of a Mercantile Application Pilot Program Regarding
Special Arrangements with Electric Utilities and Exemptions from Energy
Efficiency and Peak Demand Reduction Riders, Case No. 10-834-EL-EEC,
Entry ¶ 7, 2010
Ohio PUC LEXIS 952, *6-9 (Sept.
15, 2010); Chittum supra note 69 at 9, 37-38.
[97] In the Matter of the Adoption of Rules for Alternative and Renewable
Energy Technology, Resources, and Climate Regulations, and Review of Chapters
4901:5-1,4901:5-3,4901:5-5, and 4901:5-7 of the Ohio Administrative Code,
Pursuant to Amended Substitute Senate Bill No. 221, Case No. 08-888-EL-ORD,
Entry on Rehearing ¶ 17; In the Matter of
a Mercantile Application Pilot Program Regarding Special Arrangements with
Electric Utilities and Exemptions from Energy Efficiency and Peak Demand
Reduction Riders,
Case No. 10-834-EL-EEC, Entry ¶ 7, 2010 Ohio PUC LEXIS 952, *6-7.
[98] See id.
[99] Chittum,
supra note 69, at 38.
[100] See id.
[101] Id.
[102] See Ohio Rev. Code Ann.
§ 4928.66(A)(2)(c); Columbus Southern Power Co., 129
Ohio St. 3d at 51, 2011-Ohio-2383 at *27, 950 N.E.2d at 169.
