Ohio lawmakers mull energy overhaul as data center demand piles up

This article was originally published by Ohio Capitol Journal.

Ohio lawmakers on the House Energy Committee began discussion this week of a measure that would overhaul the state’s energy landscape and got an update from the Public Utilities Commission of Ohio.

Commission Chair Jenifer French argued that growing demand as manufacturing developments and data centers move to Ohio is out of whack with the number of aging fossil fuel plants reaching the end of their life.

“The growth in demand and retiring resources is leading to a supply and demand imbalance,” she argued.

She argued the state needs to encourage more “base load generation” — the kind of “always-on” energy sources that provide consistent power to the grid. Although French pointed to resources like coal, natural gas, and nuclear, renewable sources like hydroelectric and biomass can provide consistent power as well.

“In order to meet the needs of growing demand in Ohio,” she said, “it is important to encourage construction of base load generation, which can be fueled by resources right here in Ohio.”

In her written testimony, French placed specific emphasis on generating that power by burning natural gas.

House Bill 15

State Rep. Roy Klopfenstein, R-Haviland, described his legislation as an effort to “modernize” the state’s energy framework as demand explodes.

“Over the past five years,” he explained, “we have witnessed an unprecedented surge in energy demand, with data centers alone consuming 600 megawatts of electricity. (AEP) forecasts that this will increase to 5000 megawatts by 2030. This trend is not likely to reverse.”

In terms of energy, Klopfenstein said, Ohio has been a victim of its own success. Major development projects from Intel, Honda, and most recently Anduril are great for jobseekers, but they come with ever greater demands for energy.

“Without new generation, we could face potential shortages,” Klopfenstein said. “And I probably would change that word could to will face potential shortages.”

His goal is to increase base load generation, and he contends House Bill 15 will make it easier for new generation facilities to come online by keeping big distribution companies out of a market where they might crowd out smaller players.

Klopfenstein’s proposal also requires utilities to offer service at the market rate and repeals electric security plans which allow providers to place surcharges on monthly bills to cover infrastructure investments.

The Long Shadow of House Bill 6

His bill would also repeal the widely derided surcharges to bail out two Ohio Valley Electric Company coal plants that were part of the corrupt House Bill 6 legislation in 2019 that’s been the subject of federal and state prosecutions. But by the same token, Klopfenstein also proposes eliminating a fund benefiting solar facilities that was part of HB 6.

“It is not the role of the state to favor one form of generation over another,” he argued. “Instead, we should open the market to dispatchable energy generation to address our future shortages.”

Democrats on the panel pushed back, highlighting a recent law allowing county officials to block solar and wind development when similar authority doesn’t exist for fossil fuel plants.

“I’m wary of some of the paradoxes that may be created by letting local governments sort of ban wind and solar, strangling parts of the market,” state Rep. Derrick Hall, D-Akron, said, “when the state takes a position that that’s not what we ought to be doing.”

Klopfenstein admitted he was “not in love” with that bill when it was approved but chalked it up to a question of local control and property rights.

“I don’t think the discussion on base load generation, which is sort of the target of this bill, will get into land use rights,” he said.

Another Democrat on the committee, state Rep. Sean Brennan, D-Parma, asked about the more than $400 million ratepayers have already shelled out for those coal plants — can they get a refund?

“We can’t change the past,” Klopfenstein argued, adding if Ohio wants to attract new energy companies, “when I look in arrears to asking for a refund, I think that sets a bad precedent. And I think it sets a risk factor that it would warrant some people not to come here.”

Already, an outside group called Alliance for Competitive Power has cut ads in favor of Klopfenstein’s legislation.

That group includes Vistra, which generates more than 5,500 megawatts in Ohio across several facilities including the Davis-Besse and Perry Nuclear plants as well as Alpha Generation which operates a 940-megawatt natural gas facility in Lordstown.

Maryland-based Constellation and Texas-based Talen Energy are also part of the group, but because it’s organized as a 501(c)(4) it’s unclear if other companies are involved or who much the coalition members have contributed.