Energy Bill Provision Impacts Future Contracts

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Experts say a new clause in the energy bill would deliver a major blow to alternative energy investment in Ohio.

“It is essentially a nuclear bomb to all renewable development and projects in this state moving forward," Kent said.

Jereme Kent is the general manager of Findlay-based One Energy, which helps develop renewable projects for private customers.

He’s worried about a complicated provision that would affect contracts signed after the energy standards freeze passes. He says it could void those contracts on future energy projects if lawmakers decide to change the energy law again down the road.

According to Kent, this would make Ohio very unattractive in the eyes of potential investors.

“There’s not a developer out there who’s going to sign that – there’s not a developer out there’s who’s going to invest $100 million or half a billion dollars when they know that it’s subject to future legislative changes," Kent said. "And it’s a burden that’s never been placed on any technology anywhere in the U.S. as best I can find right now.”

Dayna Baird Payne is a lobbyist for the American Wind Energy Association which represents companies that might be thinking about investing in Ohio. That includes two wind farms that already invested more than $775 million in the state.

Baird Payne, who says these contracts are often long-term agreements, believes this bill sends a bad message to energy developers around the country.

“I mean there are many provisions in the bill that actually send that signal but this one is probably one of the more blatant signs of why Ohio might not be a good place to do business if you’re in the renewable energy industry,” Baird Payne said.

Baird Payne adds that this means the government would be interfering between two private parties trying to reach a contract agreement.

It’s not completely out of the realm of possibility that lawmakers could revisit this issue – repeatedly – in the future. That’s what Republican Senator Bill Seitz from Cincinnati indicated last year when he was asked if changing the law messes with the long-term business plans of alternative energy companies.

“You show me a business that adopted a 20 year business plan in 2008 and never revises it over the next 20 years and I’ll eat my hat," Seitz said. "This is what happens all the time in the real world. Plans – be they business plans or government plans – are constantly being revised to account for changes in circumstances that have occurred in that time.”

In the months it took to debate this issue in the Senate, supporters urged that this bill would do nothing to impact current contracts. But Kent says this provision means that won’t be the case if and when the Legislature tries to change the law again.

“This single paragraph is worse than cancelling the RPS overall because it means that wind and other technologies that are renewable technologies cannot even compete without having this clause in there and this clause is an absolute showstopper for any sort of project financing,” Kent said.

The sponsor of the bill, Republican Senator Troy Balderson of Zanesville, could not be reached for comment.