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OHA - The Ohio Hospital Association

Ohio Energy Deregulation and Opportunities
Natural Gas    Electricity


 

SB 221 Enacted, Draft Rules Issued and Rate Increase Application Filed
S.B. 221 was signed by the Governor on May 1 and takes effect at the end of July.  The bill requires Ohio’s electric utilities to file “electric security plans” that will establish essentially cost-based rates, but also permits them to file “market option plans” in which rates will move over a 5 year transition to market-based rates.  There are several provisions of special interest to hospitals which are described in an OHA bulletin sent in May to member hospitals.

The PUCO has issued draft rules as required by SB 221.  The draft rules and comments filed by parties can be found on the PUCO website at www.puco.ohio.gov/.  AEP, Duke Energy Ohio and FirstEnergy have filed proposals to increase electric rates beginning in January 2009.  Dayton Power and Light Company recently announced it will file an application before the end of 2008 that will continue the 3% annual increase in its current rate stabilization plan until the end of 2010 but also address other mandates resulting from enactment of SB 221.

         American Electric Power application: 
         o       Overview by Bricker & Eckler

        Duke Energy Ohio application: 
         o       Overview by Bricker & Eckler

        FirstEnergy application: 
         o       Overview by Bricker & Eckler

Background
 OHA has been active in energy issues dating to at least the 1970s energy crisis, when it obtained a government grant to assist hospitals with energy conservation projects. OHA remains active in energy conservation through its support of the U.S. EPA Energy Star program and related conservation and pollution prevention efforts in Ohio.

OHA formed a natural gas purchasing group in 1998, and restructure its natural gas program in 2004.  OHA's current endorsed natural gas supplier is Stand Energy Corporation.

OHA has been involved in state electric policy-making since legislation was enacted to deregulate the Ohio electric market in 1999.  Since then, OHA has intervened in major electric cases before the Public Utilities Commission of Ohio and negotiated with electric utilities as a part of the regulatory process.  OHA will be actively involved in implementation of S.B. 221, related PUCO rulemaking, and the electric security plan and market rate offer cases that will be filed with the PUCO.

OHA Energy Committee
OHA's Energy Committee has met several times during 2008 and made recommendations leading to comments filed with the PUCO regarding proposed rules to re-regulate the electric market in Ohio.  After AEP, Duke and FirstEnergy companies filed application to increase electric rates, the Committee essentially divided into three sterring committees--hospitals in the Duke service area were already meeting under the auspices of the Greater Cincinnati Health Council; and AEP and FirstEnergy hospitals organized into separate steering committees under the auspices of OHA.  For more information, contact Rick Sites at ricks@ohanet.org.

Pursuant to the committee's recommendation, Tom O'Brien, an attorney with the firm of Bricker & Eckler, prepared the attached document on the topic of line extensions.


Natural Gas
OHA has had a natural gas program since 1998. OHA's energy committee selected Stand Energy Corporation based on its reputation, familiarity with hospital operations, pricing and willingness to use OHA's Master Agreement. Hospitals are invited to contact OHA or Stand Energy Company for further information. At Stand Energy Corporation, contact Stacee Dover or Terri Leach at 800-598-2046 or OHA@stand-energy.com. Contact Rick Sites at OHA if your hospital is interested in a free comparison of natural gas supply offers.

 

Natural Gas Market and Related News
 

Weekly Stand Energy Natural Gas Update
OHA’s endorsed natural gas supplier issues a weekly update to its customers.

NOAA Issues Hurricane Forecast
The National Oceanic and Atmospheric Administration issued an updated hurricane season forecast on August 7, increasing its prediction of named storms to 14-18 of which 7-10 are expected to become hurricanes.  Of the latter number 3-6 are forecast to be major hurricanes.  The reason for NOAA’s forecast of an increase in storms is the number of storms so far this season which exceeded NOAA’s early prediction.  The prediction is posted at www.noaanews.noaa.gov/stories2008/20080807_hurricaneoutlook.html.

Natural Gas Prices Below $8:  Time to Lock In
 NYMEX natural gas prices remain under $8, a surprising reversal to the upward trends seen until July.  It seems unlikely that prices will drop further and hospitals should seriously consider locking in prices.

Winter 2008-2009 Forecast
The Farmers Almanac predicts a "frigid, wet, wild, snowy winter".  The U.S. Climate Prediction Center is predicting a winter with above normal temperatures and near average precipitation.

GAO Warns of Inadequate DOE R&D Budget
The General Accountability Office issued a report finding the Department of Energy’s research and development budget fell from $6 billion in 1978 to $1.4 billion in 2008.  The GAO concluded that DOE’s energy R&D funding alone will not be sufficient to deploy advanced technologies, and that coordinating energy R&D with other Federal energy-related programs and policies will be necessary. Furthermore, other governments and the private sector will have an important role in developing and deploying advanced energy technologies that could result in a change of the energy portfolio.

EIA Issues Short Term Energy Outlook
The U.S. Energy Information Administration issued its April energy outlook and predicts Henry Hub natural gas spot prices will average $8.59 per Mcf in 2008 and $8.32 per Mcf in 2009.  Higher prices this year and next reflect continued strong demand, high oil prices, and the need to replenish more stocks this year than last year.  View the report, issued each month.

Global Warming Report: Lots of Precipitation
Environment America issued a report in early December that finds climate change throughout the United States.  As applicable to Ohio, the report finds that "extreme precipitation" events have increased during the period beginning in 1948, and that trend is expected to continue.  The report attributes the situation to global warming.  Find the report with maps and tables.

Electricity Market and Related News

Demand Response initiatives could lead to significant savings:  At a recent Demand Response Symposium, Ohio and Illinois representatives indicated that certain customers could save as much as 25% off electricity costs through effective demand response (DR) programs.  DR programs typically focus on curtailing load during peak periods.

AMP-Ohio Plans Electric Plant:  AMP-Ohio has received initial okay to build a 960-megawatt electric plant in southern Ohio.  Construction will begin in 2009 and go online in 2013 according to news accounts.  AMP-Ohio says it is building the plant as a hedge against uncontrollable market prices and reliability concerns.  More at www.amp-ohio.org/ampgs.php.

Deja Vu: Deregulated States Pay More for Electric: A study by Carnegie Mellon found that customers in deregulated states pay 2 to 3 cents per kilowatt hour more than customers in regulated states, according.  The study is titled "Electricity Prices and Costs Under Regulation and Restructuring."

Strickland Appoints Roberto to PUCO:  Governor Strickland has appointed Cheryl Roberto, former director of the City of Columbus Department of Public Utilities, to the Public Utilities Commission of Ohio.  Roberto was a policy advisor in Columbus Mayor Coleman’s office prior to heading the public utilities department.  Earlier employment included that of assistant city attorney in Columbus,  a lawyer in private practice, and as an assistant Ohio attorney general.  She graduated from Kent State and the Ohio State University Moritz College of Law.  She replaces Commissioner Donald Mason.  OHA briefly worked with Roberto in a central Ohio project involving discharge of kitchen grease into public sewers.


Utilities

Energy Management Initiatives and Resources

Contact
Rick Sites
General Counsel and Senior Director of Health Policy, Ohio Hospital Association
Executive Director, OHA Solutions and Senior Director of Health Policy
ricks@ohanet.org

© 2001-2008 OHA. Last updated October 09, 2008.
Please direct comments, corrections or additions to: oha@ohanet.org 614.221.7614.