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Ohio's RPS: Changes stemming from HB6

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On July 23, 2019, Governor Mike DeWine signed Substitute House Bill 6 (HB 6). This new legislation became effective Oct. 22, 2019. While HB6 addresses multiple energy topics, this particular Staff guidance document focuses on how this new legislation will change Ohio’s renewable portfolio standard (RPS).

This document is not intended as a complete summary of the legislation, but rather it has been drafted to offer guidance to companies that are impacted by the Ohio RPS requirements. For complete details on HB 6, please refer to the legislation using the link provided above.

Is there still a renewable portfolio standard (RPS) in Ohio?

Yes, although it will be changing as a result of HB 6.

Do these changes impact the 2019 RPS compliance year?

No.

Ohio Revised Code (ORC) 4928.644(B) requires a reduction to a company’s RPS baseline in the amount of any sales to self-assessing purchasers. Can you provide an example of how this self-assessing purchaser adjustment would work for 2020?

Here are a couple of simplified examples to demonstrate the concept:

  1. Assume that Company X proposes to use its compliance year (2020) sales as its 2020 RPS compliance baseline. If Company X did not serve self-assessing purchasers during 2020, then it wouldn’t make any adjustments to its sales volume. However, if Company X did serve self-assessing purchaser(s) during 2020, then its total sales volume would be reduced by the quantity of 2020 sales to the self-assessing purchasers(s) – with the net volume representing its 2020 RPS compliance baseline. Because the RPS requirements are a percentage of total sales, the RPS requirement would likewise be reduced.

  2. Assume that Company Z proposes to use the three-year (i.e., 2017, 2018, and 2019) historical average approach to determine its 2020 RPS compliance baseline. Further assume that Company Z did not serve any self-assessing purchasers during 2017, but it did in 2018 and 2019. In such a scenario, the company’s 2018 and 2019 annual sales volumes would be reduced by the sales to its self-assessing purchasers during those respective year. The company would then compute its 2020 RPS baseline as an average of its 2017 sales, its net 2018 sales, and its net 2019 sales.

Where can I learn more about self-assessing purchasers?

Please refer to ORC 5727.81(C).

Did HB 6 change the RPS benchmarks (i.e., annual percentage requirements)?

Yes, it did. Refer to ORC 4928.64(B)(2) for the updated benchmarks. And please note that the solar carve-out has been eliminated beginning with the 2020 compliance year.

With the elimination of the solar carve-out beginning in 2020, can companies still use solar renewable energy credits (S-RECs) to comply with Ohio’s RPS?

Yes. S-RECs can be used to satisfy the overall renewable requirement, assuming the S-RECs comply with all other applicable requirements.

Did HB 6 change the term of the RPS?

Yes. The RPS will now terminate at the end of the 2026 compliance year. Therefore, under current PUCO rule, the final RPS compliance filing would be due in April 2027.

Did HB 6 alter the eligibility requirements for renewable energy resources to qualify for the RPS?

No, it did not. However, note that resources that receive HB 6 RECS will not be eligible for RECs under the RPS.

Does HB 6 impact the certification status of those renewable facilities/resources that have been certified by the Commission through its REN application process prior to the effective date of HB6?

No, those facilities remain certified.

Does HB 6 affect the opportunity for renewable energy resources to obtain RECS in the future?

No. The opportunity to be certified as a renewable energy resource as well as the opportunity for such resources to receive RECS in the future is not affected by HB 6.                                                                                   

Can residential solar facilities apply for funding under the new renewable generation fund?

No.  The renewable generation fund is reserved for specific utility-scale solar facilities.

Did HB 6 alter the methodologies for determining a company’s RPS compliance baseline?

The two options presented in ORC 4928.643 remain – however, as detailed above in Q2 and Q3, HB 6 did include a provision by which the company’s annual sales would be reduced by the amount of sales during the applicable year(s) to any self-assessing purchasers for purposes of determining the compliance baseline.

I understand that HB 6 included a provision to reduce overall RPS obligations commensurate with output from certain utility-scale solar facilities.  Is that correct?

Yes, that is addressed in ORC 4928.642.

How would the solar adjustment addressed in Q13 work?

In summary, this adjustment would entail a proportionate reduction to each company’s RPS obligation as a function of solar output from specific utility-scale solar facilities during the prior calendar year. At this point (October 2019), these specific solar facilities are not yet operational. Staff is currently evaluating specifically how any such adjustments would be completed and future communications on this topic can be expected. The earliest this particular provision might impact (i.e., reduce) a company’s compliance obligation is the 2021 RPS compliance year.

Did HB 6 change the annual RPS reporting requirements?

No. The PUCO’s annual reporting requirements remain until the report due in April 2027, although we may collect slightly different information on the reporting forms as a result of HB 6.

Will Staff be making revised compliance report templates and worksheets available, given the changes associated with HB 6?

Yes. Once completed, the revised forms will be posted to the RPS webpage. As HB 6 does not impact the 2019 RPS compliance year, Staff’s report templates and worksheet for 2019 are expected to resemble those from recent years.

Under Ohio’s legal framework applicable to the customers of Electric Distribution Utilities (“EDUs”), it is my understanding that customers have the right to select their electric generation supply and supplier. Is my understanding correct and if so, does HB 6 alter this right?

Your understanding is correct. HB 6 does nothing to impinge upon the right of EDU customers to select their supply and supplier of electric generation service. More specifically, such customers will continue to have the right to meet all or a portion of their generation supply needs from renewable resources if they desire to do so. And there are many competitive retail electric service providers that offer such renewable products and services to residential, commercial and industrial customers.                                                                                                                                    

Does HB 6 affect customers’ net metering opportunities?

HB 6 provided guidance in ORC 4928.01(A)(31)(d) around qualifying criteria for net metering systems, specific to systems under 20 megawatts that use wind energy. This was the only change that HB 6 made regarding net metering. EDU customers continue to have access to net metering opportunities which may be particularly useful to customers with on-site renewable resources. And, the opportunity for net metering was recently expanded by the PUCO to include customers that are sourcing generation supply, renewable or otherwise, from competitive retail electric service providers.