New Ohio Governor Strickland Announces Energy Principles at Chamber of Commerce briefing

[Kolesar]

Governor Strickland is taking on some of the tough energy issues in Ohio. The quasi-deregulated electricity market is a mess. He is also calling for global warming to be a priority when refiguring the electric industry.

He has a modest call for efficiency. I think of it as a good start for introducing the concept. The speech covers a lot more than what I mention, so I suggest you read on. This is a good look at the direction we will be taking.

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Columbus, OH – Ohio Governor Ted Strickland today delivered the following remarks to the Toledo Regional Chamber of Commerce on Ohio’s energy policy:

Toledo Regional Chamber of Commerce Legislative Briefing

May 1, 2007

It is a pleasure to be here with you today to share some thoughts on Ohio’s economy and on the future of energy in Ohio.

Everyone in this room knows that the challenges of Ohio’s economy have been well documented. But signs of progress and renewal are sprouting.

Recently Ohio was awarded the Governor’s Cup from Site Selection Magazine in recognition of Ohio leading the nation in new business facilities.

And Foreign Direct Investment Magazine just named Toledo one of its “Cities of the Future” based on its attractiveness for future business opportunities. In fact, the publication named Toledo the #1 “business friendly” large city in North America.

As you know, I asked my Lt. Governor Lee Fisher to serve as Director of the Department of Development, because my administration understands that development is not only a priority, it is a necessity.

Lee and his staff have already worked to assist in the expansion of several Toledo-area companies.

Rieter Automotive North America is a Lucas County company that makes fiber padding, carpet, and insulating materials for automobiles. We recently announced that a combination of tax credits and a Rapid Outreach Grant will assist Rieter in an expansion of their facilities and result in creating and retaining hundreds of jobs in Lucas County.

More than 3 million dollars of Third Frontier funds were just designated for northwest Ohio in the Entrepreneurial Signature Program. This program supports innovation and commercialization of new technology. The funds will benefit a range of businesses and the University of Toledo.

To be sure, our state’s resources are limited. And we cannot do everything we want to do.

In the first year of my proposed state budget, general revenue spending will actually shrink, and over the two year span of the budget total spending will increase a modest 2.2 percent annually.

That’s lower than any budget in the last 42 years.

Holding to that line will allow us to live within our means and invest in what matters.

And as we invest in our economic future, my administration will listen to business leaders who know first hand what it takes to create jobs. What I’ve heard across the state – and from some in this room right now – is that one of the biggest obstacles to growth is finding qualified workers.

My administration is committed to increasing access to job training and higher education because Ohio should have the most educated workforce possible.

That’s why I’ve proposed a Higher Education Compact, which offers a significant increase in the basic instructional subsidy for our public colleges and universities if they agree to hold down tuition costs, including no tuition increase at all next year. And we will expand and improve our job training programs by simply utilizing dollars available from federal programs that the state has previously ignored.

We recognize that business is a partner in the future prosperity of Ohio. And that’s why we’ve launched Advantage Ohio, an across-the-board review of current regulations. We will eliminate those that are unnecessary, redundant and contradictory. We will make it easier to do business in Ohio while still protecting the health and safety of our people.

Now you all know that change is happening in our state, in our economy, and all around us.

But for far too long, too much of government has been simply continuing next year what has been done the year before – without regard to what could be done, or should be done. And if we keep that up, we’re done for.

The approach I take to issues is to make a common-sense assessment of what Ohio needs and where Ohio’s opportunities lie.

And I believe that as we embrace transformational changes in our economy, changes in what we make and how we make it, that one of the great opportunities we have in Ohio is to reshape the future of energy.

Energy is at the core of Ohio’s economic and environmental health: energy built our past, energy sustains our present, and energy holds the promise of an even brighter future.

Ohio is 3rd among the 50 states in manufacturing. We are the 4th largest producer of durable goods. We have the 5th most Fortune 500 Companies. And we are fortunate to have such strong output. But the consequence of all that is made here is the vast quantity of energy that is consumed here.

Indeed, Ohio is 5th in overall energy consumption. And our economy spends more than 30 billion dollars on energy every year.

Though a constant in our lives, energy evolves. Transportation in Ohio was once dependant on a grain-fed horse, then a gas-fueled car, and now we’re on the cusp of cutting edge alternatives including fuel cells and biofuels.

In fact, right now we face both opportunity and challenge. Our use and production of fossil fuel-based energy has made Ohio one of the largest emitters of air pollutants and greenhouse gases in the nation. And we are heavily dependent on energy sources from some of the most unstable parts of the world. In other words, our economy’s health rests on energy whose security we question and whose price we cannot control.

But Ohio has the resources to meet this energy challenge. Our great universities can develop the next generation of technology to produce energy more cleanly and to use it more efficiently. Our factories can make the component parts of those new technologies to be used here and around the globe. Our natural resources, ranging from the vast coal reserves found in the hills of Appalachian Ohio to the abundant wind and sunshine that bless our state, can provide more diverse energy supplies. Our students can learn the math, science and engineering skills to use that energy to power a new, vibrant Ohio economy.

Last week, I attended the inaugural meeting of the University Clean Energy Alliance of Ohio. Chancellor Eric Fingerhut and I witnessed 15 public and private colleges and universities, including the University of Toledo and Bowling Green, sign a historic agreement to work together to take on research and development challenges in the energy field.

And today I am calling for all stakeholders to join with me to create an Ohio Energy Compact – an agreement among producers and consumers, the regulated and the regulators – to define the best energy choices for Ohio and to transform our state’s entire approach to energy.

Like any great challenge, we will take it on in steps.

If, as I believe, energy can be the basis of Ohio’s economic turnaround, electricity will be a dominant force. How we decide to generate, distribute, and price electricity can be the foundation on which new industries, new jobs, and a safer, cleaner, healthier environment can be built. The right choices can make us leaders on our nation’s road to energy independence and economic vitality.

In 1999, Ohio lawmakers created a plan to restructure our electric utility industry. Supporters made some assumptions at the time: they believed Ohio could deregulate electric generation because a competitive market would emerge; many believed that electric rates would go down; they believed electricity was just like other industries that had been deregulated.

But electricity, it turns out, is different. It is of such profound importance to our way of life that electricity deregulation has had a more than checkered past and maintains an uncertain future.

Competitive markets simply have not developed. And lower electric rates were probably not a realistic expectation.

In fact, in other states deregulation has brought with it significant increases in utility rates. According to the U.S. Department of Energy, customers in states with deregulated electricity paid 30 percent more last year than customers in regulated states.

However, we cannot go back to the “good old days” – of cost-of-service regulation – we cannot put the Genie back in the bottle. So how do we move forward? One approach to the unfolding regulation situation we face is to opt for a band-aid solution that buys time and avoids, at least for a while, the worst of the rate increases in the hope that in a couple of years the electricity market will have changed and we can revisit the problem.

I do not believe we have the luxury of that approach. The future of energy will not wait for us to make a decision. Waiting would jeopardize our economy, constrain our capacity to generate energy, threaten our environment, reduce our ability to improve efficiency, and limit our capacity to lead the nation in the production of advanced energy technology.

So I stand ready to work with the legislature, with industry, with the utilities, and with advocates, to shape the future of the electricity market in Ohio.

With so much at stake, it is vital that we are clear about our goals and how we can work together to reach them. I believe the principles I will outline today, like the electricity grid itself, are the essential infrastructure of this debate, required to keep us connected and working at capacity.

The next steps must be viewed as a joint investment in Ohio’s future. I believe that if utilities, environmental advocates, customers of all sizes, regulators, business leaders and political leaders can put aside self interest and work for the common good, Ohio can be the leader on our nation’s road to energy independence and economic vitality.

In our new Energy Compact:

We must make transparency and accountability the foundation of the Compact. We can restore lost faith in both government and public utilities by designing clear, “common sense” plans and being responsible for accomplishing them. This also provides a sound basis for public and private sharing of the investments required to achieve those goals.

We must give customers equal footing with utilities. The complexity of these issues creates an imbalance of knowledge and expertise that can create the appearance of a disproportionate influence of utilities in electric power decision-making. In an era of expensive energy, there is increased tension between the historical social responsibility of what we call public utilities and the driver of private sector return on investment. We must work together constantly to make sure the public understands the issues and the consequences of our plans.

We must make energy efficiency a central element in addressing electric regulation. Let us prioritize our cheapest, cleanest, and most readily available energy resource - energy efficiency - by giving customers the tools they need to exercise greater responsibility for their individual energy footprints. For instance, there exists today real-time metering technologies that enable even residential customers to see actual prices and adjust their electric usage accordingly. I think that’s smart energy in action.

We must stimulate renewable energy consumption in order to attract advanced energy investment. Ohio already has the industrial base, technical resources, and skilled labor necessary to lead the way in renewable energy. It’s time to send a clear signal that Ohio is the right place for renewable energy technology investment.

We must modernize Ohio’s electric infrastructure. We should broaden the debate to include our energy delivery system, not just our generation capacity. It’s time to invest to modernize our electric infrastructure, the aging fleet of plants that generate our power, the transmission system that is doing more than it was ever meant to do, and the deteriorating distribution networks. It is our responsibility to see that the infrastructure exists to meet the needs of the 21st Century economy in Ohio.

We must take into account environmental issues, especially global warming. The choices we make in electricity regulation will impact our environment. And, environmental policies, especially rules on greenhouse gas emissions, will have dramatic effects on Ohio’s economy. Our approach to electricity regulation will integrate environmental considerations, not as an afterthought, but as a guiding concern.

I’d like to say to my friends in the legislature, and to everyone who has an interest in this issue: I believe it is time to think boldly. It is time to think past us versus them, because all of Ohio depends on a sound policy and secure access to electricity. It’s time to think past stability versus change, because change is happening right now. It’s time to think past economy versus the environment, because a forward-thinking policy benefits both.

We can start by adopting a principled, well-considered approach to electricity regulation.

I thank you for the opportunity to visit with you today, and I look forward to a vigorous debate on this issue.