Ohio gas bills may go up with a pipeline provision added to this legislation

COLUMBUS, Ohio (WCMH) – A bill meant to prevent Ohio towns and counties from restricting the sale of gas cars has been sent to the governor’s desk with a provision allowing gas companies to charge customers to build pipelines for potential “megaprojects.”

House Bill 201, passed by both chambers Wednesday evening, was intended to prevent the Ohio EPA from adopting California’s more stringent emissions standards for vehicle manufacturers. But a last-minute amendment to the bill allows gas companies to tack on up to $1.50 to customers’ monthly bills to fund the construction of natural gas pipelines to supply energy to massive economic development projects – like Intel’s 1,000-acre Licking County site for semiconductor chip facilities.

The Legislative Service Commission has not produced an updated fiscal analysis to account for the bill’s amendments, but under a provision considered in June to allow a $3 rider, energy companies could recoup an additional $66.7 million from their customers.

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The companies would be authorized to add that charge under an existing Infrastructure Development Rider program. Currently, utility companies can use the rider in limited circumstances; under HB201, eligibility is expanded to include the construction, extension, or upgrade of a natural gas company’s pipelines. For six years after the bill’s signing, the rider can also be used for investments to provide energy to the sites of economic development plans approved by JobsOhio, JobsOhio’s regional partners or the Department of Development.

On the Senate floor, Sen. Bill Reineke (R-Tiffin) said the infrastructure rider for gas companies is necessary to keep Ohio competitive with other states for the consideration of large economic development projects, similar to Intel’s scale. Gas company executives, including from Columbia Gas and Duke Energy, testified Tuesday that without the rider, gas companies would be unable to extend pipelines to accommodate large projects in regions of the state ripe for development.

That means “job makers” with bold development plans will choose elsewhere to invest, testified Vince Parisi, president and chief operating officer of Columbia Gas.

“The current [rider] is not flexible enough for the high costs associated with the large economic development projects Ohio has seen recently,” Parisi said. “These large projects, like Intel, are installed in areas that are significantly distant from the nearest natural gas pipeline capable of providing service. Because of this, the cost to serve these customers is pretty high.”

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But Democrats and some Republicans view the rider less as an opportunity to boost the economy and more as an additional burden on ratepayers.

Under the amendment, the Public Utilities Commission of Ohio is required to annually report on infrastructure development rider applications received and approved, the amount approved for recovery through each company rider and a list of the status of all approved economic development plans. While PUCO authorizes the infrastructure development riders, companies are allowed to apply the rider to projects before approval.

If companies aren’t able to recover project costs under current law’s one-year limit, they’re allowed to continue the rider for five additional years.

Sen. Kent Smith (D-Euclid) called HB 201 an “anti-competitive, utility-driven” policy proposal that puts everyday Ohioans on the hook for gas companies’ potential projects – without any assurance that they’ll come to fruition.

“When the legislature moves fast, Ohioans should hang onto their wallets, and this is one of those instances,” Smith said.

Sen. Niraj Antani (Miamisburg), one of a handful of Republicans to vote against the bill, echoed Kent’s sentiments, calling it an effective tax increase on Ohioans.

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The Senate hoped to add a similar provision to the state’s two-year budget in June, instead approving up to a $3 monthly rider on ratepayers’ bills. As such, Senate President Matt Huffman (R-Lima) defended HB 201’s late amendment, telling reporters that it’s crucial to supporting the “extraordinary growth in folks wanting to locate here in Ohio.”

“These projects are happening right now, and in the case of Intel, for example, there was a promise that we’re going to put a gas pipeline in for Intel, a $20 billion investment,” Huffman said. “Well the gas company has to figure out how to pay for that, otherwise the Intel project doesn’t get built.”

Columbia Gas has an existing 63-cent rider for what Parisi described as the “first portion of its costs” to supply energy to Intel. He said to recover the full costs of the project, the company will likely need to approach the $1.50 limit.

In addition to the infrastructure rider, HB 201 would also prohibit local governments from restricting the sale of vehicles based on power source – a provision aimed at preventing the proliferation of bans similar to California’s ban on the sale of new gas-powered vehicles by 2035.

The bill also prohibits the state’s EPA from enacting California’s carbon emissions standards. California has received multiple EPA waivers to adopt stricter standards than the federal Clean Air Act requires in an attempt to achieve the state’s carbon neutrality goals, including the most recent waiver in 2023.

Gov. Mike DeWine has 10 days from HB 201’s passage to sign or veto it. His office did not respond to a request for comment.

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