JUST AND REASONABLE ELECTRIC RATES FOR OHIO Ohio Partners for Affordable Energy wwww opaemerc org 231 West Lima Street P.O. Box 1793 Findlay OH 45839-1793 419. 425.8860 www.ohiopartners.org Electric utilities have been viewed as monopolies since the onset of the 20th Century. Recent experiments in Ohio and other states have proven that electric utilities remain monopolies today. Attempts to develop competitive wholesale and retail markets to control prices have failed. As a result, consumers are paying prices that are too high and not getting reliable service. Utilities have resisted complying with clean air standards, and are failing to recognize the risk of carbon controls by investing in renewable energy and cost-effective efficiency programs/demand-side management (DSM). Ensuring that essential energy service is affordable requires a major change in the approach to regulating utility rates. The market is not a substitute for effective regulation. PRINCIPLES I. ELECTRICITY, HEAT AND WATER ARE NECESSITIES OF LIFE THAT MUST BE AFFORDABLE FOR ALL CONSUMERS. II. STATE, FEDERAL AND LOCAL GOVERNMENTS MUST ACT TOGETHER TO ASSURE ELECTRICITY, HEAT AND WATER SERVICES ARE RELIABLE, SAFE, SUSTAINABLE AND OFFERED AT A FAIR PRICE. LEGISLATIVE SUMMARY • The Public Utilities Commission of Ohio is required to regulate all aspects of utility service. All rates must be just and reasonable and in the public interest. Utilities can meet this obligation by buying or building powerplants, or purchasing power if less costly to do so. • The Public Utilities Commission of Ohio cannot engage in single-issue ratemaking; rates must be set through a base rate case that ensures utilities charge rates justified by total costs. Only fuel adjustment clauses are exempt from this requirement. • Special contracts for large commercial and industrial customers can no longer be confidential, must be subjected to a public hearing, and the cost of the contracts cannot be shifted to residential and small business customers. The contracts must be just and reasonable and serve the public interest. • Utilities are required to conduct a least cost planning process to identify the most cost-effective demand and supply side options for providing electric utility service. • Utilities are required to meet targets to reduce energy consumption and peak demand through the use of energy efficiency/DSM. • Utilities are required to provide 25% of generation service from renewable sources by 2025. • Creates an Ohio Energy Authority authorized to build, purchase, or finance electric generation and DSM projects to provide least cost energy to customers. Utilities must purchase electricity purchased or produced by the authority. • Reliability and service quality ensured by establishing training requirements and staffing levels in line positions. Projects financed or built buy the Ohio Energy Authority must pay prevailing wage.

PRESS RELEASE For Immediate Release Contact: Dave Rinebolt, Executive Director Ohio Partners for Affordable Energy wwww opaemerc org 231 West Lima Street P.O. Box 1793 Findlay OH 45839-1793 419. 425.8860 Cell 614.975.8692 www.ohiopartners.org OPAE RELEASES ELECTRIC REREGULATION PLAN Plan Focuses on Needs of Small Customers FINDLAY (August 24, 2007) – Ohio Partners for Affordable Energy (OPAE), an organization of sixty nonprofits serving consumers throughout the state, have released a plan to ensure just and reasonable utility rates. The community action agencies and other nonprofits that make up OPAE’s membership provide a broad array of social services, from Head Start to senior nutrition programs. Agencies also provide weatherization and energy conservation services as well as utility bill payment assistance. “Electric rates are spiraling out of control,” said John Sarver, of Cleveland Housing Network and OPAE Board Chair. “Residential customers, especially low income customers can’t afford it; small businesses can’t afford it; and, large commercial and industrial customers can’t afford it. Bottom line – Ohio can’t afford it.” “Ohio needs to take advantage of cost-effective energy efficiency,” added Jim Tehnundfeld, an energy auditor and OPAE Vice Chair. “We also need to use Ohio-based renewable power. Ohioans need clean air and protection from the risk of global warming – renewables and efficiency meet both needs.” The OPAE plan calls for: • Regulation of every aspect of utility service to ensure just and reasonable rates which are in the public interest. • A least cost planning process to develop supply and demand side strategies to provide service at the lowest possible cost. -- MORE -- • Minimum requirements for the use of energy conservation and renewable energy to meet customers’ need for energy services. • Requirements that rates not shift responsibility for costs from large customers to small customers and vice versa. • Requirements that rates for low income customers are affordable and that payment plans for residential and small commercial customers are fair. • Creation of an Ohio Energy Authority to purchase, build, or finance new generation and energy efficiency investments, and provide those services to customers at cost. • Enhanced reliability through training standards, mandatory staffing levels, and investment in the distribution system, including provisions to encourage distributed generation and net metering technologies. • Utilities to be permitted a reasonable profit. Utility finances will be reviewed annually to protect against excessive rates. If rates are too high, the Commission is required to initiate a rate proceeding to lower rates. • Establishing tough appliance efficiency standards. • Making Energy Star® certified appliances exempt from sales tax. “Customers pay for everything when it comes to utility service,” noted Dave Rinebolt, OPAE Executive Director. “If we are paying, then we ought to be able to get what we need – affordable rates, energy efficiency, renewable energy, and reliability. This state’s economy is foundering. Ohio’s utilities need to step up to the plate and share in the effort to create more jobs and promote business development – after all, their business is only as good as our economy and they can’t roll up their wires and leave. Energy efficiency and renewables will produce jobs. That’s where ratepayers money should be invested, not in obscene shareholder profits and obsolete powerplants.” * * *

Gongwer Ohio Report: Volume #76, Report #169, Article #04 --Friday, August 24, 2007 ENTITY WOULD GAIN AUTHORITY TO BUILD ELECTRIC PLANTS, PURCHASE POWER, UNDER NEW PLAN A new quasi-governmental authority would be created to purchase, build and finance electric generation plants and energy efficiency technologies under a proposal that a coalition of non-profit organizations outlined on Friday. The concept, released by Ohio Partners for Affordable Energy, suggests the creation of an Ohio Energy Authority that could generate or purchase power that utilities would be required to buy and sell - both at cost - to consumers. OPAE Director Dave Rinebolt said his group's plan is in line with suggestions from a collection of industrial users in that they both are proposing a return to cost of service ratemaking. He noted, however, that his proposal prohibits "single-issue" ratemaking for all factors with the exception of fuel costs. "Customers pay for everything when it comes to utility service," he said. "If we are paying, then we ought to be able to get what we need - affordable rates, energy efficiency, renewable energy and reliability." The plan (Summary , Legislation , Code Sections ) was released Friday as groups continue to prepare for the release of a more detailed electric utility regulation proposal from Gov. Ted Strickland. Under OPAE's proposal the authority would generate funds for its projects by issuing state-backed bonds, Mr. Rinebolt said, noting that a similar authority exists in New York, and was included in a new Illinois law on the electric industry. The plan also calls for the payment of prevailing wage on all authority projects. The proposal offered by OPAE, which consists of 60 non-profit organizations, also calls for significant use of demand-side management and energy efficiency technologies. It also seeks implementation of a 25% renewable portfolio standard by 2025. The proposal says utilities would be permitted to make a "reasonable" profit, which would be assessed by the Public Utilities Commission of Ohio on an annual basis. The PUCO, it said, would have the ability to initiate proceedings that could result in lower rates if profits are found to be excessive. OPAE also calls for: --improved reliability standards and investments in the distribution system --making special contracts between large consumers and electric companies public; --applying certain efficiency requirements on the natural gas industry; --creating energy efficiency standards for appliances, and; --exempting EnergyStar appliances from sales taxes. Some of the key parties to the issue have circulated their proposals for the industry, hoping Mr. Strickland will draw from their suggestions. (See Gongwer Ohio Report, August 7, 2007 )

A call for re-regulation in Ohio, including review of RTOs, albeit with special contracts.

Creates Illinois Power Authority to build and procure, public competitive procurement process (market based, pay as bid) but utilities may build if least-cost, RPS, EE standards, winter shut-off moratorium, some short-term rate relief

Statement upon signing HB 25.

Re-regulation, including utility ownership of generation. See Montana Governor's Signing Statement.

Appliance Efficiency Standards, last amended in 2005 for effect February 20, 2006.

Useful for provisions re: labor, low-income, consumer protections. See Massachusetts restructuring key excerpts.

Key excerpts re: affordability, price reporting, consumer protection, process.

California Public Utilities Code, Sections 1801-1812.