Nielsen. Ste hen From: Scott Elisar Sent: Tuesday, November 19, 2013 9:22 AM To: Jamie Cc: Kevin Murray Subject: RE: SB. 58 Further Information Attachments: imageOOSjpg; FINAL Lesser Testimony on SB 58 (Before Senate-?10?22-13) (C41813).pdf That is true however if you refer to the Lesser study that was publicly presented in Committee he accurately points out that we are substantially paying more for these improvements/mandates than we would if we were using the markets to meet these goals. And that this study falsely assumes that there is a one to one relationship between wholesale and retail electric prices A great case in point is the situation with Duke! - we have retail prices for Duke Energy Ohio that are above wholesale prices in part due to the Public Utilities Commission of Ohio approving non- bypassable charges to offset in part lower wholesale electricity prices. Duke was authorized to collect 330 million dollars in nonbypassable charges over a three year period they however - are not satisfied and are asking the commission to task on another 700 million dollar more. The Commission has approved similar nonbypassable charges for AEP and DPL these charges substantially DWARF anyone?s estimates of savings from energy efficiency measures Attached are the Lesser studies; if you don?t want to cite Duke you can say the 250 million that consumers are paying annually throughout Ohio dwarf any savings from these energy efficiency mandates hope this helps! Scott Scott E. Elisar McNees Wallgce Nu_rick LLC 21 E. State Street, 17th Floor Columbus, Ohio 43215 (614) 719-2850 (Direct Dial) (814) 395?3925 (Mobile) {614) 469?4653 (Fax) I. McNees Wallace Nurick or: The foregoing message may be protected by the attorney client privilege. If you believe that it has been sent to you in error, do not read it. Please reply to the sender that you have received the message in error, then delete it. Thank you. Pursuant to US. Treasury Department Circuiar 230, unless we expressly state otherwise, any tax advice contained in this communications (including any attachments) was not intended to be used, and cannot be used, for the purpose of avoiding taxwrelateci penaities or (ii) promoting, marketing or recommending to another party any matterls) addressed herein. 253 From: Jamie Sent: Tuesday, November 19, 2013 8:54 AM To: Scott Elisar Subject: FW: 5.8. 58 Further Information See question below. I was trying to not get into technicalities with her on this, but she seems to want a response on this particular section. What do you think an appropriate (brief) response would be? Jamie Senator William J. Seitz Senate District 8 Phone: (614) 466-8068 Fax: (614) 466-4250 Email: From: Thompson, Chrissie Sent: Tuesday, November 19, 2013 8:45 AM To: Jamie Subject: RE: 3.3. 58 Further Information Thanks much, Jamie. By the way, what do you make of the rest of the paragraph in the OAEE summary, after the part you highlighted? Seems they are saying the net result is savings to Chrissie Thompson State capital reporter The Cincinnati Enquirer 513668-2883 cthomoson?enouirer.com politics] Follow me on Twitter: @CThoszonENg Follow me on Facebook From: Jamie Sent: Monday, November 18, 2013 4:41 PM To: Thompson, Chrissie Subject: 5.8. 58 Further Information Chrissie-? For my last email, attached you will ?nd further information on the effects of EB programs for ratepayers. I have also attached the summary released by Ohio Advanced Energy ,?Eoonomy in response to Sub SB. 58. You will see on page 2 (highlighted) that even their study concluded Ohio?s renewable mandates. inore?ased costs to consumers in 2011 and 2012. 254 Let me know if you have any questions or need any further info. Jamie Senator William J. Seitz Senate District 8 Phone: (614) 466?8068 Fax: (614) 466-4250 Email: This message has been scanned by a BARRACUDA SPAM VIRUS FIRE-WALL and ver?fied virus free 255 SUMMARY OF DR. Lessea?s CONCLUSIONS When prices in competitive electric markets decrease as a result of government mandates that force willing buyers and sellers to deviate from their preferences, those prices are not being ?suppressed? by the workings of a competitive market. in market-based economies, it is often unlawful for a market participant to suppress prices because this type of conduct is anti-competitive and works to unreasonably deprive consumers of the bene?ts of competition, resulting in higher prices for products and services. The type of price suppression asserted by the reform opponents is not the result of market forces but is an arti?cially induced consequence like the short-term results that may be observed when government imposes price controls on goods or services. If Ohio?s mandates actually were able to reduce prices in the competitive market, then mandated resources would compete successfully without a need for any mandates. in our economic system, private capital (as opposed to captive customers) would happily invest in these resources and reap the rewards of providing better service and lower prices to consumers. Energy ef?ciency and ?renewables? do not face market barriers, just like very expensive Rolls-Royce cars do not face market barriers. A consumer?s failure to purchase something because it is more expensive or because the consumer has other uses for available funds is not a market barrier. Any arti?cial price suppression effects are temporary as acknowledged by the so- called studies referenced by the reform opponents. For example, The American Council for an Energy?f?oient Economy study cited by the OMA acknowledges the transitory nature of arti?cial price suppression, stating: ?Suppliers participating in these wholesale markets will likely respond to reductions in market prices by taking actions that will, over time, offset the reduction and eventually cause the market price to move toward the level it would have been in the reference case." Moreover, in the long run, electric prices will be higher than they would have been but for the subsidies and mandates. If we have learned anything from our history. we have learned that states and nations cannot mandate and subsidize their way to greater economic growth. ?1041877: in Europe, for example, consumers in countries like Britain, Germany, and Spain, which have heavily subsidized renewable energy investments, pay very high prices for electricity. Those high electricity prices are crippling economic growth and harming the most vulnerable consumers. Now. these countries are attempting to unwind their portfolio mandates. The so-called studies assume there is a one-to-one relationship between wholesale prices and retail electric prices. Thus, if wholesale energy prices decrease by one cent, they assume that the electric prices paid by Ohio's retail customers decrease by the same amount. This assumption is fundamentally defective based on actual, observable, retail pricing outcomes in Ohio. (For example, the PUCO has approved substantial generation supply price increases for and and has made some of the increases non?bypassable at a time when wholesale electric prices have been declining and are at relatively low levels). The so?called studies ignore all of the participant costs in calcuiating the savings from energy ef?ciency mandates. in other words, they fail to include the costs incurred by consumers on top of the direct mandate costs, focusing solely on the costs incurred by utilities where any costs are considered. in some cases, no costs are considered. Despite acknowledging that existing generators will exit the market due to the arti?cial price suppression, the analysis for the years 2012 2020 fails to account for the effects from those unsubsidized suppliers exiting the market. Moreover, the analysis fails to consider the effects of reduced supplies from potential unsubsidized market entrants who will be less likely to develop new resources if there are subsidies. . The so?called studies purport to ?prove? that Ohio can gain something for nothing; that by manipulating energy markets through portfoiio mandates, Ohio can, in essence, print money. The more stringent the mandates; the more money Ohio can print. Because there are fundamental problems with all of the-theories embedded in the so-called studies, it is unnecessary to drill deeper into their inner workings before concluding that the claims that depend on these so-called studies are un?t for their intended purpose. Because of these fundamental problems, members of the General Assembly should not rely on the reform cpponents? claims that depend on the validity of any of these studies as they consider proposals to reform Ohio?s portfolio mandates. {041377; 2