A new Ohio bill aims to help utility customers lower their energy costs while easing strain on the state’s power grid. House Bill 427 would authorize utilities to create programs allowing them to temporarily adjust customers’ energy usage during periods of high demand in exchange for payment.
The legislation, introduced by state Rep. Roy Klopfenstein in August, would enable utilities to make small changes like raising thermostat settings a few degrees or cycling water heaters when the grid is under stress. Customers would receive payments for their participation, but they could also override the adjustments at any time.
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The bill extends benefits that have worked for large industrial customers to households and small businesses. Known as demand response programs, these initiatives can lower wholesale electricity costs, which in turn lead to lower retail rates, according to the U.S. Department of Energy.
As electricity demand increases along with customers’ bills, demand response is emerging as a key tool for keeping power flowing when grid conditions are tight.
“This legislation is a crucial step in our state’s comprehensive plan to ensure all Ohioans have access to reliable, affordable, and readily available energy,” Klopfenstein said in a press release.
What does Ohio’s demand response legislation say?
Under the proposed legislation, utilities would need approval from the Public Utilities Commission of Ohio before launching any demand response program. The commission would evaluate whether programs are cost-effective by examining costs, long-term grid savings and other factors, such as reliability benefits.
Customers who choose to participate would sign an agreement with their utility allowing temporary power load reductions during peak demand periods. Participants would maintain control over their energy use and could override the utility’s action during any event. However, utilities could set rules limiting future participation for customers who frequently opt out.
What are the financial benefits of demand response?
Demand response programs offer financial benefits to electric companies and their customers. In many existing demand response programs across the country, homeowners and small businesses can receive a credit on their monthly bills for opting in.
In 2023, Baltimore Gas and Electric customers saved $10 million through demand response, according to the utility company. Customers of Southern California Edison can earn up to $160 per month between June and September.
If demand response comes to Ohio, utilities and retail electric service providers could bid the demand reductions into the regional capacity market, which compensates power generators and other resources for energy availability when needed. Revenue from capacity market bidding would be used to offset program costs.
Demand response programs can also help electricity providers defer construction of new power plants and delivery systems reserved for peak times, according to the Department of Energy.
The bill is currently in the energy committee in the Ohio House of Representatives.
