Ohio Energy Efficiency Incentive Program
Companies can minimize the impact of a surcharge on their electric bills if they take steps to reduce their demand for energy by developing and submitting an action plan by October 11, 2011.
In May 2011, FirstEnergy began imposing an energy efficiency surcharge on all commercial and residential customers called the Demand Side Management and Energy Efficiency Rider (DSE2). The rider is based on how many kilowatt-hours of electricity a non-residential customer demands. It is FirstEnergy’s response to Ohio Senate Bill 221, enacted in 2008 to address concerns of rising energy costs and to encourage Ohio businesses and utilities to adopt renewable energy technologies. SB 221 called for a reduction of 22 percent in energy usage by 2025, establishing annual and cumulative efficiency standards beginning with a reduction of 0.3 percent in 2009.
The implementation of the DSE2 Rider on each customer’s energy bill will enable FirstEnergy to provide the funding to initiate the Ohio Energy Efficiency and Peak Demand Reduction Commercial & Industrial Utility Incentive Programs. This is the program through which companies can take steps to reduce their energy consumption, reducing their overall energy costs and minimizing the impact of the surcharge. Companies can develop and submit their plans by October 11 to be eligible for the incentive. Upgrades need not be completed or even initiated by October 11 to qualify for the incentives; only the application is due by this date.
Commercial customers can upgrade their facilities to reduce their energy use and earn an incentive of 80 cents per watt saved during the first six months for doing so. After the first six months, the incentive is reduced to 60 cents per watt saved. The incentive program is implemented in three phases. The first phase focuses on standard lighting, non-standard lighting, motors and drives. The second phase focuses on custom projects, HVAC, traffic signals, specialty equipment and refrigeration/commercial food service. The final phase focuses on audits, new construction and street lighting.
While the numbers may sound small, the savings will add up quickly for companies that are large energy consumers. Consider an example. Assume a company will replace 100 fixtures, reducing the wattage of each fixture from 475 to 225. By saving 250 watts per fixture, with an incentive reduction of 80 cents per watt, the company will save $200 on each fixture. For 100 fixtures, that savings adds up to $20,000.
In addition, if a company started or completed an energy reduction project during the three years prior to April 2011, a separate incentive program is available called the Mercantile Customer Program. A ‘mercantile customer’ is a commercial or industrial customer that consumes more than 700,000 kWh per year for non-residential use, or is part of a national account involving multiple facilities in one or more states. The incentive for projects qualified under the Mercantile Customer Program may be utilized in two ways: avoidance of qualifying surcharges under DSE2 Rider or cash rebates.
If a company were to elect to bypass the DSE2 Rider surcharges, the energy saving period will be compared to the average kilowatt usage during the previous three years. The energy savings based on the comparison will be used to calculate the value of the surcharge credit. If the company elects to receive the cash rebate, the rebate will equate to 75 percent of the value that would be received for future projects. The rebates will be capped at 50 percent of the project cost or $250,000 per project, whichever is lower. Total customer rebates will be limited to $500,000 per year, per utility territory.
If you have any questions on how this will affect you or your business, contact your Meaden & Moore representative at (216) 241-3272.