The Washington Times first published this piece.

Ohio’s sweeping energy policy reforms have taken a bold, market-based turn that state and federal policymakers would be wise to follow. Evolving from Rust Belt factories to a high-tech haven, Ohio has seen the technological future, and it needs energy — reliable, affordable energy — and a lot of it.

Electricity demand was relatively flat for the first 20 years of the millennium, but artificial intelligence, supercomputing, cryptocurrencies, advanced technology manufacturing, and expanded digital services requiring massive new data centers have changed everything. Energy demand has spiked. Energy grids are stressed. Regional power companies can charge record prices. Consumers are left with the choice of paying the increasing rates or turning off the lights.

In Europe, when energy demand exceeded supply, central planners chose to decrease demand by tapping the brakes on economic growth while closing operating power plants. Electricity prices skyrocketed. Germans today pay 10 times what many Americans pay for power, their manufactured goods cost more to make and more to buy, and their less-competitive economy suffers. These higher energy prices, along with overly stringent regulatory regimes, have crippled Europe’s technology sector, leaving it reliant on American companies for computing, data storage and AI.

Ohio has taken a more sensible economic approach. Instead of artificially reducing demand by making energy even more expensive, policymakers in Columbus have taken steps to increase energy supply.

Ohio House Bill 15 set the stage for the state’s energy production to move from a government-regulated monopoly to a market-based competitive field. Taking many of the recommendations made by The Buckeye Institute and Americans for Prosperity-Ohio, the legislation abandons overrestrictive mandates, ends government subsidies, and cuts the bureaucracy that hinders growth and has hampered new energy production for decades. 

The law requires the Ohio Power Siting Board to make decisions within 45 days of application, expediting a confusing process that too often takes months or even years to complete. Ohio’s 45-day rule is an overdue fix that will help keep vital energy projects on schedule and out of bureaucratic limbo.

Faster project approvals mean more power to meet surging demand sooner. That means lower production costs and more competitive prices for manufacturers, data centers and computing firms that need reliable, around-the-clock electricity.

The bill also encourages “behind-the-meter” power generation, allowing companies to build new power sources to supply their plants directly. Controlling their energy supply will enhance reliability and give companies greater certainty that their electricity demands will be met.

Ohio has also killed expensive, inefficient government subsidies to utility companies, including notorious taxpayer bailouts for the Ohio Valley Electric Corp. that have cost consumers more than $600 million since 2017 and would have cost another $100 million annually for the foreseeable future. Republicans in Washington just eliminated similar subsidies at the federal level, and for good reason. Taxpayers should not be subsidizing utilities even as they pay record prices for electricity. Removing government subsidies for politically favored companies levels the playing field and encourages genuine competition and innovation in the energy sector.

Finally, Ohio House Bill 15 bars utilities from adding “bill riders” that surprise consumers with unexpected fees. It also replaces outdated electric security plans, which are rate structures that allow utilities to charge hidden fees. Market rate offers are more transparent and competitive pricing systems that let consumers make more informed decisions when choosing electricity suppliers. By aligning default utility rates with the wholesale energy market, market rate offers require utilities to price competitively and encourage them to be more efficient and offer consumers more affordable energy rates.

Ohio has set a standard that other states can and should adopt. States have different energy structures, some more market-based than others, but any state, even those with highly regulated energy monopolies, can benefit from following Ohio’s example.

Ohio’s approach will help deliver less expensive, more reliable energy by increasing supply through competition and deregulation rather than stifling demand with artificially higher prices. Looking to balance grid stability, affordability and innovation, Ohio has rightly eschewed politically motivated mandates, prodded regulators to act efficiently, and prioritized consumers’ concerns over entrenched special interests. That message resonates across economic sectors and will attract new-economy firms looking for reliable energy with transparent, affordable pricing.

States looking to remain economically competitive in an increasingly digital and global market should follow Ohio’s lead or risk suffering Europe’s fate and falling further behind. 

Rea S. Hederman Jr. is vice president of policy at The Buckeye Institute. Donovan O’Neil is state director of Americans for Prosperity-Ohio.