As Introduced

136th General Assembly

Regular Session H. B. No. 427

2025-2026

To amend section 4909.192 and to enact section 4928.106 of the Revised Code to authorize voluntary demand response programs for residential and small commercial customers.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That section 4909.192 be amended and section 4928.106 of the Revised Code be enacted to read as follows:

Sec. 4909.192. When considering an application to increase rates under section 4909.18 of the Revised Code, the public utilities commission may approve the following:

(A) Nondiscriminatory programs available for all energy-intensive customers to implement economic development, job growth, job retention, or interruptible rates that enhance distribution and transmission grid reliability and promote economic development.

(B) Nondiscriminatory programs available for all mercantile customers, as defined in section 4928.01 of the Revised Code, that align retail rate recovery with how transmission costs are incurred by or charged to the electric distribution utility, as defined in section 4928.01 of the Revised Code, or programs that allow customers to be billed directly for transmission service by a competitive retail electric service provider.

(C) Nondiscriminatory programs available for residential customers and small commercial customers, as defined in section 4928.101 of the Revised Code, that reduce demand at peak times for purposes of grid reliability or to help lower customer rates, including peak demand reduction programs under section 4928.106 of the Revised Code. Any programs to reduce demand proposed in an application to increase rates shall include terms permitting competitive retail electric service providers, certified under section 4928.08 of the Revised Code, to offer their customers access to these programs.

Sec. 4928.106. (A) As used in this section, "small commercial customer" has the same meaning as in section 4928.101 of the Revised Code.

(B) An electric distribution utility may create a voluntary demand response program to lower demand at peak times for residential customers and small commercial customers as described by this section.

(C)(1) Each demand response program under this section shall be evaluated by the public utilities commission to determine if the program is cost-effective for customers. To determine if the program is cost-effective for customers, the commission shall consider all of the following:

(a) The need for demand reduction based on capacity prices;

(b) The long-term savings to the grid;

(2) No electric distribution utility shall offer a demand reduction program under this section unless the program is approved by the commission.

(D) An electric distribution utility may enter into an agreement with a residential customer or small commercial customer for the customer to participate in the utility's demand response program.

(E) For customers that participate in the program, the utility may take actions to reduce the customer's load at peak times, such as increasing the temperature on the customer's air conditioner, reducing the temperature on the customer's hot water heater, or cycling other appliances.

(F) A customer that participates in the program may override the utility's action to reduce the customer's load for any individual event.

(G) A utility may set rules that restrict a customer's future participation in the utility's demand response program if the customer overrides the utility's action pursuant to division (F) of this section.

(H) A customer that agrees to participate in the utility's demand response program shall be paid by the utility a fee on an annual or per event basis approved by the commission.

(I) A utility or competitive retail electric service provider may bid the demand response reductions from the utility's demand response program into the capacity market of the regional transmission organization approved by the federal energy regulatory commission and having the responsibility for maintaining reliability in all or part of this state.

(J) A utility that bids demand response reductions into the capacity market shall use revenue earned from the bidding to offset costs of the utility's demand reduction program.

(K) The commission may approve a performance incentive for a utility with a voluntary demand response program based on savings the program generates.

(L) Not more than three years after the effective date of this section, the commission shall evaluate the success of the utility demand response programs and make recommendations to the legislature regarding bidding demand response into the capacity market under division (I) of this section and any other modifications to the programs that will enhance customer benefits.

Section 2. That existing section 4909.192 of the Revised Code is hereby repealed.