Federal & State News – March 2023

Bricker & Eckler LLP

Federal News:

Whoever said a tectonic shift in sourcing our country’s power was going to be easy? Although the current market is exploding with funds for new clean energy sources, the country’s existing system for connecting new power sources to homes and businesses is overwhelmed.  And that’s putting it mildly.

The sheer volume of clean energy projects has revealed substantial limits in the country’s antiquated systems to connect new sources of electricity to homes and businesses, known as interconnection.  More than 8,100 clean energy projects (wind, solar, and batteries) were waiting for permission to connect to electric grids at the end of 2021.  At the end of 2020, that figure had been 5,600.

Interconnection is the process by which electricity generated by wind turbines or solar arrays is added to the nation’s power grid, which is itself comprised of dozens of electric networks, each overseen by a different authority.

In Ohio, PJM Interconnection oversees such process (and operates the nation’s largest regional grid, stretching from Illinois to New Jersey).  During 2021, PHM announced a freeze on new interconnection applications until 2026.

Across the country, it now takes an average of four years for developers to get approval to join the power grid, which is double the time it took a decade ago.  And even when companies finally get their projects reviewed, it is often the case that the local grid is at capacity; those developers then need to spend (much) more for new transmission lines to move power farther along the grid.

Lawrence Berkeley National Laboratory estimates that less than 20% of solar and wind proposals make it through the interconnection queue.

Large-scale solar, wind, and battery installations in the United States fell 16 percent in 2022, according to the American Clean Power Association, which blamed the drop, to a significant extent, on such delays connecting projects to the grid.

PJM, the grid operator for Ohio, now has 2,700 energy projects under study — mostly wind, solar and batteries — a number that has tripled in just three years. Wait times can now reach four years or more, which prompted PJM last year to pause new reviews and overhaul its processes.

State News:

Ohio Supreme Court hears oral arguments in Work-from-Home tax case:  At the outset of the COVID-19 pandemic, the Ohio General Assembly enacted a measure declaring that for municipal income tax purposes, the days an employee worked from a location other than the employee’s principal place of work (i.e., WFH) would be considered days spent at the principal place of work (i.e., the office).

In late February, the Supreme Court heard oral argument in Josh Schaad v. Karen Alder, finance director of the city of Cincinnati, et al., Case No. 2022-0316.  In this case, Mr. Schaad is appealing a dismissal by the 1^st District Court of Appeals (Hamilton County) to his compliant of being taxed by the City of Cincinnati all the while he was working from home in the suburbs.  Arguing the decision was as unconstitutional, the appellant argues that a local government can tax nonresidents only when the work they perform is done within the municipality.

His employer withheld taxes from his 2020 pay for the City of Cincinnati, during the time in which he was working from home in Blue Ash.  Although Cincinnati gave him a partial refund based on the number of days he worked outside of Cincinnati before the pandemic, the city refused to refund the local taxes for the days he worked at home in Blue Ash because of an active stay-at-home order during the pandemic.

The case is being closely watched for its impact on municipal income tax collections, with support for Mr. Schaad’s position coming from several groups, including the Ohio Society of Certified Public Accountants, Ohio Chamber of Commerce, and the conservative National Taxpayers Union Foundation.  Support for the City’s position includes the Ohio Municipal League.