So far, so good … but plenty of room for improvement
COLUMBUS, Ohio, Jan. 9, 2002 – The state agency charged with representing the interests of Ohio’s residential utility customers released today a “report card” on the first year of Ohio’s competitive electric marketplace. The report issued by the Ohio Consumers’ Counsel (OCC) concludes that the first year of “electric choice” in Ohio has been generally positive for the state’s residential consumers – but that there is substantial room for improvement.
In June 1999, the Ohio General Assembly passed legislation that restructured Ohio’s electric industry. Under the legislation, most residential electric customers in Ohio were given the freedom to shop for a new electricity supplier beginning January 1, 2001.
“As the state’s residential utility advocate, we want to know first if Ohio’s residential electric consumers are better off today than they were before electric choice took effect,” said Ohio Consumers’ Counsel Rob Tongren. “Then we want to know how their situation can be improved even more. The short answer to the first question is, ‘Yes, they are.”‘
Tongren said electric choice has been good for consumers in a number of ways:
“- New Supplier Choices. A number of Ohio consumers now have electric supplier choices they have never had before. In 2001, more than 600,000 residential electric consumers switched to a new supplier. Some customers shopped on their own, while others participated in electric choice by joining local community buying pools, or aggregation groups.
“- Lower Electric Bills. Customers who have switched to a new supplier typically are expected to save between $10 and $110 annually, depending on how much electricity they use. Customers who live in areas of the state where supplier choices are limited – or, in some cases, still don’t exist – also are saving money. Under Ohio’s new law, residential consumers who continue to purchase their electricity from their local investor-owned utility have received a 5 percent reduction in the generation portion of their electric bill. Savings from this discount totaled approximately $126.5 million statewide in 2001.
“- Protection Against Price Spikes. In addition to the guaranteed 5-percent cut in generation costs, a rate freeze is helping to protect Ohio consumers from volatile price swings during “market development periods” that extend through 2005 (2003 for customers of Dayton Power and Light).
“- Continued Reliable Supply of Power. Despite record demand for electricity in some areas of the state during the hot and humid summer months, power has flowed largely uninterrupted in Ohio.
“- New Energy Sources. At least one new supplier in Ohio’s electric market has indicated it plans to build a new solar power facility in Ohio and is studying the feasibility of building a wind generating facility here as well.
“Electric choice is off to a good start in Ohio. The initial steps toward transition to a competitive electric market have gone smoothly, and the impact on residential consumers has been largely positive so far,” said Tongren. “However, there is much room for improvement. Certain state and federal actions are needed to promote meaningful competition and increase opportunities for savings in all areas of the state. So far, competition and consumer options have been limited primarily to northern Ohio.”
OCC’s report outlines a series of recommended state and federal actions to energize Ohio’s competitive electric market:
“- Develop a state plan for spurring competition in areas of the state where currently there are no alternative suppliers.
“- Finalize and issue rules for the competitive bidding process that utilities are required to offer at the end of their three- and five-year market development periods.
“- Identify cost-effective options for providing consumers with tools for monitoring their electric usage and improving conservation and energy efficiency efforts.
“- Develop an effective energy policy for Ohio that assures available, reliable and affordable electricity for residential customers over the long term.
“- Ensure full implementation of a single Midwest Regional Transmission Organization to ensure the smooth flow of power across regions.
“- Refine the federal mechanism for monitoring utilities’ market power to prevent it from becoming an obstacle to competition and fair prices.
“- Develop a federal mechanism for ensuring sufficient power reserves in wholesale markets.
“While electric choice is off to a reasonably good start in Ohio, the results are far from conclusive,” Tongren concluded. “At the current time, most residential electric customers in Ohio are better off than they were before electric choice took effect. But it will take time and effort for Ohio’s competitive electric market to develop and mature.”