Overview
Senate Bill 3, passed by the Ohio General Assembly in 1999, opened Ohio to electric competition.Customers were no longer required to take generation service from their host utility and could contract with a competitive retail electric supplier, or “CRES” for their power needs.The transmission and distribution of electricity remained regulated and monopoly-owned by the state utilities.Retail electric competition was an early success in the state but has since pulled back to a large extent.

History
Ohio’s initial foray into retail electric competition went particularly well, and for a brief period boasted the highest amount of customers on competitive supply of any deregulated state.Part of that success was attributable to a handful of large aggregation programs that pooled together large volumes of residential customers and shopped for competitive supply that would beat the utility rates.

A “market development period” was built into the design of the restructured market, and tariff generation rates were set such that many customers were able to save money on their electric bills by switching to a CRES.The market development period was slated to end December 31, 2005, and rates were to be adjusted to reflect the price of electricity in the wholesale market.

After much debate, the Public Utilities Commission of Ohio (PUCO) decided that neither the retail electricity market nor the wholesale electricity market were developed enough to warrant a move to market based pricing, and that customers would not benefit from such a move.As an answer the PUCO together with the Ohio utilities worked out so-called Rate Stabilization Plans (RSPs) that were intended to control generation prices and continue a slow transition to a competitive market.

Rate formulas under the various RSPs are complicated, and the resulting generation rates against which customers compare competitive offers are almost never reflective of true market conditions.In most cases, the utility generation rates are well below market rates, even though overall customers have been saddled with rate increases to their bundled bills.The RSPs generally run through the end of 2008, but some of the utilities have already filed for extensions.

Due to the crafted RSPs, electricity shopping in Ohio has been dramatically reduced over recent years, and several suppliers have left the state.Political and regulatory wrestling to find a proper approach will have a great impact on the future of electric competition in Ohio.Much work remains to be done.

Strategic Energy is a registered supplier (CRES) in Ohio and offers energy products with varying terms and pricing to non-residential customers in the following service territories:

• American Electric Power (AEP, comprised of Columbus Southern Electric and Ohio Power) — The largest utility in the state.
• Duke Energy (f/k/a Cinergy) — Duke Energy’s retail electric program is the most active in the state.
• FirstEnergy (In Ohio holds Toledo Edison, Cleveland Electric and Ohio Edison) — The aggregation program in FirstEnergy (NOPEC) was previously the largest in the country, but is now dissolved.
• Dayton Power and Light — A small utility serving the Dayton and surrounding areas that due to its rate structure has seen little success with retail competition.

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