Energy Choice Works and Must Continue as Reregulation Threats Again Surface, Researchers Say
Allowing Ohio consumers to choose their electric supplier in a deregulated market continues to save ratepayers nearly $3 billion per year – or about $261 annually per household — according to a new study by researchers at Cleveland State University (CSU).
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That savings, which totals $37.5 billion since 2011, means the average Ohio household saved about $3,400 over that period. Commercial and industrial users on average saved $1.6 billion annually from deregulation, according to the study by Cleveland State University's Levin College of Public Affairs and Education.
“This new study examines an important time period in Ohio's electricity markets: the pandemic and post pandemic era, during which time U.S. retail electricity markets have experienced some turmoil,” the CSU researchers said. “What we have learned is that deregulated markets continue to save Ohio ratepayers nearly $3 billion per year – including during the recent period of energy market upheaval.”
“The latest threat to deregulation and the clear benefits it provides to Ohio's electric consumers and the state economy is coming in the form of reregulation efforts driven by investor-owned utilities under the guise that there's a severe shortage of generation capacity that only they can adequately address,” said ChuckKeiper, Executive Director of the Northeast Ohio Public Energy Council (NOPEC).
“Despite the unquestioned benefits of marketplace price competition and energy choice, the utilities are using that scare tactic to take a run at reducing competition and removing choice from consumers,” Keiper said. “The findings in this study underscore just how costly that would be for Ohio ratepayers,” Keiper added.
NOPEC, which commissioned the first study on the effects of deregulation in 2015 and then a second study in 2019, again asked researchers to update the findings and validate projected savings, Keiper said.
NOPEC is a nonprofit council of governments that works cooperatively to provide a competitive environment for energy and cost savings for the nearly 900,000 residents and small businesses it serves in more than 240 communities in 19 Ohio counties.
“Concerns about power generation and reliability are real, particularly in the face of increasing demand driven by economic growth, electrification trends and extreme weather patterns,” Keiper said. “But the answer in Ohio is not to turn away from deregulation and financially penalize consumers.”
The Ohio Energy Group (OEG), a 28-member collection of energy-intensive utility customers that includes several Fortune 50 companies, recently addressed that demand and also refuted the push for reregulation by investor-owned utilities to increase generation.
“There must not be reregulation,” the OEG said. “The right of consumers to shop for competitive generation…must not be changed. There must be no change to government aggregations programs.”
In fact, the latest study showed deregulation in Ohio has spurred investing in new generation.
Researchers compared the three fully regulated states of Michigan, Indiana and Wisconsin with Ohio, Pennsylvania and Illinois, which have deregulated generation.
“Competition has driven down average electricity prices in the three deregulated Midwestern states, while their regulated peers have seen a steady increase in the price of generated electricity,” the study said. “Ratepayers in these regulated states are saddled with the cost of aging, uneconomic power plants, while competitive markets in the deregulated states have incentivized investment into new, efficient and cost-effective generation and have accessed wider, multi-state markets for generated electricity.”
The study continued: “Despite the many benefits of competition, Ohio has been faced with efforts to undermine the viability of its deregulated electricity markets. Investor-owned utilities have exploited flaws in Ohio's regulatory and legislative systems to obtain cross-subsidies to support unprofitable generating facilities (for example, Ohio's House Bill 6 continues to subsidize coal plants). These efforts threaten to undermine the full benefits consumers might otherwise realize from competitive markets and deregulation.”
Ohio consumers recognize the value. One statewide poll conducted after deregulation had been fully in place for years showed that nearly 79 percent of Ohio voters would oppose any legislation that did away with a consumer's ability to shop for power suppliers.
“Deregulation has been a marked success for the Midwestern states of Ohio, Illinois and Pennsylvania,' the new study said.”It has kept generation costs low, even as other components of the cost of electricity have risen faster than inflation.In Ohio, this has meant ratepayer savings of some $37 billion over the last 15 years, and $16 billion over the last five. Ohio will continue to enjoy such savings in the coming years so long as its electricity generation markets are fully deregulated.”
To read the full study and to learn more about how to support energy choice, go to nopec.org/white-papers.
ABOUT NOPECNOPEC (Northeast Ohio Public Energy Council) is a non-profit group of over 240 communities in 19 Ohio counties that negotiates exclusive energy rates for its members. As Ohio's largest governmental retail energy aggregator, NOPEC buys gas and electricity in bulk to help lower customers' utility bills. Since 2001, NOPEC has saved residents and businesses hundreds of millions of dollars on their energy costs, awarded more than $53 million in energy-efficiency grants to NOPEC member communities and helped protect Ohio consumers by advocating for consumer-friendly energy policies to protect against unfair utility rate increases. For more information about NOPEC, visit www.nopec.org.
Contact: DaveJankowskiChief Marketing & Communications OfficerNOPECdjankowski@nopec.orgO: (440) 249-7828C: (216) 408-8012
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