December 12, 2013
Ohio is “the best-looking girl at the dance” because its utility regulators are looking to expand electricity competition at a time when several other states are holding steady.
That comment from Pat Wood, a former Texas utility regulator, was part of a daylong hearing as the Public Utilities Commission of Ohio considers ways to take the next steps in deregulation.
While Wood wants to see more competition, consumer advocates are wary of potential changes, which they say would provide clear benefits to energy companies and only the hope of benefits for many customers.
Ohio is one of about a dozen states that allow consumers to choose their electricity and natural-gas provider, the result of a push to overhaul the systems in the late 1990s and early 2000s.
Yesterday’s hearing was the final one in a PUCO investigation that began late last year. The likely next step is for the agency’s staff to compile findings; there is no timetable.
The PUCO is looking at a variety of potential changes, including the phase-out of regulated pricing for electricity. Now, consumers can choose between the regulated price offered by the utility and a series of unregulated options from alternative suppliers.
Many of those suppliers — which have names such as IGS Energy and Direct Energy — say they are at a competitive disadvantage, because customers automatically receive the regulated price unless they choose otherwise.
At the same time, consumer advocates say that the regulated price is an essential protection for people who may not understand how to shop for electricity service. They also say that the PUCO cannot eliminate regulated pricing for electricity without a change in the law by the General Assembly.
AARP, the advocacy group for retired people, made this case in its testimony last spring, saying the PUCO’s investigation appears to ignore the potential harm of any “radical change to the current default service policy on Ohio’s residential customers.”
The opening panel yesterday was made up of deregulation advocates who outlined their belief that open markets lead to low prices.
“When you give customers a choice, they take it,” said Bill Massey, an attorney for the Compete Coalition, a group of businesses that support open markets for electricity. “They love shopping."
Wood, the former Texas utility commissioner who is now a Houston-based consultant, said Ohio’s enthusiasm for open markets reminds him of “the halcyon days of Texas.”
He was referring to his tenure with the Texas commission from 1995 to 2001, when the state restructured its market so that electricity sales are handled exclusively by unregulated companies instead of regulated utilities.
At that time, many states were moving in a similar direction, including Ohio.
But that trend has slowed almost to a stop. Today, about a dozen states and the District of Columbia allow customers to choose their energy provider. The remaining states either have limited “ choice” programs or no programs at all.
This year, Arizona’s utility commission abandoned an attempt to create a program. In Pennsylvania, whose system is similar to Ohio’s, regulators concluded their own electricity-market investigation without making significant changes in that state’s system.
In this context, advocates for deregulation view Ohio as one of the best opportunities in the country to advance their cause.
“We are apostles for the future market,” Wood said.