Report: Re-regulating markets could risk $15B in savings for Ohio customers

Dive Brief:

  • Deregulation of Ohio's power markets has been a boon to customers, with a new report finding ratepayers saved $15 billion from 2011 to 2015 and could see similar benefits over the next five years, the Cleveland Plain Dealer reports. 
  • The report, from the Northeast Ohio Public Energy Council, comes as the state is considering re-regulating its power markets and investor-owned utilities are struggling to cope with low gas prices that have left some coal plants unprofitable.
  • The Plain Dealer reports the new savings analysis was released just ahead of a planned meeting between Republicans in the Ohio House of Representatives, FirstEnergy and American Electric Power, and independent power producers.

Dive Insight:

Power companies in Ohio are working to press lawmakers to re-regulate the state's electricity market, and The Plain Dealer reports utility officials and Republicans in the state's legislature were getting together last week to consider how to move forward. Cheap gas has thrown the sector into turmoil, with the largest utilities saying they will shut down or sell several plants that are no longer profitable.

But according to the Northeast Ohio Public Energy Council, re-regulating the state's power markets would rob consumers of billions in anticipated benefits. The group says consumer ability to shop for power supplies, combined competition from efficient gas plants, has put pressure on utilities' standard offer. But while the price of generation has fallen, NOPEC said the cost of delivery has risen, obscuring some benefits.

"Unfortunately, the regulated portion of electricity ... has been trending upward at the same time that competition has been pushing the generation portion of the costs down," the report concluded. "As a result, the overall cost of electricity has not fully reflected the savings achieved through deregulation."

Both First Energy and American Electric Power have said they are considering selling or shuttering plants, if a solution cannot be reached. Ohio utilities have made several attempts to win support for struggling generation. Over the summer, the Ohio Supreme Court rejected DP&L's Service Stability Rider, aimed at easing the transition to a competitive market.

Last month, the Public Utilities Commission of Ohio rejected a virtual power purchase agreement proposed by FirstEnergy,and instead approved a Distribution Modernization Rider that was about half the size requested. The utility responded by saying it may sell more than dozen power plants within the next 18 months, including several nuclear plants. Similarly, AEP has said it is working to sell several coal plants if they cannot be made profitable.

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Filed Under: Generation Regulation & Policy