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Electric Rate Case Spurs Rare Ad Campaigns
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Electric companies these days seem to be taking a page out of political campaign handbooks. They are running negative television commercials, buying large newspaper ads and sending direct mail.
At dollar stores and bus stops, it’s easy to start a conversation about electric rates. Carl King lives in the Northland area. He carries his latest electric bill statement in his wallet.
“Look what I’m paying for a studio. I’ve got a studio apartment; I got a refrigerator, a television” Says King.
King’s May bill shows a charge of $67. He says that’s too high and now he worries his bill will go up after seeing competing TV ads about electric service.
The appearance of the ads shows Central Ohio is changing from a heavily regulated electricity market to a more competitive one. PUCO spokesman Matt Butler says it’s all because of a state law passed more than a decade ago.
“The PUCO is working to set the state up for competition in each of the electric service territories as was envisioned by the state legislature beginning back in 1999.” Butler says.
Up until now, American Electric Power was the dominant private company providing electricity in Central Ohio. AEP produces electricity and transmits it through the power grid and then sells it to businesses and homes. But because AEP has not faced competition, it has been heavily regulated, its rates set by the Public Utilities Commission of Ohio.
Now, thanks to the new law, AEP must sell some of its electricity to other power companies – retail electric companies like First Energy, IGS, and Duke. AEP is also setting up its own retail company. AEP must sell its electricity to these firms through a yearly wholesale auction.
The retail companies would buy electricity from AEP.. and then sell it to you..
Nothing in your house would change, no new wires, no new meter. The only thing that would change is the bill, and perhaps, the rate.
The PUCO’s Matt Butler says Northern Ohio has gone to competitive pricing and seen rate reductions.
“Now, there’s no guarantee going forward that prices will always always decrease with the auction and certainly we’ll see fluctuations. But we do believe, the commission believes that the long term benefits and efficiencies gained through competition will lead to lower prices. “ Matt Butler, PUCO
But, this change to a competitive market is not happening overnight..
During a transition period, retail electric companies moving into Central Ohio will have to buy energy from AEP generating plants. AEP has asked the PUCO to increase the rate it charges retail electric companies. AEP-Ohio president Pablo Vegas maintains the higher rate guarantees the power will stay on even during periods of peak demand.
“That capacity, we call that capacity and capacity is having that generating plant available for the customer. They’re going to have to buy that capacity from AEP for the next three years.” Vegas says.
First Energy argues that capacity rate request is too high - more than ten times the competitive rates – and will hurt its effort to lower electric rates.
The PUCO Hearings are scheduled to wrap up on June 8th and a decision is expected in July.