Research & Reports / Utilities

Electric bills $1 billion higher: OSU analysts urge state to require traditional utilities to sell power plants

An analysis of Ohio consumer electric bills since 2009 by Ohio State University economists has found that consumers are paying higher electric bills today than they did before de-regulation. The study follows an earlier OSU-Cleveland State University study found that the auction-based standard service offer and the ability of consumers to switch to independent competitive suppliers saved on the price of power itself. But state regulators, following a change in the law in 2008, have allowed electric utilities to jack up delivery rates by adding special rate “riders,” the new study has determined. (Ohio State University)

COLUMBUS — “Ohio should require its traditional electric utilities to sell off their power plants, a team of Ohio State University analysts has concluded and is urging lawmakers to consider requiring that.

‘Our recommendation is that the state should do it [deregulation] right,’ said Noah Dormady, an energy and environmental economist and public policy scholar at OSU’s John Glenn College of Public Affairs.

‘Scholars have known since 1983 that you need to separate the wires business from the generation [power plant] business and move to a market-based system to set prices or rates,’ said Dormady.

But that never happened in Ohio. Instead, the state allowed the old utilities to create wholly-owned subsidiaries which are supposed to run the power plant business ‘at arms length.’

The result? A ‘mess,’ said Dormady, describing how a change in the law in 2008 has allowed the companies to avoid ‘market rate plans’ and instead propose ‘electric security plans’ to the PUCO.”

— John Funk, Cleveland Plain Dealer

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