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Published: Wednesday, 12/8/2010

24% of Ohio homes buy power from alternatives

Millions of household electric customers in Ohio, Texas, and Connecticut fled their local utilities in the past year, switching to competitive power suppliers including Constellation Energy Group and NRG Energy Inc., according to an industry report.

Almost 24 percent of Ohio households were buying power from alternative suppliers as of June 30, according to the report to be released this week by the Distributed Energy Financial Group and funded by competitive energy retailers.

In Texas, judged by the group as the most competitive state for power retailing, more than half of customers were buying power from utility rivals, said Nat Treadway, the report's author.

A two-year slump in wholesale power prices has helped retailers win over residential customers. A dozen states and the District of Columbia allow households to choose their power supplier, although the energy itself is still delivered through wires owned by the local monopoly utility.

Most customers stuck with state-regulated standard utility power rates, except in Texas, which abolished them three years ago, Mr. Treadway said.

"Wholesale prices matter," he said. "Ultimately, the idea is to generate enough competition to provide products and services people want."

A survey by Texas utility regulators showed that only 13 percent of electrical customers have either switched to competitors or switched to a different plan offered by their legacy power company, Mr. Treadway said. Customers can chose to lock in prices, pay the same monthly amounts, or specify that they buy power from renewable sources such as wind farms.

ConEdison Solutions, the competitive retailer of New York utility Consolidated Edison Inc., benefitted as 32 percent of Connecticut households switched from utility plans, up from 18 percent last year, said Christine Nevin, a spokesman for the company.

"Our price when compared with the utility for standard power was lower," Ms. Nevin said. "Our green power offer is comparable to the utility price." Residential customers began switching after seeing lower prices advertised for months, she said.

Wholesale power has averaged $52.59 a megawatt-hour this year in PJM Interconnection LLC, the largest U.S. power market, 23 percent below the previous five-year average, according to data compiled by Bloomberg. The average price tumbled 47 percent to $44.55 last year after the global financial recession cut industrial demand.

In Ohio, a PJM state, 57 percent of residential customers at FirstEnergy Corp.'s Cleveland Electric Illuminating Co. and 44 percent of its Ohio Edison customers switched to competitors in the year ended June 1, according to the report. FirstEnergy, like many utility owners, formed a retail subsidiary to compete with rivals and, now that wholesale prices have fallen, with its own utilities.

Duke Energy Corp., owner of Cincinnati's utility, sells electricity to residential customers at 15 percent below the regulated rate, according to the Public Utilities Commission of Ohio's Web site. Duke Chief Executive Officer Jim Rogers told investors the retail unit kept 60 percent of customers who opted to switch from the utility.

Duke Energy Ohio on Nov. 15 proposed moving to market-based rates.

"Customers clearly have embraced the competitive marketplace in Ohio," Julie Janson, president of Duke's Ohio subsidiary, said in a statement. "They like having a choice over their generation supplier."


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