Toledo electricity choice expands

4th utility offers competition to FirstEnergy in Toledo area

4/24/2012

It took nearly 12 years, but it now appears as if the elusive promise of choice for residential electric customers has at long last come true.

Beginning this week, AEP Retail Energy, a subsidiary of American Electric Power, is offering residential customers in northwest Ohio electric service at a two-year fixed-rate price lower than that of FirstEnergy Corp., the utility that supplies power to most of northwest Ohio through its Toledo Edison subsidiary.

With its offer, AEP Retail is now the fourth non-FirstEnergy-related electric supplier to offer northwest Ohioans alternative electric service as part of the Electric Choice program that began in 2001 but that has largely failed to provide competition for residential customers.

The other alternative suppliers with offers are Baltimore-based Constellation Energy, DP&L Energy, a subsidiary of Dayton Power & Light, Duke Energy Retail Sales, an affiliate of North Carolina-based Duke Energy, and FirstEnergy Solutions, which is a subsidiary of Akron-based FirstEnergy.

FirstEnergy Solutions was the only alternative supplier for Toledo-area customers from 2009 until late 2011, supplying power to the Northwest Ohio Aggregation Coalition buying group at a rate below that of FirstEnergy.

FirstEnergy Solutions previously supplied power to the aggregation from 2001 to 2005, but no deal was negotiated for cheaper electricity from 2005 to 2009.

Although FirstEnergy Solutions provided a cheaper rate, no other alternative suppliers competed in FirstEnergy's territory from 2003 to 2011.

Matt Butler, a spokesman for the Public Utilities Commission of Ohio, said that the lack of competition began to change in 2009 when FirstEnergy's most recent rate plan was approved.

That plan called for the utility's rates to be set at annual power auctions that allowed alternative suppliers to study the electric rates and see if they could beat them.

"It's really just been as of late 2011 that we began to see other offers start to appear," Mr. Butler said. "AEP jumped in last Monday, and Duke and DP&L have only come the last couple of months," he said. Constellation Energy arrived about six months ago.

When the Electric Choice program began in January, 2001, four alternative suppliers began competing with FirstEnergy. But the four — Advantage Energy, FirstEnergy Services Corp., Nicor Energy, and AES Power Direct — had limited amounts of power to sell because their electricity was low-priced power that FirstEnergy was required by law to make available to competitors to jump-start competition.

Two years later, when FirstEnergy no longer was required to offer low-price power to be resold, competition died.

Mr. Butler said the 2009 rate plan and its auctions lowered FirstEnergy's rates but also gave competitors insight into the incumbent utility rates. "The market has finally evolved and there's a [profit] margin there now for competitors," he added.

Anthony Rodriguez, a spokesman for the Office of the Ohio Consumers' Counsel, said that at long last electric customers can use the "Price to Compare" number on their electric bills and compare other suppliers' prices. The "Price to Compare" was part of the 2001 change allowing electric choice and lists the cost to generate power by an incumbent utility.

Currently, the FirstEnergy Cost to Compare for northwest Ohioans is 6.29 cents per kilowatt hour. So, for example, those considering AEP Retail's offer can get a price of 5.69 cents per kilowatt hour; Constellation, 6.09 cents; DP&L Energy, 6.10 cents; Duke, 12 percent off the Price to Compare, and FirstEnergy Solutions 6 percent off the Price to Compare.

"People have now gotten the opportunity to see where they're at and compare and decide if they can get a better deal," Mr. Rodriguez said.

"This is one of the first times in a long time that residential customers have had a chance to shop, so you really have to take the same approach that you take on the natural gas side," he said. "You have to be very careful and look at what people are offering, do your due diligence, and decide whether you want to make a switch or go with your utility."

Anybody who is not part of an aggregation can contact one of the suppliers on the PUCO's Web site (puco.ohio.gov).

Those who are part of an aggregation would have to opt out of the aggregation.

Mr. Rodriguez said that the auction process for other utilities has opened up competition statewide.

"AEP and FirstEnergy have been duking it out in the state for customers for some time now," Mr. Rodriguez said. "FirstEnergy has been very active in AEP territory, and now it appears that AEP is pushing back."

Mr. Rodriguez said that although the auction process has ignited competition, it is hard to know if a switch to auctions in 2001 would have created competition a decade earlier.

Just prior to 2001, California went to an auction process and that caused rates there to skyrocket. "That whole scare that they had in California really changed the way electricity was priced," he said. "The Ohio legislature didn't want that to happen, so they kind of backed away from auctions."

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.