Wednesday, March 15, 2017

Ohio's restructured electricity market has cost households at least $1 billion

Ohio's restructured electricity market has cost households at least $1 billion since 2009, according to a new study by The Ohio State University's John Glenn College of Public Affairs. 
The report co-authored by Professor Noah Dormady, Glenn College doctoral student Zhongnan Jiang and Matthew Hoyt, an economic analyst at Exeter Associates finds that households in Ohio have never seen the benefits of competition, but have instead been forced to subsidize the losses of an aging coal fleet through a system of inflated riders and surcharges on their home electricity bills.

“Our findings stand in stark contrast to the competing analyses that have found mixed or favorable effects associated with retail restructuring,” said Dormady.   “We believe that much of this is due to the fact that the retail restructuring design of SB 221 created a perverse system by which commission intervention distorted true market-basis pricing…In essence, true retail deregulation never occurred in Ohio—and while wholesale prices declined, retail customers generally saw increasing total bills due to the regulated portion of their bill, that is riders and surcharges.”

To help reduce the incentives for utilities to inflate electricity costs to households and allow them to experience the intended benefits of competition the study provides important recommendations for correcting Ohio’s restructuring problems. Under the current system, customers have been overpaying for generation. They have been paying for generation through their energy costs, and they have been paying for generation through riders and surcharges on their monthly bills.

To read the full report go to glenn.osu.edu/research/policy. For more information contact Dr. Noah Dormady at 614-688-1668 or email him atdormady.1@osu.edu.

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