Electric choice: Know your choices

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Since Jan. 1, 2001, most Ohioans have been eligible to shop for the source of their electricity. Thanks to a new state law, customers can choose from among competing electric suppliers, or they can choose to stay with their current electric utility.

How does it affect me? Even after seven months, some consumers are wondering: What does electric choice really mean to me? And more importantly, where are all the choices?

These questions are especially relevant to consumers in Ohio’s rural communities, many of whom are served by rural electric cooperatives.

Co-op customers will be able to choose their electric supplier only when and if their local cooperative chooses to participate.

Although they have the option of doing so, most co-ops so far have taken a “wait and see” approach to electric choice and have not yet opened up their electric markets to competition.

On the otherhand, rural customers served by an investor-owned utility – AEP, Cinergy, Dayton Power and Light, or FirstEnergy – have been free to participate in electric choice since January.

Know your choices. Whether you are a co-op customer or a utility customer, it is important to understand your options under Ohio’s new electric choice law – even if the market currently is short on choices.

While the electric choice law came in with a great deal of fanfare, the lack of electric suppliers to date has resulted in little noticeable change to the average Ohioan.

For some, this may be a disappointment; for others, it means they can take their time to learn how electric choice works, how to participate when the opportunity arises, and how to protect themselves against possible frauds and scams.

Why waiting is good. There’s another advantage to the slow development of Ohio’s competitive electric market: added consumer protection.

Ohio lawmakers took a cautious, long-term approach to electric choice. They crafted legislation that shelters consumers from the problems that often occur in the early days of developing markets – such as the power shortages and wild price swings California consumers currently are facing.

So, while electric supplier choices may be limited right now, so are risks to consumers.

Despite the current lack of supplier choices, residential consumers served by investor-owned utilities are already saving money through electric choice.

Advantages. The new law includes a mandated rate freeze for these customers and a guaranteed 5 percent reduction in the generation component of their electric service. (That’s the cost of producing the electricity, which accounts for about one third of your electric bill.)

These benefits are guaranteed for the next three to five years, depending on the part of the state, for customers who elect not to switch suppliers or who have not yet had the opportunity to switch.

While waiting for new supplier choices to emerge, smart consumers will take advantage of the many resources available to help them learn about electric choice.

Information resources. One of these is the Ohio Consumers’ Counsel, the state agency that represents residential utility customers. The counsel is working closely with Ohio’s electric utilities to help consumers in both urban and rural markets become informed electricity “shoppers.”

Much like making stock market investments or buying a home, consumers must evaluate all available options. Consumers who “do their homework,” and learn how and where to get their questions answered, are much more likely to make decisions that are right for them when electric supplier options finally become available to them.

Avoid scams. As in any new marketplace, there is the potential for abuse of the system and fraudulent sales practices. Here are some useful tips from OCC for avoiding scams:

* Verify supplier certification and claims through the OCC.

* Get all offers in writing (and read the fine print).

* Be wary of offers that seem “too good to be true.”

* Above all, don’t make a snap decision. There’s no need to feel pressured to make a decision before you’re ready – or before all your questions have been answered.

Do nothing and save. Remember: If you do nothing, you will still receive the 5 percent savings on the generation component of your electric bill. Whether you switch suppliers or not, you’ll still receive the same reliable service from your local electric utility.

This new law also establishes quality and reliability standards for electric suppliers, and prohibits suppliers from providing false or misleading information, or from switching customers without their permission.

In addition, the law authorizes OCC to closely monitor suppliers’ sales practices and, if appropriate, to take legal action to help residential customers resolve problems they may have with suppliers.

Rural electric customers served by investor-owned utilities can get information about electric service suppliers, offers, or contract terms by calling the Ohio Consumers’ Counsel toll free at 1-877-742-5622 or by visiting OCC’s Web site www.pickocc.org. Rural co-op customers interested in electric choice should contact their co-op directly.

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