Utilities. Chapter 3

Transcription

1 Utilities Chapter 3 56

2 Public Utility Rates: Who s in Charge? Q.: Who controls the rates I pay for public utility services such as telephone, gas, electricity, water, and sewer? A.: The Public Utilities Commission of Ohio ( PUCO ) sets the rates for investor-owned utilities ( IOUs ), which provide most of the utility services in Ohio. These include companies like Verizon North, SBC, AEP, Cinergy, Columbia Gas, Dominion East Ohio, First Energy, and many other private companies. Some cities and villages provide utility services usually water and sewer; their rates are set by the city or village council. The remaining utility services are provided by non-profit associations like the rural electric cooperatives ( co-ops ). Their rates are set by their customers. Customers in some parts of Ohio have a choice in purchasing natural gas and the generation component of electricity from non-public utilities, but the distribution rate they pay is still subject to PUCO regulation. Q.: Can a customer shop around and buy a portion of his or her energy service from a non-utility? A.: Yes. Currently, a gas customer who happens to receive service from Columbia Gas, East Ohio Gas, or CG&E, may qualify to choose his/her own third-party gas supplier. The gas supplier, or marketer, would charge the customer only for the gas itself. That supplier s rates are not regulated by the PUCO. However, comparison of such gas rates contained in an Apples-to-Apples chart is available by logging onto the PUCO s Web site ( and clicking on the link for the topic, Consumer Education. These programs which allow a customer to choose his/her own gas supplier are known as Customer Choice programs. Customers who participate in Customer Choice programs must continue to pay the public utility (such as Columbia Gas, East Ohio, or CG& E) base rates to distribute the gas to the customer s premises. Not all gas companies offer Customer Choice programs and not all Customer Choice programs are available to every customer. As a result of Amended Substitute Senate Bill 3, beginning on January 1, 2001, electric customers will be able to choose their own generation supplier of electricity whose rates will not be regulated by the PUCO. However, electric customers who switch must continue to pay electric utilities rates for the transmission and distribution of electricity as well as transition charges for the next 5 to 10 years. Transmission, distribution, and transition charges will continue to be regulated by the PUCO; generation charges will not. Under this new legislation, residential customers will see a small reduction in rates. In addition, all customers who switch to a different generation supplier should receive a shopping incentive designed to encourage switching. 57

3 Q.: What is the PUCO? A.: The PUCO is a state agency located in Columbus which has responsibility for regulating the rates and services of Ohio s regulated utilities. It consists of five commissioners, each of whom is appointed by the Governor for a five-year term from a list of candidates provided by a special nominating council. Each commissioner is required to have experience in the fields of economics, law, finance, accounting, engineering, or sciences. PUCO commissioners are assisted by a staff consisting of accountants, economists, engineers, rate analysts, attorneys, and other support staff members. The staff not only advises the commissioners, but also has a very important role in the rate-setting process. Q.: Why do we need a PUCO? A.: Most utility services are monopolies with no competitive market for setting prices or quality standards. In order to prevent these monopolies from abusing customers by over-charging them, the Ohio legislature created the PUCO in The PUCO was empowered to regulate the rates and services of utilities by balancing the interests of utility customers with those of utility investors. Now, as some utility services are becoming competitive, the legislature is beginning to de-regulate them. For a utility company which is competing with others in the marketplace (much like any other company), the market would replace the need for regulation by the PUCO. Q.: How does the PUCO set my utility rates? A.: Rate cases at the PUCO usually are initiated by the public utility, although they may be initiated by customers or the PUCO itself. Generally, the utility begins the process by notifying the PUCO and the mayors of the affected areas of an intended rate increase. After the utility files a standardized application with numerous exhibits explaining why the increase should be approved, PUCO staff members analyze the information contained in the application and make field visits to review the utility s property, invoices, and accounting books. Approximately five months later, the PUCO staff files a document detailing its findings, conclusions, and recommendations. Other parties such as the Office of Consumer's Counsel (a state agency representing residential consumers), commercial customers, industrial customers, cities, as well as the applicant utility itself, may file objections to the staff s findings. Hearings are then scheduled so that witnesses supporting the positions of the parties for and against the rate increase may be cross-examined. At the end of the hearings, written arguments (briefs) are submitted. After reviewing the application, staff report, and the record of the hearing and briefs, the PUCO renders its decision to grant, modify, or deny the rate increase. The entire rate case process usually 58

4 takes between ten and twelve months. Any party dissatisfied with the PUCO s decision may appeal to the Supreme Court of Ohio. The appeal process may take more than a year. by Stephen M. Howard, an attorney with the Columbus firm of Vorys, Sater, Seymour and Pease, LLP. 59

5 PUCO and Public Utility Rates: How Are They Set? Q.: Is there a formula that is used in setting public utility rates? A.: Yes. The Ohio legislature has prescribed by law the general formula which the Public Utilities Commission of Ohio ( PUCO ) must follow when deciding how much a utility may charge for its services. That formula is: Rate Base x Rate of Return + Allowable Test Year Expenses = Revenue Requirements. The first component of the formula, known as the rate base, is the amount of dollars that the utility s owners have invested in the company. Rate base is reduced each year as it is used up or depreciated to provide the utility s services. The second part of the formula is a reasonable and fair rate of return to investors of the utility. In recent years, it has been set at a rate of between 8 percent and 13 percent. The rate base is multiplied by the rate of return to produce the level of authorized income which the PUCO deems appropriate. The third part of the formula is the allowable level of expenses of the utility. These expenses include labor, operations and maintenance, insurance, depreciation, etc. Certain expenses are not allowed to be included, and others may be subject to adjustments. The sum of the authorized income plus the allowable expenses equals the utility s revenue requirement. If the utility s current revenue levels are less than this revenue requirement, a revenue increase is necessary. Q.: How does this revenue requirement translate into increases in rates on a consumer s bill? A.: If the utility needs a revenue increase, the PUCO must determine how that revenue increase should be recovered from the various customer classes. Most utilities have more than one customer class (such as residential, commercial, industrial, etc.), and the costs of serving these various classes of customers may differ. The PUCO must determine the appropriate revenue responsibility of each class of customer and then must design specific rates for each class. The utility is then ordered to file new rates (called tariffs ) that carry out the PUCO s directive. 60

6 Q.: On electric bills there is a figure known as the electric fuel component ( EFC ) rate, and on gas bills there is a figure known as the gas cost recovery ( GCR ) rate. Are these figures established in the same way? A.: No. The EFC rate recovers an electric utility s cost of fuel used in producing the electricity it sells. It represents the average cost per unit of electricity, or KWH of the fuel (usually coal, oil, or nuclear fuel) which the electric company burns to provide electric service. That EFC rate may be changed every six months and is reviewed and monitored in another type of proceeding. It usually varies between a penny and a penny and a half per KWH and represents about 10 percent to 20 percent of the residential consumer s monthly electric bill. Likewise, the GCR rate on a gas bill is the average cost per unit of gas (or MCF ) the natural gas utility pays for the gas that is delivered to your meter. This rate is also reviewed independently by the PUCO and can change every three months. It varies between $2 and $6 per MCF and makes up about 60 percent to 70 percent of a residential consumer s monthly natural gas bill. The EFC rate and the GCR rate simply flow the utility s costs through to the customers. They include no profit or any expense other than the utility s cost of the fuel or the natural gas. by Stephen M. Howard, an attorney with the Columbus firm of Vorys, Sater, Seymour and Pease, LLP. 61

7 Know about Customer Choice Programs When Selecting Your Gas Company You may have already been visited by sales people from companies that are offering to provide your business with natural gas service. These companies want to compete with your current gas service company. Not all of the state s gas companies, which are regulated by the Public Utilities Commission of Ohio ( PUCO ), are offering what are called Customer Choice programs. In some instances, participating gas companies are not offering the program in all parts of their service territories. This article highlights sources of information for making decisions about natural gas service choices Customer Choice and warns about unscrupulous marketing practices of some of the players in these programs. In response to these unscrupulous sales practices, the PUCO has adopted minimum service requirements for the solicitations, enrollment, and provision of service to customers by those who market gas service under the Customer Choice programs. Q.: Who is responsible for overseeing the Customer Choice programs in the retail gas market? A.: The PUCO and, in particular, the PUCO s Director of Consumer Services, is monitoring competition in the retail gas market s Customer Choice programs, certifying competitive providers, providing dispute resolution services, and providing educational services for small businesses as they seek information and guidance with the now competitive and highly technical but essential utility services. Q.: What is natural gas choice? A: Natural gas choice is the result of voluntary programs developed by four Ohio gas companies: Dominion East Ohio, Columbia Gas of Ohio, Cincinnati Gas & Electric and Vectren Energy Delivery of Ohio. Gas choice allows customers to select a supplier or continue to purchase natural gas from the local gas company. As a result of these choice programs consumers can shop and compare prices for natural gas, just as they would for any other goods or services. Q: How can a customer begin to explore options? Is there a deadline for making a decision? A: Customers can choose a supplier at any time but should first learn about the natural gas choice program and consider available options. In order to make an informed decision, consumers should do some comparison shopping. Questions to ask each supplier can include: Are you a PUCO-certified supplier? Is there a fee to sign up? For what period of time am I obligated to stay with a supplier? 62

8 Can I cancel my agreement with the supplier at any time? If so, is there a cancellation fee? Is there a customer incentive for signing up? Will I receive one or two bills each month? How much will I pay for natural gas from a supplier? What happens when my contract expires? What will I pay for gas if I stay with the local gas company? When will this regulated rate change? What kind of rate is the supplier offering? Is it a fixed rate for the agreement period? If the rate is variable, how often will it change and what factors will determine the rate? Are there any special add-on services? Is there a budget plan? Q: What if a customer decides not to choose a particular gas supplier? A: If a customer does not choose a particular supplier, that customer remains with the local natural gas company, and the local company will continue to supply natural gas at a regulated rate. The regulated rate, known as the Gas Cost Recovery ( GCR ) rate makes up approximately two-thirds of a customer s monthly bill and typically changes each quarter based on the company s actual cost of providing gas. Q: Will a customer save money by choosing a new natural gas supplier? A: There is no guarantee that every supplier offer will save a customer money each month. Gas choice programs allow for customers to seek opportunities to save money and for suppliers to promote competitive offers in hopes of attracting new customers. Many factors, including weather, gas usage and the natural gas company s regulated rate can impact potential savings. It is important to research the available offers and decide if choosing a supplier will save money. Q: Can local governments create buying pools and negotiate an offer to supply natural gas to customers in their community? A: Yes. This is called aggregation. Specifically, aggregation is the process by which consumers join together in a large group to buy a commodity such as natural gas. A law passed by the Ohio General Assembly and signed into law by Governor Taft on March 27, 2001 authorizes local governments individually, or in conjunction with other local governments, to aggregate their constituents for the purchase of natural gas. Affinity groups, such as trade associations and professional groups, may also form buying pools to purchase natural gas. 63

9 Q.: How does a consumer know if the supplier is a reputable company? A.: The PUCO certifies the natural gas suppliers to ensure they are sound companies, and PUCO rules govern suppliers marketing, solicitation, and enrollment practices and ensure that contracts with consumers contain sufficient information to enable consumers to make informed choices. Q.: What kinds of problems have consumers encountered as they choose gas providers? A.: The PUCO s consumer services group has received reports from consumers about the following practices: Sales people who mislead customers into believing that they are signing up to continue taking service from their incumbent gas company (meaning the company that has served area customers before the Customer Choice programs). Sales people who make offers or claims that are different from or not included in the written service contract that the business owner is asked to sign. For example, some consumers are being told that they can switch to any other natural gas company at any time, even though the written contact binds the consumer for a specific term up to five years. You should never sign a contract when the sales person s claims are different from or omitted from the written contract. Sales people may ask consumers to sign a statement that allegedly only verifies that the sales person spoke with the business owner, when in fact the statement is a contract for service with a natural gas company. Sales people may misrepresent the savings a consumer will enjoy if the business is switched to the new company. Some calculations compare the new company s rates to the highest rates that have been charged in the incumbent company s recent history, rates often driven by market or weather emergencies and thus not representative of a typical period of time. Q: Who can provide small businesses with more information on natural gas choice? A: The Public Utilities Commission of Ohio ( PUCO ) also can provide consumers with information about the natural gas choice programs. The PUCO s Natural Gas Choice brochure is a guide to choosing a natural gas provider. To get an Apples-to-Apples comparison of rates between these companies, log onto the PUCO s Web site ( For information applicable to your area, look for the name of your serving incumbent gas company. Under the name of each company, you can click to obtain general information about natural gas service choices, a list of 64

10 companies which have registered to participate in the current Customer Choice programs, and an Apples-to-Apples comparison chart of competitive providers offers to allow you to compare rates of various companies providing gas service in your service territory. PUCO Apples-to-Apples charts provide straightforward, unbiased information to assist consumers, and are the only charts in the state the require suppliers, under penalty, to provide accurate, up-to-date information about their latest offers. The PUCO can verify every offer listed. A copy of PUCO s door-to-door solicitation rules is available on the PUCO Web site and from participating gas companies. While the solicitation rules apply only to residential customers, small business owners would benefit from knowing these rules in order to protect themselves from unscrupulous practices. To obtain a free copy of the Apples-to- Apples charts, or for additional information about choosing a natural gas supplier, contact the PUCO at (800) [TDD: (800) ] or visit by Mary W. Christensen, a partner in the Columbus law firm of Christensen & Christensen, and the Ohio Consumers Counsel, with updated material provided by the Public Utilities Commission of Ohio. 65

11 What You Should Know about Telephone Service The following articles address various aspects of telephone service to consumers, including businesses. Choosing A Local Telephone Company Q.: How can I choose a local telephone company now that there s competition? A.: Competitive local telephone service has become an important option for businesses, including small business. A company can learn about the players in the newly competitive local telephone market and the qualified competitors of the incumbent local exchange carries (such as SBC, Verizon or Sprint) by calling the Public Utilities Commission of Ohio ( PUCO ) at: (800) (voice) or (800) (TDD) (toll free in Ohio only). From out of state, call (614) or (614) (TDD). Or, write to the PUCO at: 180 E. Broad St. Columbus, OH Or, visit the PUCO s Web site at where the Guide To Selecting a Local Telephone Provider, Telephone Customers Bill of Rights and other consumer information is posted in the telephone section. Of particular importance to small businesses is the PUCO s extension of its consumer services, such as informal dispute resolution, to small businesses. Unique to small businesses in the competitive market is the possibility of aggregating its service needs with other businesses so that even a small business can enjoy the lower rates available to large businesses. Q.: How will I know if it makes economic sense to switch my local telephone service? A.: You need good price information. All local telephone companies must file tariffs with the PUCO describing their services and the rates and terms for those services. Under the PUCO s Minimum Telephone Service Standards, a copy of the particular local telephone company tariff must be available either at a telephone company location in your local calling area or from a telephone company by first-class mail, for which you can be charged, within five days of your request. If you cannot understand the tariff, you might describe your calling habits or information about recent billings to each telephone company in whose service you are interested. Ask about any additional charges to bring the service to your premises. Get the estimate in writing. Don t sign a contract for service until the services and prices are included. Do not sign a contract in which the terms are different from the sales person s offer. Do not, however, provide companies 66

12 with copies of your bills or current account number. Unfortunately, some unscrupulous sales personnel take customer information from bills, including the account and telephone numbers, and move consumers from their current telephone company s service to their employer company s service without the consumer s knowledge or consent (this is called slamming ). If you are not satisfied with your new service or savings, you can switch to another company s service. Do not sign any contracts that bind you for any minimum service period unless you are confident that the chosen company or service will suit your long-term needs. In many areas of the state, you can switch and keep your telephone number as long as you remain within your calling area. Most importantly, if you do not understand service offerings or the rates that you will be charged, consider engaging the services of a telecommunications consultant. A few dollars spent on such help can prevent many hours of aggravation, service unavailability, and unexpected telephone costs. Q.: What are the risks involved in switching local telephone service? A.: The PUCO s Minimum Telephone Service Standards ( MTSS ) and a consumer hotline provide support for consumers, but these rules and services are not insurance against telephone service disruptions. Some consumers have switched to new telephone companies to gain some leverage in their dealings with the incumbent telephone company. They think that their new telephone company (one that resells the incumbent s service) will have better resources and power to deal with the incumbent than they do as individual customers. Unfortunately, some consumers have found themselves in a dispute with not one, but two telephone companies when the new local telephone company is either unwilling or unable to advocate on behalf of its customer. This lack of support from the new company often results from poor company records. You must be sure that all paperwork you sign when changing companies is correct and complete and that it is clear that you are the customer. Otherwise, you risk losing your telephone service or the use of your telephone number. If you are switching from one telephone company to another at the same location or in the same service area, be sure to complete correctly a letter of agency, which authorizes your current telephone company to transfer your service to your new telephone company. Keep copies of everything that you sign. by Mary W. Christensen, a partner in the Columbus law firm of Christensen & Christensen. Updated by Public Utilities Commission of Ohio ( PUCO ). 67

13 Telephone Customers Have Rights Q.: I m a small business owner. How can I find out what rights I have as a telephone customer? A.: The Public Utilities Commission of Ohio s ( PUCO ) Telephone Customers Bill of Rights fully describes a telephone customer s rights and responsibilities under the PUCO s Minimum Telephone Service Standards (MTSS). For a copy of the Telephone Customers Bill of Rights or any PUCO publication, call the PUCO consumer hotline at (800)686-PUCO (7836) or visit the PUCO s Web site at Q.: Must telephone companies doing business in Ohio give customers a minimum level of service? A.: Yes. All companies providing local and long-distance telephone service to Ohio residential and small business customers must comply with the state's Minimum Telephone Service Standards ( MTSS ). Customers may be entitled to credits toward their local telephone account if the telephone company does not follow these standards. Additionally, the Public Utilities Commission of Ohio ( PUCO ) can levy fines against companies that violate any part of the MTSS. Q.: What if a customer has trouble getting telephone service installed? A.: According to the MTSS, service must be established within five business days of a customer s request. With some limited exceptions, if service is not established within five business days, the customer is entitled to be credited one-half the installation charge unless the customer receives notice 24 hours prior to the scheduled appointment. If service is not established within 10 business days, the full installation charge must be credited. Q.: What if the telephone company makes an error in our business s white pages listing? A.: If a local telephone company fails to include or makes an error in a customer s white pages listing, the customer is entitled to receive a credit equal to at least three months of monthly charges. Q.: If a customer calls an incorrectly listed number in the local telephone company s phonebook, does the customer have to pay for a Directory Assistance charge? A.: If a phonebook lists an incorrect number due to a telephone company error, customers who call that company s Directory Assistance to obtain the correct listing are entitled to receive a credit for that charge upon request. 68

14 Q.: What is the local telephone company s obligation if it misses a repair appointment? A.: Telephone companies must tell customers when, within a four-hour window, a repair will be made. If a local telephone company misses a repair appointment or the four-hour window, a customer is usually entitled to receive credit for one-half of one month s charges for the service(s) that cannot be used. Q.: What if our business s telephone line is out of service for 24 hours or more? A.: Any customer with an outage of 24 hours or more is entitled to a credit based on the monthly cost of local service. A 24 to 48 hour outage entitles a customer to a prorated credit based on the actual duration of the outage. A 48 to 72 hour outage entitles a customer to a credit equal to one-third of one month s service. A 72 to 96 hour outage entitles a customer to a credit equal to two-thirds of one month s service. An outage of more than 96 hours entitles a customer to a credit equal to a month s service. Customers who experience an outage of 72 hours or longer can receive additional compensation. In addition to the MTSS credit, those customers are entitled to choose either the use of a cellular loaner phone for the remainder of the outage or a $20 credit to their account. Telephone companies can apply to the PUCO on a case-by-case basis for an exemption to these requirements due to an Act of God. If an exemption is granted, the MTSS requirement to restore service is extended by 48 hours. Q.: How can our business avoid disconnection of local telephone service? A.: Disconnection can be avoided by paying any past due balance on or before the disconnection date, or by setting up a payment plan with the phone company to pay the past due balance. Q.: Must telephone companies respond to customer complaints within a certain period of time? A.: Yes. Telephone companies must resolve customer complaints within 10 business days or let customers know by phone or in writing what needs to be done and when the problem is expected to be resolved. Customers are not entitled to receive credit based on a violation of this part of the MTSS. 69

15 Q.: Where can residential and small business customers get more information and help in resolving their telephone company complaints? A.: The Public Utilities Commission of Ohio ( PUCO ) is the sole agency in the state charged with resolving utility complaints and disputes for both residential and small business customers. Customers can call (800)686-PUCO ((800) ) or visit the PUCO Web site at by the Ohio Consumers Counsel. Updated by Public Utilities Commission of Ohio ( PUCO ). 70

16 Understanding a Local Telephone Bill Q.: Why are there so many charges on a local telephone bill? A.: In addition to charges for basic local service and calling features, there are several charges that the federal and state governments permit telephone companies to collect. Each charge is related to a specific program authorized by the Federal Communications Commission ( FCC ) or the Public Utilities Commission of Ohio ( PUCO ). How these charges appear on your monthly bill varies depending on the company. Q.: What is the number portability surcharge? A.: This is an FCC-authorized charge that allows companies to recover costs associated with customers ability to keep their existing telephone numbers when switching to other local service providers. For example, an SBC customer who decides to switch to another carrier for local service will not have to get a new phone number. The FCC allows companies to charge this number portability surcharge even where residential consumers have no local telephone choices. While local markets have yet to fully develop, residential customers of SBC, the state s largest provider, are beginning to see more choices. Q.: Why is there a monthly charge for the emergency system? A.: Fees for services are paid by all local telephone customers as a flatrate monthly charge. The monthly amount is calculated by the telephone company and reviewed by the PUCO. This charge is based on the costs associated with implementing and operating service at the county level. Q.: What is the inside wiring maintenance plan charge? A.: Most local phone companies offer inside wiring maintenance plans such as Ameritech Ohio s Line Backer. Consumers pay a monthly fee and, in return, the companies will repair an inside-wiring problem, when and if one occurs. Some plans include a replacement telephone. Inside-wiring plans are optional and may serve the needs of some customers. Inside-wiring problems are relatively rare, however, and only occur once every 20 to 30 years on average. Therefore, the cost of this service may be greater than its value for most consumers. Customers can choose to do their own inside wire repairs, hire an outside contractor, pay the telephone company for the repairs or subscribe to the maintenance plan. 71

17 Q.: What is the federal subscriber line charge? A.: The federal subscriber line charge is mandated by the Federal Communications Commission ( FCC ) and helps cover the fixed cost of the local phone network, including the lines and equipment from the central office to the customer. Depending on your local telephone company, this charge may appear as FCC charge for network access, federal line cast charge, interstate access charge, or FCC-approved customer line charge. This is a per-line charge, and the FCC caps the maximum price a company may charge. Customers with multiple lines may pay a higher subscriber line charge. Q.: Have all telephone customers seen an increased federal access charge? A.: Yes. The subscriber line charge, sometimes billed as the federal access charge or the interstate access surcharge, has increased for all Ohioans. Beginning July 2, 2003, the federal government permitted local telephone companies to raise this charge from $5 to as much as $6. This charge has been mandated since the mid-1980s to help cover the cost to maintain outside wires, poles and other facilities used to link customers to the long-distance network. The Ohio Consumers Counsel ( OCC ) opposed this increase as part of a national organization of state utility consumer advocates. Q.: What are universal service fees? A.: Universal service fees are charges that appear on customers local telephone bills and help fund government-mandated programs to make local telephone service more affordable to low-income and rural customers. These charges also help provide Internet access to schools, libraries and rural health care providers. Q.: Where can residential and small business customers get more information to better understand their telephone bills? A.: The Public Utilities Commission of Ohio ( PUCO ), the sole agency in the state charged with resolving utility complaints and disputes for residential and small business customers, publishes the Understanding Your Telephone Bill and Tips To Cut Telephone Costs fact sheets to educate consumers, including businesses, about various charges and offer some tips that can help reduce your telephone bill. To obtain a copy of PUCO fact sheets or any PUCO publication, or for assistance with utility questions, contact the PUCO at (800)686-PUCO (7826) or visit by the Ohio Consumers Counsel. Updated by Public Utilities Commission of Ohio ( PUCO ). 72

18 Know about Electric Choice and Aggregation Q.: What is electric choice? A.: On January 1, 2001, electric choice became law in Ohio. This law gives consumers the opportunity to choose from among competing suppliers for their electric service. This law also permits communities to aggregate as a way to potentially save consumers money. Where competition has developed, consumers have been able to choose which company generates, or supplies, their electricity. Even if a consumer chooses an electric supplier, the local electric utility is still responsible for distributing the electricity, maintaining the poles and wires and billing for those services. The Public Utilities Commission of Ohio ( PUCO ) enforces rules governing electric choice. Q: What is electric aggregation? A: Aggregation allows consumers to combine their electric usage and form buying groups. Group purchasing, or aggregation, may allow consumers to secure greater buying power in a competitive market. Q: Does aggregation save consumers money? A: While there is no guarantee that consumers will save money through aggregation, this opportunity can reduce a supplier s marketing and administrative costs because they can market to an entire group rather than to individuals. These reduced costs can be passed on as savings to individual consumers in the buying group. Q: Who can aggregate? A: Ohio s electric choice permits buying pools to be formed by affinity groups (groups formed by people with common interests, such as churches or schools) and local governments. Organizations such as trade associations, professional groups, school districts, businesses, churches and neighborhood associations can use their buying power to negotiate an attractive offer with a supplier. Communities such as cities, townships and counties may go through a governmental process to aggregate the electrical loads of residents and businesses, and arrange to buy electricity from a supplier. In addition, local governments can join together and combine their electricity loads. Local governments may not offer their aggregation programs to customers of a municipal electric system or a rural electric cooperative unless that utility participates in electric choice. 73

19 Q: Are there different types of local government aggregation? A: Yes. Ohio s electric choice legislation lets local governments choose from two types of aggregation for their communities. One option allows residents to sign up, or opt-in, and permits the government to arrange for electricity on their behalf. The second option, known as opt-out, allows the local government to serve as a buyer for all residents except those who affirmatively choose not to be part of the buying pool. Opt-out requires that citizens vote on a referendum at a primary or general election to have the government serve as their buying agent. Under both methods, a local government must pass an ordinance or resolution approving the aggregation effort before officials can negotiate to buy electricity. Q: Are there different types of aggregation for organizations and community groups? A: No. Affinity groups that wish to aggregate must sign up each member. Q.: Where can consumers learn more about the electric choice and aggregation? A.: The Ohio Consumers Counsel, the residential utility advocate, has fact sheets about electric choice and aggregation. Information about natural gas, telephone and water services is also available. All of the OCC s publications are free and available by visiting or calling toll free at (877)PICKOCC ( ). The PUCO also can answer questions regarding electric choice and electric aggregation. For more information, or to obtain copies of the regularly updated Apples-to-Apples electric supplier comparison charts, or the brochures, Governmental Energy Aggregation or Aggregation: Joining a Buying Group, call (800)686-PUCO (7826) or visit by the Ohio Consumers Counsel, the residential utility advocate. Updated by the Public Utilities Commission of Ohio. 74