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FIRST ELECTRIC DEREGULATION OPTION TO BE AT POLLS

Voters who want to lower their electric bills may want to brush up on terms such as "opt-out" and "aggregate" - key jargon for ballot issues this November that could decide just how cheap electric rates will be.

In the process, some northwest Ohio voters will have to decide whether they trust their local government to do two key things: negotiate a good enough electric deal for residents and give them enough time to get out of the deal if they desire.

Several local governments in northwest Ohio - most of them in Lucas County - filed paperwork by Thursday's deadline for ballot initiatives to let them become electricity barters. Officials argue that it is a key step to lowering the area's historically high rates.

Starting in January, area residents can buy power from any utility and have it shipped through Toledo Edison's power lines. But state lawmakers fear that individuals, acting alone, won't be able to save enough on electric bills to justify the hassle.

So the state's 1999 deregulation law allows local governments to negotiate on behalf of their constituents and automatically switch them to the new company, or "aggregate" the service. Citizens who do not want to be part of the deal must formally ask to "opt out" of the plan.

There's a catch for local governments, however. To get the power to negotiate such deals, they must first have their role approved by voters.

Nearly all of Lucas County precincts will be voting on the issue. Only residents of Ottawa Hills, Whitehouse, Berkey, and Harbor View won't have the chance to vote for an aggregation plan.

Outside Lucas County, the suburban cities of Perrysburg and Northwood will put the issue to a vote, along with the regional cities of Defiance and Sandusky. The issue will appear on the ballot in Stryker in Williams County.

Supporters of the ballot initiatives see the votes as no-brainers. Utility marketers will offer the best deals to bulk buyers, and it would be extremely expensive to go door-to-door trying to sign up people to a new plan.

It's much easier for one entity to barter for a new plan, present it to residents, and let those who don't like it find their own companies, Lance Keiffer, an assistant Lucas County prosecutor, said.
"There is no guarantee that we're going to get someone in here cheaper than Toledo Edison," said Mr. Keiffer, who's coordinating the effort for county commissioners. "But, if [the vote] is favorable, it at least allows us to look at the issue."

Most of the region's local governments, particularly in rural areas, have chosen to stay out of the issue, at least for now. That's primarily because residents in those areas have not asked for the system to change, local leaders said.

"If we have citizens that show an interest, we certainly would hold some hearings and have some public information meetings and decide whether that's an option," Steve Arndt, president of the Ottawa County commissioners, said.

Many rural counties have towns with municipal electric companies, and some stretch into territory covered by rural electric cooperatives. Neither of those types of utility companies is covered under the deregulation bill.

Communities that do not have a ballot initiative can try to negotiate rates for their residents, but they would have to individually sign up residents for such a plan, under an "opt-in" plan. The cost of doing so could eat up any savings.

A more realistic opt-in plan, experts said, would involve a group of citizens banding together to negotiate rates. A subdivision or a mobile-home park could sign up its residents to barter as one group. Businesses could make pacts to negotiate together.

And a little-known provision of the law allows groups to start a miniutility.

Some say that emerging technology will one day allow a group of residents, such as a subdivision of 100 homes, to buy a natural gas-powered unit about the size of a heat pump that produces power for about 5 cents a kilowatt hour, including the cost of the generator. That's less than half the price Toledo Edison charges.

Any excess power created would have to be bought by the predominant utility in the region, such as Toledo Edison, at market rates.

"You're going to have hospitals buying micro-generation units, schools buying micro-generation units, city halls buying micro-generation units," state Rep. Lynn Olman (R., Maumee), who chairs the Ohio House's public utilities committee, said.

But, for now, the most popular provision of the deregulation law remains aggregation. Toledo Edison, for its part, welcomes the movement.

"In some ways [aggregation] makes it easier for us because we can bid on a number of customers," said Joe Mosbrook, a spokesman for the utility's Akron-based parent company, First Energy.

Regardless of what happens, Toledo Edison customers are set to see a reduction in their bills, even if it is only a few dollars a month. A family that uses 750 kilowatts of power a month - considered an industry benchmark - pays $83.82 a month, almost 11.2 cents a kilowatt hour.

Under the deregulation law, Toledo Edison must lower that monthly bill to $81.01, about 10.8 cents a kilowatt hour. (Exact rates vary depending on how much power a family uses.)
More than a third of that new bill - $31.01 - covers the cost of generating the electricity. It equates to 4.1 cents a kilowatt hour. If residents, or their governments, can find a rate cheaper than that, they will save money.

Rob Tungren of the Ohio Consumers' Counsel said he could not estimate how much people could expect to save by switching, but the number of governments proposing ballot initiatives should help lure new marketers to the state.

"I think it's going to be bait for marketers to come to Ohio," he said.

"And most companies recognize that to move customers, you've got be at least 5, 7, or maybe 10 per cent better off in price," Mr. Tungren said.

Some Lucas County townships have put the measure on the ballot, even though county commissioners will have it on the ballot as well. Both types of government oversee unincorporated areas of the county, making it unclear which vote would supercede the other.

The attorney general's office has been asked to research the issue.

Debate is expected regarding how big of a customer pool to create.

Many governments have said they want to band together to form mega-purchasers of electricity, to further reduce the overall rate. But such deals could make it harder for local leaders to control the bidding process, and hence prevent local residents from having much input on the final proposal.

Representative Olman said he will try to educate the public with an information meeting Sept. 18 at the University of Toledo's Nitschke Hall. The 1:30 p.m. meeting will feature a collection of elected leaders and business and consumer officials.

In the meantime, some local leaders, such as the Lucas County commissioners, have hired consultants and are working to have a utility deal in place by Jan. 1.

"We're not going to sit around and wait for the final vote in the election," said Mr. Keiffer, the assistant prosecutor.

"We're going to be doing the leg work so that, if there is a favorable vote, hopefully we'll be in a position that we can hammer out a final plan and contact the marketers to see what the possibilities are," Mr. Keiffer said.

But most local leaders said that, even with a positive result at the ballot box, residents should not plan to see a new name on their electric bills after Jan. 1.

"I'm sure everybody will be feeling their way a bit," Waterville Mayor David Myerholtz said. "The brokers and the buyers will be a little cautious out of the chute, to make sure the deal they put themselves into ... is something they can live with."

All content © 2000 THE BLADE, TOLEDO, OHIO and may not be republished without permission.

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© Copyright 2008 State Representative Lynn Olman. All rights reserved.

 

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