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Competitive Electric Suppliers Take Share of AEP Customers

Ohio lawmakers passed laws to de-regulate electricity back in 1999. But, a competitive market in the area served by American Electric Power was slow to develop. Now, 18 percent of AEP customers have switched suppliers. "I anticipate we're going to see things like the phone companies did when they de-regulated.So your cellphone gave you free minutes at night or free week-ends, those kinds of things. Says Snitchler Public Utilities Commission of Ohio, Chair, Todd Snitchler, is on the front lines of change in Ohio's move toward competitive electricity markets. As more companies decide they can buy energy wholesale and sell it profitably to retail customers, the public utilities commission decides who can compete. "We have to certify and approve those competitive suppliers and then we're also charged with monitoring their market conduct. So if a competitive supplier is not following the rules, is treating customers unfairly, it's our obligation to, in effect, discipline the market." Says Snitchler. But, discipline is different than regulation. In the past, under PUCO regulations and rules, a utility such as American Electric Power, produced and distributed electricity from its power plants in the region to its 1-point-5 million customers. Now, the Public Utilities Commission auctions electric generation from AEP and other suppliers to retail energy companies. Those companies then can sell the electric at prices consumers will pay. So far, ten companies have persuaded about 18 percent of AEP's customers to switch suppliers. Direct Energy is a 26 year old international company considering entry into the AEP service region. Executive Cory Byzewski predicts the list of electric suppliers available to consumers will keep growing. "Between now and 2014 you're probably not going to see 40 or 50 but I would be surprised if you don't see at least 20 as many people will be taking bets." Byzewski says by 2014 he expects changes that will boost competition among retail energy companies. More households and small businesses will have so-called smart meters that constantly monitor electric use and then transmit that information back to the utility. "As more information starts to come out of households in terms of how they use energy the more we'll be able to tailor offers to each and every consumer out there." Byzewski says In other states, Direct Energy already has a plan that gives some consumers free electric for a designated day each week. But such offers often include a higher price for electric at other times. The consumer will have to shop for the best offer. Public Citizen is a consumer advocacy group that lobbies congress. Researcher Tyson Slocum has looked at electric deregulation in about two dozen states. He says deregulation is no boon to consumers. "The bottom line is the experience of consumers in a deregulated market is one of price volatility, of higher prices, and poorer service and reliability." Says Slocum. American Electric Power says 18 percent of its customers have switched suppliers since deregulation began in its service region. And, PUCO chair Snitchler anticipates more competitors in coming months. He says consumers can stay informed and keep track of current electric offers on the PUCO website. "We want to take away that uncertainty and provide folks with information and education and let folks make the choice that is best for them." Says Snitchler.