Deregulation Update

Ohio’s family of rural electric cooperative adopted a “watch, wait, and see” stance when the State Legislature passed a package of bills addressing electric industry deregulation, also called “electric choice.”

Because cooperatives are not-for profit, member-owned utilities, they are self-regulating through their elected boards of trustees and must meet stringest federal guidelines through the USDA Rural Utilities Service.

The electric choice laws were aimed at large investor-owned utility companies. Deregulation mainly affected power generation companies by making it possible for customers to choose from whom they purchase kilowatts of electricity. Theoretically, they have the right of choice to purchase power, like any other type of commodity, from a marketer or load aggregator.

What did not change was the delivery service. Local utilities will still deliver electricity to their customers – and charge them for it – even if the power is generated by another company. There are no provisions under “Ohio Electric Choice” for customers to physically disconnect from their distribution company in order to connect to a new power distributor.

Rural electric cooperatives are not participating in “Ohio Electric Choice” and their member-consumers cannot purchase electricity from outside providers. The landscape of electric deregulation in Ohio continues to change, but so far consumer activity in choosing power suppliers has been less than originally expected due to rate and reliability concerns.

In many parts of the nation, states that adopted electric deregulation are reversing course after finding that consumers have not saved money and reliability has suffered. The Enron scandal, the California energy crisis, and the 2003 summer eastern seaboard blackout have resulted in reconsideration of the wisdom of allowing companies to compete for electric loads while ignoring investment in and maintenance of their generation, transmission and distribution systems.

For more information about deregulation in Ohio, see or call Buckeye REC.