EPRG 0715

Stephen Littlechild

Municipal aggregation and retail competition in the Ohio energy sector

EPRG 0715 Non-Technical Summary | PDF

Also published in:

  • Littlechild, S. (2008), “Municipal aggregation and retail competition in the Ohio energy sector”, Journal of Regulatory Economics 34(2)

Abstract: Ohio allows communities to vote to aggregate the loads of individual consumers (unless they opt out) in order to seek a competitive energy supplier. Over 200 communities have voted to do this for electricity. By 2004 residential switching reached 69% in Cleveland territory (95% from municipal aggregation) but by 2006 had fallen to 8%. Savings are now small, but customer acquisition costs are low and the cost to consumers is negligible. Aggregation and retail competition have been thwarted by Rate Stabilization Plans holding incumbent utility prices below cost since 2006. In the Ohio gas sector, rate regulation has not discouraged aggregation and competition, but market prices falling below municipally negotiated rates can be politically embarrassing. How municipal aggregation would fare against individual choice in a market conducive to retail competition is an open question, but the policy deserves consideration elsewhere.

Keywords: Municipal aggregation, retail competition, electricity, gas, Ohio, regulation.

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