Re-Regulation: A $107 Billion Utility Bailout

Ohio Utilities Re-Regulation Scheme: 6 Key Facts & Fiction

Ohio Utilities Fiction

The Facts

1. Re-Regulation or changing Ohio’s power generation laws is a good deal for Ohioans FACT: The “re-reg” proposal is a $ 107 Billion bailout or subsidy paid by ratepayers, paid in three parts:

  1. $ 25.6 Billion: “break-even” payment to utilities to allow inefficient coal plants to compete with new gas plants for 15 years To learn more click here.
  2. $ 21.6 Billion: “inefficiency premium” payable to utilities when low-cost private investment is forced to leave Ohio.
  3. $ 60 Billion-cost of removing “consumer choice” in the current competitive market for just 20 years, outlined in OSU/Cleveland State study
2. Re-Regulation is needed now because new gas-fired power plants are not being built fast enough to replace coal plants FACT: In Ohio 10,003 MW of old coal-fired power plants have closed, leaving only 14,379 MW of coal plants operational. To date, 11,386 MW of new modern private sector gas-fired power plants have been built or are in advanced development to more than equally replace any coal closures. To learn more click here.
3. Re-Regulation is needed to allow monopoly utilities to compete FACT: There is nothing preventing Ohio utilities from building new gas-fired power plants today. It is simply in their best interest to have a monopoly on the market so that they dictate higher electricity prices for consumers, and drive out new competition from private investment made in natural gas-fired power plants. Utilities have attempted/failed at new gas plants in Ohio, and realize their cost structure is non-competitive with the private sector.
4. Re-Regulation will not impact “customer choice” to buy low-cost electricity FACT: A cornerstone element of “re-reg” is that “customer choice” will be eliminated since private investment will no longer exist in Ohio. The only customer option will be high-priced monopoly power from Ohio’s utilities. Re-regulation will kill any price competitive private sector power generation investment in Ohio and therefore kill customer choice. Consumers agree as a recent survey showed that Ohio customers support the current market by a margin of 7:1.
5. Re-Regulation keeps electricity generation decision-making and management in Ohio FACT: Location of a company’s management team has no bearing on a company’s ability to construct or run Ohio based power plants. In fact, AEP recently sold several of its Ohio plants to out-of-state owners. DP&L is owned by a company out of Virginia.To learn more click here.
6. Re-Regulation will fix Ohio’s energy picture, which AEP claims is at a “crossroads” FACT: The cost-competitive energy picture in Ohio is prosperous and benefiting ratepayers through low energy costs. Ohio has been part of 13-state open competitive market for its power needs for 18 years. As coal-fired power plants closed, the private sector responded immediately, investing $ 5 Billion of new gas-fired plants and another $ 7 Billion in progress for additional power needs, in total 12 new gas plants will be completed adding $ 170 Billion in benefits to Ohioans. The only “crossroads” in Ohio are the crossroad the electric utilities face by betting their future on inefficient/obsolete coal plants for which they now seek added bailouts.

Re-Regulation Is A Bad Deal for Ohioans

Ohio Senator Bill Seitz, who has been in Columbus since Ohio started the deregulation process in 1999, best summarized “re-regulation” stating that it would be hard to “put the toothpaste back in the tube”, (referring to the fact that de-regulation was debated in 1999 and free market competition was the better option verses “re-reg” or the old monopoly system).

“There are ... new players in Ohio as a result of deregulation that were not here in 1999. They are going to — I think — cry foul at any attempt to re-regulate that would inhibit their ability to be a competitive supplier.”’

– Ohio State Senator Bill Seitz

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