Q: What is electric choice?
A: On January 1, 2001, electric choice became law in Ohio. This law gives consumers the opportunity to choose from among competing suppliers for their electric service. This law also permits communities to aggregate as a way to potentially save consumers money.
Q: What is electric aggregation?
A: Aggregation allows consumers to combine their electric usage and form buying groups. Group purchasing, or aggregation, may allow consumers to secure greater buying power in a competitive market.
Q: Will aggregation save consumers money?
A: While there is no guarantee that consumers will save money through aggregation, this opportunity may reduce a supplier's marketing and administrative costs because they can market to an entire group rather than to individuals. These reduced costs may be passed on as savings to individual consumers in the buying group.
Q: Who can aggregate?
A: Ohio's electric choice permits buying pools to be formed by local governments and "affinity" groups (groups formed by people with common interests, such as churches or schools). Organizations such as trade associations, professional groups, school districts, businesses, churches and neighborhood associations can use their buying power to negotiate an attractive offer with a supplier.
Communities such as cities, townships and counties may go through a governmental process to aggregate the electrical loads of residents and businesses, and arrange to buy electricity from a supplier. In addition, local governments can join together and combine their electricity loads. Local governments may not offer their aggregation programs to customers of a municipal electric system or a rural electric cooperative unless that utility participates in electric choice.
Q: Are there different types of local government aggregation?
A: Yes. Ohio's electric choice legislation lets local governments choose from two types of aggregation for their communities. One option allows residents to sign up, or "opt-in," and permits the government to arrange for electricity on their behalf.
The second option, known as "opt-out," allows the local government to arrange for electric supply for all residents except those who affirmatively choose not to be part of the buying pool. "Opt-out" requires that citizens vote on a referendum at a primary or general election to have the government serve as their buying agent or supplier.
Under both methods, a local government must pass an ordinance or resolution approving the aggregation effort before officials can arrange for the supply of electricity to its residents.
Q: Are there different types of aggregation for organizations and community groups?
A: No. Affinity groups that wish to aggregate must sign up each member individually.
Q: Have any communities aggregated?
A: Yes. More than 190 communities have allowed their local governments to aggregate on an "opt-out" basis. The Northeast Ohio Public Energy Council (NOPEC) and the Northwest Ohio Aggregation Coalition (NOAC) are examples of coalitions of aggregated communities that have been formed since the electric choice law became effective. Each of these coalitions is made up of a number of communities that have banded together, forming larger groups to maximize their buying power.
Q: Who can provide residential customers, local governments and community organizations with more information about electric aggregation?
A: The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, can provide additional information about electric aggregation. The OCC also can give presentations to local government officials and community groups of 30 or more people.
To obtain a free copy of the OCC's "Governmental Electric Aggregation" fact sheet, additional information about electric choice or to schedule a speaker contact the OCC toll free at 1-877-PICKOCC (1-877-742-5622) or visit www.pickocc.org.
4/27/2009
Law You Can Use is a weekly consumer legal information column provided by the Ohio State Bar Association. This article was prepared by the Office of the Ohio Consumers' Counsel.