Ohio Legislative Committee Would Bid Out Stranded Consumers

Ohio's Legislative Committee on Electric Utility Deregulation has released a draft blueprint for deregulation in Ohio which would group consumers who do not find their own suppliers into "Regional Marketing Areas"(RMA's) and auction them off to power companies.

Most consumers are not expected to find a new power provider on their own in the restructured industry, so that rules dictating the treatment of "passive" consumers will largely define the nature of "choice" in the deregulated market. Many cities and towns are seeking the option to choose power suppliers as communities, enabling them to establish community standards for environmental protection, lower rates, revenue stability, and economic development.

The RMA appears as an alternative to community choice as a method of providing "stranded consumers" with access to competitive markets. Under the proposal, consumers not finding their own supplier would be automatically grouped into a RMA, which would become customers of the lowest bidder , but without community input or control over the bidding process. RMAs would be bid out under state regulators only as "subunits of a utility's service territory" in two year contracts. Proponents estimate the creation of 80 RMAs statewide.

David Rinebolt, a proponent of the model, said the RMA is a mechanism for alternative providers to enter the market and collect a large number of customers without incurring prohibitive marketing costs, and allows for price reductions without legislated rate cuts.

While the legislation contains no mention of local control over contracts, Rinebolt said that the state's county and municipal associations are asking for strong affirmative local control language in the bill. Home Rule laws in Ohio are so strong, said Rinebolt, that "any municipality that wants to put up a wall around town can do it, including exclusive municipal aggregation." Rinebolt said that most municipalities are primarily concerned about loss of tax revenues from deregulation, and view municipal aggregation as a means of protecting the local tax base. "Local governments depend on utility property tax revenues, so deregulation presents a huge hole in their budget.' Rinebolt said that key legislators are talking about making county governments the governing entities behind RMAs.

Copyright (c) 1998 by the American Local Power Project