It is true that homeowners in Ohio enjoy relatively moderate electricity prices when compared to the 50 states. Just like in other states, the utility rates across the board but especially for residential consumers continue to rise out of proportion with actual fuel costs. Generally speaking, people living in states located in the Northeast, North Central, and Mid-Atlantic generally pay higher electricity rates than those living in the southern half of the United States. These northern regions are dominated by states that have deregulated their markets, and offer more choices for ratepayers. It is possible to shop for energy online. But you would be hard pressed to call pricing in the region a “good deal,” and in fact Ohioans continue to pay above the national average. When considering your options to reduce your energy costs and control your future budgets, it is valuable to look at the overall utility picture.
This post is not intended to be a full research piece. We hope you find enough here to inform a decision or to guide you to continue your own investigation.
Energy Is a Focus
Perhaps as recently as a few decades ago, it was common for families who were relocating to consider the strength of their salary in a new location by looking at consumer indexes. These might combine all expenses. Lately, isolating energy costs and comparing them is getting more popular. That may be due to the increased portion of living expenses that energy demands. Electricity, heating fuels, and gas for cars all are increasing often at rates higher than income.
WalletHub is a personal finance website that since 2013 has looked at real energy expenses by state. Ohio comes out about midpoint for total costs, and it seems even more favorable for electricity expenses. But that may be misleading. For example, Ohio residents may be spending more on heating fuels per capita during colder months than other states where electric heating may be slightly more prevalent. And in fact, Ohio doesn’t rank well in real fuel expenditures.
Matching WalletHub’s rankings, the Energy Information Agency (EIA) finds the state was 23rd in total energy consumption per capita in 2013. So it isn’t necessarily an energy hungry state.
Looking at the average price of residential electricity as recently as December of 2015, we might conclude that in Ohio prices are somewhat moderate. But are they really a “good deal?”
The Good News – A Focus on Ohio
The Office of the Ohio Consumers' Counsel (OCC) is a residential utility consumer advocate, and it represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. Another key role for the state agency is to study trends that affect their bills and to educate consumers about electric, natural gas, telephone and water issues. The agency also monitors public utilities’ compliance with regulatory standards for consumer protection.
In January of 2016, the OCC reported on the current state of the electricity market. In summary, they find “everyone is unhappy” in their own words. This comes after a year of study that was purely data driven. For utilities, it is no surprise that they see legislation and policy as hindering their business while consumers see pricing and service as their main issues. But the OCC digs deeper to find some interesting trends and realities. Even when compared to adjacent states with similar power generation and transmission needs, Ohio is more expensive. Here are the key highlights:
- Ohio generates approximately 67% of its power using coal, 18% with natural gas, 12% from nuclear sources, and less than 2% from renewable sources.
- States with a more diverse electricity supply mix have lower rates than Ohio. Many have much higher portions delivered from renewable sources.
- Of the 12 states that make up the North Central region of the U.S., only Michigan and Wisconsin have more expensive electricity for residences.
- Thanks to very high rates in the Northeast and in Hawaii ($0.27 per kWh!), the nationwide average is high. Even so, Ohio’s average price is still above the national average.
- One large utility, AEP Ohio, places Ohio consumers at the highest electric rate and profit for AEP in the states in AEP’s territory. Could it be that AEP has Ohioans potentially subsidizing the citizens of other states?
What it Means
As is typically the case with public services, the market is complex with government, business, and consumer influences. This is part of the reason that each state and each utility gets different results. But the OCC recognizes that there is something to be learned from other markets, especially those that seem to get better results under similar or even worse conditions. The Counsel proposes a 15-member task force to do a full-scale review of the state’s electric industry and its regulation. The task force envisioned by the OCC board would include members from the Ohio Senate and House of Representatives, the chair of the Public Utilities Commission of Ohio (PUCO), representatives from the state development agency, state attorney general’s office, agricultural industry, large industrial customers, private and public electric utilities and academia. It would include a seat for the OCC.
Absent from this recommended panel according to its detractors are independent power producers such as Dynegy. And continuing to study the state electricity market does little for any one homeowner in 2016. It may benefit everyone in the near future. But it would be surprising if it resulted in significant cost reductions. A more likely outcome would be better control over future increases.
The Message to You
History proves that your electricity costs almost always increase in time. The amount of the increase and the burden to your budget may change. The consumer focused OCC has found that Ohio may be an anomaly, where prices are higher than similar states or even nearby states. The fix to this will take more time and will not likely result in significant and immediate savings. There is a better way to get that result. By investing in a rooftop solar energy system for your home, you are able to remove yourself from the unpredictable future fully, or to some degree. The more you generate, the less you need to worry about the future of Ohio utility pricing. Thanks to low solar installation costs, generous incentives, and current net metering rules, you can nearly predict your costs for years to come.
Interested in learning more about YellowLite’s renewable energy solutions? Reach out to us today to learn more.