Electricity Customer Choice in Ohio: How Competition Has Outperformed Traditional Monopoly Regulation

It took nearly a decade of sorting out regulatory problems, but by 2011 deregulation of the market for electricity generation in Ohio began to work exactly how economic theory projected it would. Since 2011, a robust retail market for electricity has developed in Ohio. As a result, deregulation of electricity has saved consumers an average of $3 billion per year, for a total of $15 billion over five years. Moreover, it is projected to continue to save consumers nearly that amount for the next five years, through 2020, totaling another $15 billion in savings. Further, the Midwestern deregulated states (Ohio, Pennsylvania and Illinois) have, over time, outperformed their regulated Midwestern neighbors (Michigan, Indiana and Wisconsin) in terms of constraining electricity cost increases for their consumers.

This Study was undertaken to assess the effects that deregulation of electricity generation has had on electricity prices in Ohio. Deregulation has become controversial in Ohio as several of Ohio’s investor-owned utilities (“IOUs”) sought price supports for their uncompetitive generation facilities. The IOUs sought these supports even though Ohio had deregulated the generation side of the electricity business in 2001.