Utilities commission stifles competition

Mar 31, 2016

COLUMBUS, Ohio—Ohio's economy has benefited from regulatory reforms that opened up the electricity market to competition. Unfortunately, today the Public Utilities Commission of Ohio (PUCO) announced a rollback of this important energy policy by granting handouts to two of the largest, most powerful electric utilities in the state, the costs for which will no doubt be passed along to customers.

FirstEnergy and American Electric Power (AEP) asked the PUCO to approve a contract that would force customers to pay higher prices in order to prop up struggling power plants. Other power companies would be more than happy to buy the plants in question and operate them more cost effectively, or build new, more efficient plants.

Bad energy policies such as the Obama Administration's war on coal and federal mandates as well as generous subsidies and state renewable power requirements spurred the utility companies to seek these agreements. However, the right thing for the PUCO to do is to call for immediate and comprehensive changes to these bad energy policies, rather than issuing handouts that will create significant problems for the state and, most importantly, ratepayers in the long run.

Competitors of FirstEnergy and AEP have already appealed to the Federal Energy Regulatory Commission to override PUCO's decision, and have also threatened to sue.

"This income guarantee will hurt Ohioans for sure. In the short term, it raises power costs for AEP and FirstEnergy customers. In the long term, it slows economic growth and throws a wrench into the gears of the free and competitive electric market," said The Buckeye Institute's energy policy analyst Joe Nichols. "Fortunately, federal energy regulators and the courts will probably have a chance to reverse this unwise decision."

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Founded in 1989, The Buckeye Institute is an independent research and educational institution—a think tank—whose mission is to advance free-market public policy in the states.