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Municipal aggregation and retail competition in the Ohio energy sector

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  • Littlechild, S.

Abstract

Ohio allows communities to vote to aggregate the loads of individual consumers (unless they opt out) in order to seek a competitive energy supplier. Over 200 communities have voted to do this for electricity. By 2004 residential switching reached 69% in Cleveland territory (95% from municipal aggregation) but by 2006 had fallen to 8%. Savings are now small, but customer acquisition costs are low and the cost to consumers is negligible. Aggregation and retail competition have been thwarted by Rate Stabilization Plans holding incumbent utility prices below cost since 2006. In the Ohio gas sector, rate regulation has not discouraged aggregation and competition, but market prices falling below municipally negotiated rates can be politically embarrassing. How municipal aggregation would fare against individual choice in a market conducive to retail competition is an open question, but the policy deserves consideration elsewhere.

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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0739.

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Length: 24
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:cam:camdae:0739

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Web page: http://www.econ.cam.ac.uk/index.htm

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Keywords: Municipal aggregation; retail competition; electricity; gas; Ohio; regulation.;

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  1. Ridley, Scott, 1997. "Local government: the sleeping giant in electric industry restructuring," The Electricity Journal, Elsevier, vol. 10(9), pages 13-21, November.
  2. Ridley, Scott, 1995. "Seeing the forest from the trees: Emergence of the competitive franchise," The Electricity Journal, Elsevier, vol. 8(4), pages 39-49, May.
  3. Littlechild, S., 2005. "Competition and contracts in the Nordic Residential Electricity Markets," Cambridge Working Papers in Economics 0550, Faculty of Economics, University of Cambridge.
  4. Littlechild, Stephen C, 2003. "Wholesale Spot Price Pass-Through," Journal of Regulatory Economics, Springer, vol. 23(1), pages 61-91, January.
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