OSU Study: Consumers don’t save money when they go with alternative electricity suppliers

More often than not, Ohio consumers don’t save money when they pick an electricity choice plan, rather than the standard electricity offer, according to a study from Ohio State University.

Instead, they pay more, the study found.

Noah Dormady, an OSU associate professor in the John Glenn College of Public Affairs, said: “The bulk of the offers provided to Ohio consumers are way above what those consumers would pay if they did nothing.”

Dormady, lead author of the study, found that 72% of the most popular retail offers over the past decade have been more expensive than the default price.

In 1999, state lawmakers deregulated the energy market, allowing consumers to buy electricity from outfits other than the established companies, such as AEP Ohio or Duke Energy. The idea was that market competition would help consumers trim their utility costs.

The Public Utilities Commission of Ohio certifies about 50 different power suppliers across the state. Retail choice only covers power generation; customers can’t shop for different prices on distribution or transmission costs.

Over the past two decades, alternative power supplies have pitched different plans to consumers via mailings, phone marketing and even door-to-door sales calls. Dormady said consumers are often overwhelmed with choices.

Dormady and his team examined every electricity offer made to Ohio consumers by retail marketers from 2014 to 2023 – more than 2 million records. Some offers are gimmicky deals that have deceptively low initial costs, high monthly fees and consumption caps, his study found.

Residential customers who sought a 12-month fixed rate deal from an alternative supplier got rates above the default rate 72% of the time, the study said.

Dormady said that it looks like the current setup is too complex for most consumers to figure out the best deals for them.

“We need to make it easier for consumers to identify the electricity offers that will save them money and that are right for them,” Dormady said. “Unfortunately, it is too easy to confuse consumers in a complex market like this.”

The Ohio Consumers’ Counsel, which represents residential customers in utility matters, agreed with Dormady’s analysis.

“There are too many stories of energy marketers using deceptive practices and charging Ohio consumers unconscionable prices,” said J.P. Blackwood, spokesman for the consumers’ counsel. “If you are going to choose a marketer for your energy, the worst way to do that is on your doorstep or by talking to a marketer who has rented space at a big box retail store.”

Careful research and regular follow-up checks are crucial if picking a marketer for energy, he said.

Ohio consumers can also pick a natural gas supplier other than the established utility company. Dormady’s study didn’t examine how consumers fare in the deregulated natural gas market.

Laura Bischoff is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.

This story was updated to add a gallery.

This article originally appeared on The Columbus Dispatch: Study finds Ohio consumers don’t save money through electricity choice

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