More often than not, Ohio consumers don’t save money when they opt for an electricity choice plan instead of the standard electricity offering, according to an Ohio State University study.
Instead, they pay more, the study found.
Noah Dormady, OSU associate professor in the John Glenn College of Public Affairs, said, “The majority of offers to Ohio consumers are well above what those consumers would pay if they did nothing.”
A study by researchers at Ohio State University found that most consumers who choose an electricity choice plan end up paying more than if they simply stuck with the standard electricity offering from established utilities.
Dormady, lead author of the study, found that 72% of the most popular retail deals over the past decade were more expensive than the standard price.
In 1999, state lawmakers deregulated the energy market, allowing consumers to buy electricity from companies other than the incumbents, such as AEP Ohio or Duke Energy. The idea was that market competition would help consumers reduce their energy costs.
The Public Utilities Commission of Ohio certifies approximately 50 different energy suppliers in the state. The retailer’s choice only concerns energy generation; customers cannot shop for different prices for distribution or transmission costs.
Over the past twenty years, alternative energy sources have presented various plans to consumers through mailings, telephone marketing and even door-to-door sales. Dormady said consumers are often overwhelmed by choices.
Dormady and his team examined every electricity offer retail marketers made to Ohio consumers between 2014 and 2023 – more than 2 million records. Some offers are gimmicky deals with deceptively low upfront costs, high monthly fees and usage limits, his research shows.
Residential customers seeking a 12-month fixed rate from an alternative supplier were quoted rates above the standard rate 72% of the time, the research found.
Dormady said it appears the current setup is too complex for most consumers to find the best deals for them.
“We need to make it easier for consumers to identify the electricity offering that will save them money and that suits them,” Dormady said. “Unfortunately, in a complex market like this, it is too easy to confuse consumers.”
The Ohio Consumers’ Counsel, which represents residential customers in utility cases, agreed with Dormady’s analysis.
“There are too many stories of energy marketers using deceptive practices and charging Ohio consumers unconscionable prices,” said JP Blackwood, spokesperson for the Consumer Council. “If you’re going to choose a marketer for your energy, the worst way to do it is in your home or by talking to a marketer who has rented space in a big box store.”
Careful research and regular follow-up checks are crucial when choosing an energy marketer, he said.
Ohio consumers can also choose a natural gas supplier other than the incumbent utility. Dormady’s research did not investigate how consumers are faring 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 in Ohio.
This story has been updated to add a gallery.
This article originally appeared on The Columbus Dispatch: Research shows Ohio consumers aren’t saving money by choosing electricity
