Electric Industry Restructuring in Ohio: Residential and Low Income Customer Impacts

摘要

This report analyzes the electric utilities in Ohio in order to determine how they are situated for the coming of competition. It begins with the status of the utilities as of 1995, the last year for which detailed data were available, and determines the detailed underlying cost structure behind the rates charged to customers. The study then develops a number of restructuring scenarios to be analyzed. These scenarios cover different approaches to dividing stranded asset costs between customers and stockholders, and between different groups of customers. They also cover wholesale versus retail competition, different regulatory structures for those services still under regulation, and new approaches to stranded asset costs such as securitization--the use of special bonds to reduce costs. Throughout the report the special emphasis is on the impact of restructuring on low-income residential customers. Low-income customers are the most vulnerable to changes in the regulatory structure with the fewest alternative options. The report finds that there are a great deal of above-market cost, potentially stranded assets in Ohio--approximately $8.75 billion in 1995. The annual above-market costs total over $3 billion, of which about 2/3 is recovery of capital related costs and 1/3 is recovery of energy related costs. The distribution of stranded assets in Ohio is very uneven. Some utilities such as Cleveland Electric and Ohio Edison have very high levels of above-market costs. In contrast, Ohio Power has, under some estimates, costs which are actually below market costs. The study looks separately at the near-term or transition period (approximately the next seven to ten years) and the longer term competitive market period. During the transition period the costs of stranded assets are being collected from customers while competitive markets are being developed. In the longer term market period it is assumed that all of the stranded asset costs have been collected and that the competitive market for generation is fully functioning.