Bill targets energy aggregation as Ohio voters keep approving it
Electrical pylons. Photo from Getty Images.
This month, Columbus became the latest and largest city in Ohio to approve an electric aggregation plan to pool customers together in order to seek a cheaper group rate.
Voters throughout Ohio have approved many such election and gas aggregation plans in their own counties, cities and townships in recent years. These plans, as agreed upon by a majority of voters, automatically enroll residents into the plan but they are given opportunities to opt-out.
That’s a problem for state Sen. Frank Hoagland, R-Mingo Junction, who views this system as a “bait and switch program.” He is opposed to any plan which automatically enrolls customers, and introduced Senate Bill 363 to prevent governments from enacting them.
“As a combat veteran, I don’t want my local government making decisions on spending my hard-earned money,” Hoagland told a senate committee on Tuesday. “So I don’t think this is the right way of doing it.”
Hoagland’s bill has elicited concern from aggregation advocates and from the County Commissioners Association of Ohio, which represents county officials who already have or may work toward achieving an aggregation program in their home counties.
How does aggregation in Ohio work?
Ohio law allows local governments to enact an aggregation program in their respective areas. For the plan to feature automatic enrollment, the government must put the plan up for a public vote.
In those cases, once an aggregation initiative passes the local government can take the step of securing an energy supplier. There are public hearings during this process to educate citizens about the program.
Residents are then informed by mail they will be enrolled. A household can choose to opt out before the contract begins at no cost and can then shop for rates on their own. After that initial opt-out period, some plans allow for a customer to still opt out at any time for free, while others require an early-termination fee.
“It’s a highly regulated process,” said Luke Sulfridge, executive director of the Southeast Ohio Public Energy Council.
SOPEC works to enact aggregation programs throughout Southeast Ohio and helps to manage these programs once approved by local voters. With more than a dozen villages and cities on board, SOPEC represents around 80,000 customers in the region. This ranges from the city of Athens, which passed electric aggregation back in 2014, to the small village of Chesterhill (population 276) which approved electric aggregation on its 2020 primary ballot.
Aggregation is being implemented all across the state, according to the County Commissioners Association of Ohio. In total, CCAO helps to manage aggregation programs in 27 different counties, which the association claimed have saved residents $6.2 million over the past two years.
In total, the Public Utilities Commission of Ohio identifies more than three-dozen Ohio counties that have PUCO certificates to provide gas and/or electric aggregation:
There are hundreds more cities, villages and townships which have certificates as well.
What SB 363 does
The bill introduced by Hoagland and co-sponsored by state Sen. Bill Coley, R-Liberty Twp., would greatly impact these programs as they are currently constructed.
It would repeal the ability for a government to enact an automatic enrollment program and give any customer of such a program the chance to opt out without paying a switching fee.
In his committee testimony, Hoagland did not reference the fact that these are voter-approved programs, instead portraying them as originating solely from government officials.
He spoke negatively about his own experience with aggregation at home in Jefferson County.
“What ended up happening to my family was we were automatically opted into this aggregation program that our township trustees said they’re going to allow this company to come in and do it,” Hoagland said. “When they came in, we had no clue of what was going on.”
Sen. Dave Burke, R-Marysville, later asked Hoagland about the requirement of a public vote.
Hoagland replied: “this is what I understood actually happened. The company that wanted to come into our area, our county, they first went to the county commissioners and the county commissioners waved off, they said ‘no we don’t want to be the ones involved in making that decision.’ Then that aggregation company went to the townships and the township trustees and to the villages. They did their own little magic and they said, ‘Yeah, you guys can do it in our villages.’”
Actually, voters throughout Jefferson County have approved aggregation measures throughout the past decade. This includes Hoagland’s own Smithfield Twp., which first rejected electric aggregation on the November 2014 ballot before voting in favor of aggregation in November 2015.
Hoagland said he received the opt-out notice in the mail, thinking at first it was “junk mail.” He claims to have filed paperwork to opt out of the program but was enrolled anyway.
Sen. Bob Peterson, R-Washington Court House, noted he too is part of an aggregation program in Fayette County. Peterson mentioned it has saved ratepayers there money and features an opt-out clause.
Hoagland responded by implying his area has not saved money under an aggregation program, though he provided no specific financial numbers.
“Well congratulations, you got a good deal,” Hoagland told Peterson. “We got the other end of the stick.”
Democratic Sen. Sandra Williams of Cleveland made note of the CCAO’s opposition to the bill.
A letter from CCAO to lawmakers, obtained by the Capital Journal, said a major issue is that automatic enrollment allows for a volume of customers that is “significant enough that (suppliers) can offer pricing that benefits the consumer by being below the market private available to an individual household.”
“Requiring individuals to opt in would provide such a significant level of uncertainty as to the volume of supply being negotiated,” the letter continues, “that suppliers would be unwilling to assume the risk of such a contract and would chose [sic] not to participate in aggregation contracts.”
Hoagland responded to that criticism, saying: “I think the process needs to be changed to where if they advertise that program, well damnit, if I want to take advantage of it to save money for my family, well then I should have the ability to do that. But they shouldn’t have to force it on us.”
Hoagland argued decisions on personal spending should be left up to citizens, not local leaders to decide.
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