Raising electric fees is a bad deal for Ohioans

Using more electricity means your monthly utility bill goes up. And using less means your bill goes down, right? That’s what you’d expect, but that’s not what Ohio households will experience if the state’s Public Utilities Commission goes along with new proposals from the state’s leading utility companies.

AEP Ohio, Duke Energy, and FirstEnergy all intend to dramatically raise customer fixed charges in the coming months, as a hedge against falling revenues. Gains in energy efficiency and increased competition have been great for consumers, but utilities are worried these trends will hurt their bottom line. This fixed rate increase plan is intended solely to boost company profits.

 An AEP Ohio customer could see their monthly fixed charge more than double over the next two years — adding $120 more to their annual energy bill. Duke Energy Ohio customers could see their fixed charges nearly quadruple — increasing their electric bill by more than $200 annually. For many people, this increase will feel like paying another one or two utility bills each year. 

Fixed charges are a bad deal for consumers. That’s why Ohio Citizen Action is proud to work with Consumers Union, the policy and mobilization division of Consumer Reports, to fight back against these unfair proposals.

What’s a fixed charge? On a typical utility bill, consumers are charged a fixed (or base) fee for energy delivery and billing services and a separate usage fee that varies depending on how much energy a household uses each month. By conserving energy — turning off lights when leaving a room, adjusting the thermostat, or buying energy efficient appliances — households control their energy use and therefore should be able to lower their monthly bills.

But by raising the fixed portion of the bill, utilities increase your bill before you even flip a light switch, preventing you from controlling your bill and eroding the incentives and benefits of energy efficiency. Utility companies favor high fixed charges because they keep revenues steady despite variables like weather or consumer usage, but higher fixed charges hurt consumers by punishing those who need or choose to be thrifty with their energy use.

For Sara Balderston, an AEP Ohio customer in Columbus, the fixed rate proposal would cancel out her family’s efforts to lower energy use. “My family tries hard to remember to turn off lights, minimize use of our air conditioning and clothes dryer, and we and others who conserve electricity should be rewarded, not discouraged by having to pay mandatory fixed fees,“ she wrote recently to the PUCO.

Worse still, the proposal would have a disproportionately negative impact on lower-income households and seniors on fixed incomes, who tend to pay a larger share of their income toward utility costs and generally use less electricity than higher income customers with larger homes. Raising fixed charges would mean low-income households and seniors would see a much larger percentage increase in their monthly utility bills than higher-energy use households. In effect, raising fixed utility charges would force low-income and low-usage customers to subsidize high-energy users. That is unfair, inequitable and just plain wrong.

For AEP Ohio customer Jeana Wigglesworth of Columbus, a senior on a fixed income, the proposal would force her to make difficult choices to pay her utility bill. “I can’t pay my utility bill now,” she explains. “As the saying goes, ‘you have to rob Peter to pay Paul.’” The utilities’ plan to raise fixed charges could force some households to go without a meal or necessary medication — an unconscionable choice. 

Fortunately, residents are getting wise to these games and coming together to say “no” to unfair fixed charge hikes. Last month, a proposal by Gulf Power in Florida to raise fixed charges was shot down after the public outcry. And many utility commissions around the country have rejected most proposals to increase them.

The Public Utility Commission of Ohio now has an opportunity to protect Ohio residents as well by rejecting AEP Ohio and Duke Energy’s unfair fixed rate hike proposal. And AEP Ohio residents have an opportunity to speak out very soon by attending an upcoming public hearing. For the hearing schedule and to learn how to submit a comment, visit puc.ohio.gov (case no: 16-1852). The more customers who speak out, the greater the chances of blocking this unreasonable, unfair electric bill hike.

Rachael Belz is the executive director of Ohio Citizen Action, the state’s largest grassroots consumer and environmental organization, and has advocated for residential ratepayers for 25 years.