To promote energy choice in Ohio, the Ohio PUC requires that all utility bills include a Price To Compare disclosure. The intent of including this rate on electric bills is to give electricity shoppers a reference point to determine if an offer from an alternative supplier is a good deal or not. Sounds pretty straight-forward, but have you ever wondered how your Price to Compare is actually calculated and how can you use that information to save money? Read on to learn more about what the Price To Compare number is (and also what it isn’t) so that you can accurately compare apples to apples electricity rates.
What is Ohio’s Price to Compare?
The Public Utility Commission of Ohio (PUCO) requires that all deregulated utilities disclose a Price to Compare on every customer’s electric bill. The Price to Compare is, by definition, a baseline rate calculated by taking the estimated amount you would pay your local utility if you did not choose an alternate electricity supplier and dividing that by your total kilowatt hours used. The amount you would otherwise pay your local utility for generation is a 12 month forward looking estimate, and the total kilowatt hours used is estimated based on your historical usage.
For example, if your future annual cost of generation for the electricity you use is estimated to be $600 and you historically use an average of 10,000 kWh on an annual basis, then your Price to Compare would be $.06/kWh. If you can find an alternative supplier offering a better energy rate, then you would save money on your electric bill.
The Price to Compare is not your next month’s generation rate. The Price to Compare is an average rate that the utility expects you to pay for generation over the next 12 months. The Price to Compare is subject to change every month based on the utility’s Standard Service Offer (SSO) rates for the applicable time period and changes in usage patterns. That’s why the PUCO states “your Price to Compare is made up of several factors and can vary from month to month. To get a better understanding of your average Price to Compare take a look at a few of your recent bills.”
How is the Price to Compare Determined?
Each Ohio deregulated utility is required to conduct a competitive wholesale auction facilitated through an independent consultant to secure all of its energy capacity requirements for its customers who have not chosen an alternative electricity supplier. The winning bids from these auctions determine the generation rates the utility charges customers receiving the standard service offer (SSO) rate. These wholesale auctions are designed to provide Ohio SSO customers with fair and equitable prices from the utility. The PUCO oversees the auction process and approves the results for each utility.
The SSO wholesale auctions are conducted to secure generation rates for future requirements. The utilities make their best efforts to secure all of the required electricity generation through these auctions. In the event that demand is greater than expected, the utility would have to conduct another wholesale auction to secure the additional needed supply. The SSO rate is a blended rate based on all of the winning bids from the auctions for an applicable period of time.
The Price to Compare shown on your utility bill is based on the SSO rate. Utilities know in advance with a fair amount of certainty what the SSO rate is for its customer base. The Price to Compare is a calculation of what your electric supply would cost with the SSO rate for your customer rate class (typically general residential service) for the next year divided by your annual kWh usage.
Two Ohio utilities provide excellent information about their current SSO rates. If you are served by Dayton Light & Power or Duke Energy, the following are excellent resources for understanding the generation rate you would be charged by your utility if you did not select an alternative energy supplier.
Finding Cheap Ohio Electricity
The Price to Compare shown by your utility may be a decent rate. It is market based and it may be comparable to alternative supplier offers. In Ohio the incumbent utilities have two advantages over Competitive Retail Electric Service (CRES) providers: marketing budget and customer indifference.
In order to bring awareness to themselves, Ohio CRES providers must spend money on marketing while the incumbent utilities have a built in customer base. With a Price to Compare that’s more or less in line with what alternative suppliers are offering, many customers are indifferent and stay with the utility’s SSO and choose to not shop for an alternative supplier.
However, if you want to find the cheapest electricity in Ohio, you need to shop your electricity generation rate. The generation, or supply, rate is the portion of your Ohio electric bill that is open to competition. CRES providers are generally able to react more quickly to changes in market conditions than the utility. The utility’s SSO rates are set far in advance. If there are favorable changes to market conditions, the alternative suppliers can more easily take advantage of those changes and reflect them in the current rates that they offer.
The bottom line: The Price to Compare is the rate that the utility is predicting that you will pay on average over the next 12 months. To find the best apples to apples electricity rate, compare your Price to Compare with any 12 month rate offered by an alternate supplier. If you find a cheaper rate, you will save money. In addition, it is fairly common to find longer term (24 and 36 month plans) that significantly beat your Price to Compare. If you are looking for long term price protection and low maintenance, these longer term plans could extend your savings even further.
If you switch to a CRES provider, you do not need to contact your utility – that will be done on your behalf by the new supplier. The utility will continue to serve you by delivering reliable electricity to your home or business and sending you an electric bill every month. The only change will be the supplier name on your utility bill and a lower supply rate for your electricity.
Shopping for cheap Ohio electricity is easy with sites like ElectricityPlans.com. ElectricityPlans.com provides an easy to use platform for comparing the best Ohio CRES provider offers across the state. Choosing an alternative provider with a lower supply rate than your utility SSO is the quickest way to save on your electric bills. Switching is easy and it only takes a few minutes to lock in a better supply rate. The new supplier will contact your utility and the switch will be done after the next scheduled meter read at your home or business.