Office of the Ohio Consumers' Counsel

Press Room

November / December 2010

AEP utility has ‘significantly excessive’profits; OCC calls for $156 million refund
OCC challenges marketer’s name change proposal
Gift cards and other programs help with holiday utility bills
Natural gas prices not expected to soar as winter heating season approaches
Rejoice this holiday season by using some of these energy-saving tips, tricks and ideas

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AEP utility has ‘significantly excessive’profits; OCC calls for $156 million refund

Customers of an American Electric Power (AEP) utility are due a refund of up to $156 million after an analysis of profits has determined the utility’s 2009 earnings are “significantly excessive,” the Office of the Ohio Consumers’ Counsel (OCC) said in testimony filed at the Public Utilities Commission of Ohio (PUCO).

Chart of Profits

According to public documents, Columbus Southern Power, a division of AEP, had an earnings rate of more than 20 percent, the highest among all of Ohio’s investor-owned electric utilities. The OCC recommended in October that the PUCO order AEP to issue refunds to customers as quickly as possible. The OCC was joined in its call for refunds by a coalition of other intervening organizations, including the Ohio Energy Group, the Ohio Manufacturers’ Association, Ohio Hospital Association and the Appalachian Peace and Justice Network.

Coalition experts determined Columbus Southern Power’s earnings were excessive once they reached between 11.58 and 13.58 percent.

“Columbus Southern Power customers have paid higher rates than what is justified and they are due a refund,” said Consumers’ Counsel Janine Migden-Ostrander. “The PUCO should promptly order AEP to return residential consumers’ hard-earned money they have overpaid the utility.”

Ohio law requires electric utilities to show the PUCO each year of an electric security plan that its earnings were not significantly excessive when measured against comparable public companies. Any earnings determined to be significantly excessive are required to be returned to customers. This annual test is an important protection consumers have to safeguard them from paying overly excessive electric rates.

“In 2009, CSP (Columbus Southern Power) had the highest earned return on equity of any of the 142 investor-owned regulated electric utilities in the United States ... The electric utility with the second highest return on equity in the country was Dayton Power & Light ... Thus, Ohio had the dubious distinction of having the two most profitable investor-owned electric utilities in America ...”

Lane Kollen, OCC Consultant
Source: Financial filings to the Federal Energy Regulatory Commission

Columbus Southern Power has a total of about 750,000 residential, commercial and industrial customers.

By Anthony Rodriguez

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OCC challenges marketer’s name change proposal

Concerned about potential customer confusion, the Office of the Ohio Consumers’ Counsel (OCC) is opposing a proposed name change by a major gas marketer in central Ohio.

IGS Energy is an independent retailer participating in all of the choice programs offered by Ohio’s major state-regulated natural gas utilities. The company recently purchased a license from Columbia Gas of Ohio’s parent corporation, NiSource, allowing it to use the name “Columbia Retail Services” throughout the utility’s territories.

The OCC has requested a hearing before the Public Utilities Commission of Ohio (PUCO), basing its objections on concerns that residential consumers would have difficulty distinguishing between the natural gas utility and another company using the same name. As the consumer advocate, the OCC argued that customers have long associated the Columbia name with the utility and might mistake marketing materials from the re-named marketer as coming from the gas company itself.

An additional complication for consumers is that IGS, unlike Dominion East Ohio Energy (DEOE) and Vectren Source which are affiliates of Dominion East Ohio Gas and Vectren Energy Delivery of Ohio respectively, is not connected with Columbia Gas in any way. Consumers have been accustomed to receiving offers from IGS for a number of years. Should the name change request become official, this may result in additional confusion for customers used to seeing the IGS logo.

In the past, the OCC has taken action against marketers seeking to take advantage of their affiliate status. In 2009, the agency intervened when DEOE issued a mailing on Dominion letterhead, indicating that customers not choosing a marketer might be at risk of having their natural gas service interrupted. At that time, the marketer was assessed a $50,000 forfeiture and required to issue a corrective letter to customers who had signed with them in that mistaken belief.

At presstime, the PUCO had not yet decided whether to grant the OCC’s motion in the IGS case.

By Marty Berkowitz

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Gift cards and other programs help with holiday utility bills

Gift cards have been the most popular presents for six consecutive years through 2009, according to U.S. News & World Report. And 2010 is not likely to be any different. According to the last annual holiday survey by Deloitte, an international consulting company, 64 percent of all consumers – millions of Americans – give or receive gift cards. They spent about $35 per card in 2009.

Some of Ohio’s utilities also offer gift cards or certificates that can be used to help pay someone’s utility bill.

Columbia Gas of Ohio offers a “Gift of Energy” for as little as $10. Gift givers can find a form online (www. columbiagasohio.com) or by calling 1-800-344-4077. The completed form can be sent with a check, money order or, if the buyer is a Columbia Gas customer, added to his or her bill. A certificate will be mailed to the recipient or sent to the gift givers to present. The amount will be credited to the customer’s monthly natural gas bill. The process requires the gift receiver’s account number.

Dominion East Ohio has gift certificates available in denominations of $10, $25, $50, $75, $100 and $250. The certificates can be personalized to include the giver’s name or sent anonymously. The buyer need not be a Dominion customer. A form is available online at http://www.dom.com/dominion-east-ohio/ customer-service/your-bill/gift-certificates.jsp. Having the Dominion account number of the receiver is helpful but not necessary; however, the address and home phone number of the recipient is necessary.

While American Electric Power (AEP) does not have a gift card program, it will accept payments made on behalf of its customers. A person wishing to help pay someone’s electric bill can send a check to AEP with the recipient’s name and address. An account number is not needed.

AEP with Dollar Energy Fund, a nonprofit hardship fund, joined forces in 2009 to offer the Neighbor to Neighbor program, to which customers can contribute. The program helps low-income AEP Ohio customers maintain or restore their electric service by providing a utility assistance grant applied directly to their bills. To qualify, households must be AEP customers, be at or below 200 percent of the federal poverty income guidelines, have a minimum balance of $100 on their electric bill and have made a sincere effort to pay their electric bill (a minimum $100) in the last 90 days. Eligibility guidelines and application instructions can be found at www.dollarenergyfund.org.

Duke Energy Ohio offers its HeatShare program to help those less fortunate pay their utility bills. The program is administered by The Salvation Army. Duke customers can make contributions by making a notation on their monthly bill and adding the dollar amount to the bill payment. Or anyone can mail a donation, by check or money order, made payable to The Salvation Army/ HeatShare program. Information can be obtained at Duke’s website (www.dukeenergy.com). Separately, Duke will accept pre-paid MasterCard or Visa cards given as gifts and apply their amount toward a customer’s utility bill.

If someone wanted to pay another person’s Dayton Power & Light bill anonymously, he or she could send a payment with a note indicating the name and address of the customer. If the payment doesn't have to be anonymous, then the person making the payment should get the account number from the customer. The payment could be made in person at a pay agent location, online or by mail.

Neither AT&T nor CenturyLink offer gift cards or certificates that can be given to others to pay their telephone bills. Both companies, however, do allow people to make arrangements to pay another person’s bill if they provide the account number.

By Paul E. Kostyu

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Natural gas prices not expected to soar as winter heating season approaches

As Ohio’s winter heating season begins, residential natural gas consumers are preparing to turn their thermostats higher as the weather turns colder. Fortunately, experts are predicting that because supplies of natural gas continue to be equal to current demands, the wholesale price of natural gas will remain relatively low, though slightly higher than a year ago.

Choices are available for consumers who wish to take advantage of lower prices and continue to pay a variable monthly rate or otherwise lock a fixed monthly cost as a hedge against a sudden rise in the wholesale price of natural gas. Customers have the opportunity of continuing to purchase their supply through their local utility, an independent marketer or through a municipal aggregation.

The Office of the Ohio Consumers’ Counsel (OCC) recommends consumers educate themselves about choices available to them. By contacting the OCC Consumer Services Division toll free at 1-877-742-5622 (1-877PICKOCC), consumers may request free copies of fact sheets created to increase their understanding of natural gas prices and better manage their monthly bills.

Consumers also may visit www.pickocc.org and download a copy of the weekly “Comparing Your Energy Choices” fact sheet. Offers from independent retailers are summarized, and contact information, as well as the type and lengths of contracts, are included. These fact sheets also include the monthly natural gas rate listed by local utilities and a “Calculating Your Energy Choices” page allows customers to determine the lowest cost option available to them.

It is important to understand the length of contract, whether there is automatic renewal and if there is an early cancellation fee. It takes from 45 to 60 days for a switch to a new supplier to become effective, so customers need to be aware that an advertised rate may no longer be available to them when their contract becomes effective.

Often, marketers introduce themselves to potential customers through a telemarketing or door-to-door advertising campaign. The OCC includes the fact sheet “Understanding the Guidelines for Door-to-Door Solicitors” on its website.

Whether consumers are interested in accepting an offer from a marketer or prefer to remain with their local gas company, the OCC urges them to be as informed as possible when making their decision. Consumers with questions about gas choice or any other utility matter may contact the OCC hotline 24 hours a day, seven days a week through the automated voice response system.

By Marty Berkowitz

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Rejoice this holiday season by using some of these energy-saving tips, tricks and ideas

In the movie “National Lampoon’s Christmas Vacation,” Clark Griswold toils at decorating his home with 25,000 lights. When he finally completes the task and plugs in the lights, their brightness blinds his neighbors and his home’s electric meter spins so fast it’s a blur.

Griswold, played by comedian Chevy Chase, could have saved on his electric bill had he used energy efficient light bulbs. Christmas lights and decorations consume the most holiday energy because the lights tend to be used more frequently and for longer periods of time, according to the website www.christmaslightsanddecorations.com.

The same website estimates a single home could use thousands of extra kilowatts and spend more than an additional $100 a month on energy by adding seasonal decorative lights. Energy consumption is multiplied with every string of lights added to a display.

LED (light emitting diodes) lights use 75 to 90 percent less electricity than standard holiday lights, which use 25 watts in a typical 50-bulb strand. LED lights also are cool to the touch, so they are less likely to set fire to a Christmas tree or anything else. LED lights are not as fragile as normal holiday lights so they are less likely to crack or break. While LED lights aren’t as bright and are more expensive per strand, they last as much as 20 times longer (up to 100,000 hours indoors and 50,000 hours outdoors). The difference in cost should be recovered within a season or two through energy savings. Solar-powered LED white lights can cost $18 to $80 per strand, while plug-in strands of white or colored lights can cost $15 to $60. The cost depends on the number of lights and type of LED bulbs.

If you are looking to save money on holiday lighting, several websites suggest considering these tips before decorating the inside and outside of your home:

Purchase energy efficient lights such as LED lights, which are available in a variety of colors and shapes:
Reduce the number of strings of lights:
Keep your lights on for only two to five hours a day;
Turn off your lights whenever you aren’t home and when you go to bed;
Save your lighting for days closest to the holidays or for special entertaining;
Use a timer to turn lights on and off automatically;
Consider decorating this year’s tree with edible ornaments such as candy canes and strings of popcorn and cranberries;
Buy a smaller tree; it will need fewer lights;
Consider using a fiber optic artificial tree. Depending on their size, they use a single bulb ranging from 5 to 50 watts. The light is transmitted through hundreds of very small fibers along each branch of the tree. Trees cost from $20 to $200. Fiber optics also are part of other decorations such as wreaths and figures. The Alliance to Save Energy suggests:
- “Once you’ve lit the Chanukah menorah [candles], use a dimmer switch to lower [ceiling] lights.” Be sure the menorah is placed in a safe spot and the candles are secure so they don’t tip; and
- “In the spirit of Kwanzaa, the African-American spiritual week of remembering, reassessing, recommitting and rejoicing, reassess your power consumption, recommit to energy-efficient practices and rejoice in the savings.”

By Paul E. Kostyu

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Clarification

A story in the September/October 2010 edition of Consumers’ Corner about major changes to the Percentage of Income Payment Program needs clarification.

Consumers in the PIPP Plus program must follow strict guidelines to remain in the program. In addition to the annual re-verification described in the story, PIPP customers also are required to verify their eligibility whenever household income changes.