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New Law Requires Retail Suppliers To Send Annual Notices To Customers Who Were Moved To Variable Rate After "Introductory" Fixed Period
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Ohio Gov. Mike DeWine recently signed HB 15, which includes several provisions related to the retail electric and natural gas markets, including the elimination of electric security plans, with a new requirement for electric utilities to provide the Standard Service Offer through a statutorily defined market rate offer
HB 15 requires both retail electric and natural gas suppliers to send, to customers on an "introductory" fixed rate, notices concerning the expiration of the fixed rate, including an annual notice if the customer remains on a variable rate
The bill does not define the term "introductory", and whether "introductory" has a defined time period, or whether the term applies to any transition to a variable rate from a fixed rate, including at automatic renewal
Specifically, if a retail supplier offers a residential or
small commercial customer a contract for a fixed introductory rate that converts to a variable rate
upon the expiration of the fixed rate, the supplier must send to the customer two notices concerning the expiration
The first notice, sent between 60-90 days prior to expiration, shall inform the customer of the expiration and the specific expiration date, inform the customer of the availability of the PUCO Apples to Apples website for comparisons, and (for electricity only) inform the customer of the presence of the utility SSO "price-to-compare" notice on the customer's bill.
The second notice, sent between 15-45 days prior to expiration, shall include the preceding information as well as the specific initial rate to be charged upon the contract's conversion to a variable rate
Furthermore, suppliers shall provide an annual notice to each residential and
small commercial customer that has entered into a contract with the supplier that has converted to a
variable rate upon the expiration of the contract's fixed introductory rate.
The annual notice shall inform the
customer that the customer is currently subject to a variable rate and that other fixed rate contracts
are available
All of the above-described notices shall be sent by U.S. mail, or may be sent electronically if the supplier has the customer's "verifiable" consent for electronic notices
HB 15 applies all consumer protections adopted under R.C. 4928.10, minimum service requirements for competitive electricity services, to small commercial customers
"Small commercial customer" means any customer that receives electric service pursuant
to a nonresidential tariff if the customer's demand for electricity does not exceed 25 kW within the last twelve months. The term "small commercial customer" excludes a customer which:
(a) Manages multiple electric meters and, within the last twelve months, the electricity
demand for at least one of the meters is twenty-five kilowatts or more; or
(b) Has, at the customer's discretion, aggregated the demand for the customer-managed
meters
While R.C. 4928.10 itself contains only broad direction for the adoption of minimum competitive electric service standards, PUCO has under such authority adopted various marketing and disclosure rules, which now explicitly apply to small commercial customers
HB 15 also permits a form of enroll-by-wallet for both electricity and gas
Specifically, HB 15 provides that, "A customer who consents to a change of supplier shall not be required to provide
customer account information to the supplier if the customer provides a valid form of government-issued identification issued to the customer or a sufficient alternative form of identification that
allows the supplier to establish the customer's identity accurately."
HB 15 provides statutory authority for utilities to set "reasonable standards" for financial requirements applicable to retail suppliers
Specifically, HB 15 provides that PUCO, "shall establish rules to require an electric services
company to maintain financial assurances sufficient to protect customers and electric distribution
utilities from default."
"Such rules also shall specifically allow an electric distribution utility to set
reasonable standards for its security and the security of its customers through financial requirements
set in its tariffs," HB 15 provides
HB 15 specifically provides that, as used with regards to financial security, the term "electric services
company" includes retail suppliers but excludes brokers and aggregators
Similar provisions concerning PUCO and utility authority to set financial standards are included in HB 15 with respect to retail natural gas suppliers as well (while also excluding gas brokers and aggregators)
HB 15 does strike prior statutory language stating that retail gas suppliers may be required to provide a "performance bond"; however, the bill does not prohibit the requirement of a performance bond, but rather delegates to PUCO and the LDCs the nature of any financial security
HB 15 strikes in its entirety the prior statutory provisions authorizing electric utilities to rely on electric security plans to establish the Standard Service Offer
SSO may now only be established under a "market-rate offer" (MRO), though existing electric security plans may continue until the expiration date of the last delivery year for which PUCO has already approved a SSO procurement plan
HB 15 generally does not revise the requirements of a market rate offer compared to existing statute, aside from striking prior provisions requiring a blending of auction-based rates and existing default service rates if an MRO was implemented by a utility owning, or previously owning, generation
The Ohio EDCs have exclusively relied on competitive auctions for the SSO for about 10 years (or more depending on utility) under their ESPs, and the MRO does not materially change such procurements. However, the ESP proceedings had been "Christmas tree" proceedings addressing a variety of policies not directly related to default service. With respect to retail energy, ESPs have served as forums for retail market enhancements (end of switching fees, supplier consolidated billing pilots, etc), while ESPs have also included terms negatively impacting the retail market
HB 15 is silent on whether default-service-adjacent matters may be raised in MRO applications, or if MROs will only address competitive bidding and the translation of results into SSO rates
HB 15 contains a provision stating, "The commission shall adopt, for each electric distribution utility that provides customers
with a standard service offer in compliance with sections 4928.141 and 4928.142 of the Revised
Code [i.e. the MRO], a nonbypassable cost recovery mechanism relating to transmission, ancillary, congestion, or
any related service required for such standard service offer that includes provisions for the recovery
of any cost of such service that the electric distribution utility incurs pursuant to the standard service
offer."
HB 15 provides that, other than providing the SSO, "no electric utility shall provide a competitive retail electric service in this state if that service
was deemed competitive or otherwise legally classified as competitive prior to the effective date of
this section."
HB 15 includes various provisions governing electric rate cases
Notably, one such provision allows PUCO to approve, in a rate case, programs that allow customers to be billed directly for transmission service by a competitive
retail electric service provider
Specifically, PUCO in a rate case may approve, "Nondiscriminatory programs available for all mercantile customers, as defined in section
4928.01 of the Revised Code, that align retail rate recovery with how transmission costs are incurred
by or charged to the electric distribution utility, as defined in section 4928.01 of the Revised Code,
or programs that allow customers to be billed directly for transmission service by a competitive
retail electric service provider."
The bill allows an electric
distribution utility to supply behind the meter electric generation service, provided that any behind
the meter electric generation facilities that the utility intends to use to supply such service were filed
with the Public Utilities Commission under section 4928.47 of the Revised Code, as that section
existed prior to its repeal by H.B. 15 of the 136th General Assembly, no later than March 31, 2025 (AEP Ohio applied for certain behind
the meter electric generation facilities at certain customer data centers under such section prior to March 31, 2025, details here).
Generally, costs related to such behind
the meter generation service may not be recovered from customers that are not receiving behind the meter
electric generation service from the utility
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New Authority For Utilities To Impose Financial Standards On Retail Suppliers
Consumer Protections Broadly Extended To Small Commercial Customers Under New Law
Enroll By Wallet Required
May 23, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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