Competition for retail electricity customers among various service providers continued to accelerate in Ohio in 2012. The ability to switch suppliers of electricity has been in place in Ohio since Jan. 1, 2001, following approval of restructuring legislation approved by the Ohio General Assembly in 1999. While competition began appearing in some of the higher-priced markets in Ohio shortly thereafter, AEP’s low rates made it difficult for competitors to gain a foothold through much of the first decade of the 21st century.
“Market competitiveness is a measure of understanding the market, selling cost-effective solutions that yield the best possible product for the consumer and achieving profitability levels that ensure continued development and growth.” - AEP Stakeholder
A stagnant economy and low power prices, coupled with the PUCO proactively choosing the competitive market model over a cost-based model, opened the door for competition within the state of Ohio.
At the end of 2012, customer switching in Ohio had resulted in the generation-related gross margin loss of approximately $235 million. That equated to an annual average of approximately 51 percent of AEP Ohio’s retail customer load being served by an alternative supplier over the course of 2012.
Our competitive energy business, AEP Energy, is a retail electricity supplier to residential, commercial and industrial customers. AEP Energy, which acquired BlueStar Energy, provides a wide array of energy solutions, including retail electric supply and energy management solutions. The company provides electricity supply in Delaware, Illinois, Maryland, New Jersey, Pennsylvania, Ohio and Washington, D.C., and energy management solutions nationwide. AEP Energy is one of the fastest-growing business units within AEP. At the end of 2012, AEP Energy had more than 160,000 customers compared with 40,000 at the end of 2011.
A challenge for AEP Energy, in a very competitive marketplace with low energy prices, is to profitably grow at a pace that delivers superior financial returns for the associated risk. To achieve this, the company is focused on providing customized products, excellent customer service and timely and accurate billing, and developing robust systems to manage significant growth.