To all electricity customers in Ohio, is your contract fixed or variable?

January 07, 2016

In response to the Polar Vortex & actions by certain electricity suppliers, the Public Utility Commission of Ohio (PUCO) has ordered that retail electricity suppliers can only market their contracts as “fixed” if the energy price remains constant for the duration of the contract, and that any other contracts must be marketed as “variable” or “introductory.” While the intent behind this order to better protect consumers from unscrupulous practices is certainly admirable, it has the effect of erasing reasonable differences in the way residential and commercial & industrial consumers contract for electricity. By lumping together as variable all contracts which do not meet the PUCO’s extremely narrow definition of fixed, the PUCO makes no distinction between a highly volatile index-based product (one that has a very high degree of possible budgetary outcomes for the consumer) and one for which 99% of the energy-related components are fixed (and which drastically reduces the budgetary uncertainty for the consumer). GDF SUEZ Energy Resources believes that, rather than focusing on the broader labeling of contract types, the PUCO should get to the heart of the issue: what constitutes a Change in Law scenario. Under no circumstances should retail electric suppliers be using weather events to exercise price majeure on a contract that has suddenly become less economically favorable to them, thereby transferring those new costs to the end user.

Typically, contracts between competitive retail electric suppliers and Ohio’s commercial & industrial users do not have titles like “fixed,” “variable” or “introductory.” They have detailed sections which outline how specific energy-related components are treated (fixed price vs. variable or index priced) throughout the duration of the contract, while also including a section addressing Change-In-Law scenarios (how unforeseen regulatory or legal changes might affect the contract price, e.g. tax rates). Competitive retail electricity suppliers like GDF SUEZ Energy Resources, as an information leader, have clearly pointed out energy components for which pricing is fixed and which ones are stipulated as fixed, but subject to change in the future, and which components are index based.

GDF SUEZ Energy Resources is complying with the PUCO’s order to label all contracts which do not meet its definition of fixed as “variable.” We strongly encourage our clients and potential clients to ask how other suppliers are treating their retail electricity contracts in light of the PUCO’s order. GDF SUEZ Energy Resources, along with other suppliers, has asked the PUCO to clarify many aspects of this Order like why it applies to all consumer segments and not just residential as well as why it does not apply to electric utility tariffs for default service. A better understanding of the issues and education of the consumer is necessary prior to the Ordered change in contract language to help shopping customers make informed decisions.