Before 1999, residents and businesses in Ohio had no choice in their electric service (Direct Energy). Much of the state’s electricity was generated, transmitted, and distributed by Ohio's eight Investor-Owned Utilities (IOU's), the four largest being AEP Ohio, Dayton Power & Light, Duke Energy, and FirstEnergy (Ohio Edison, Toledo Edison, Cleveland Illuminating). Prior to deregulation, the cost of electricity was based on a process that was dependent on these companies cost to produce electricity, which in turn resulted in a rate cap - centralized and regulated.
In July 1999, Senate Bill 3 was passed removing the rate cap and allowing consumers to have a choice in selecting an electricity supplier. The bill was to go into effect on January 1, 2001. The law required a 5% reduction in residential rates, along with a rate freeze until 2005 to allow the retail market to grow (Direct Energy). However, retail competition was slow to emerge in Ohio.
Due to the retail market failing, The Public Utilities Commission of Ohio (PUCO), along with all four major Ohio utilities, developed “rate stabilization plans” (RSPs) that extended then-current rates for another two to three years. The RSPs essentially brought Ohio’s slowly developing competitive retail market to a halt. Senate Bill 221 in 2008 authorized the restructuring of the electric industry in Ohio and included an energy efficiency requirement, which requires PUCO to approve all rates for either a Market Rate Offer (MRO) or an Electric Security Plan (ESP) (Energynews.us).
Today in Ohio, with limited exceptions, both residential and business customers can shop the marketplace and choose a competitive retail electricity supplier to provide the generation component of their electric service. The local electric utility still delivers power to all customers, even those who have switched to an alternative generation supplier.