Cautions of Retail Choice

Each of us is a retail electric consumer unless your service is completely “off the grid” and you provide/generate all your own electricity. Retail simply means you buy electricity from an electricity provider, much like any other provider of services. Cooperative members are retail consumers of a distribution electric cooperative. Currently, Oklahoma is a “no retail choice” state.

“Retail choice” does not mean totally changing from one provider to another (commonly referred to as customer switching). If there were retail choice, your wire service provider would remain the same and only the actual electricity portion of your monthly bill would change. With retail choice you would most likely receive two bills—one for the wire delivery of electricity to your home or business and the other for the actual electricity. While individual rate classes might all be a little different, the electricity portion is normally about 50% of your bill.

Today, you receive one bill from a retail provider and that bill is for both the delivery and actual electricity combined. The price you pay is the same rate that everyone taking residential, commercial or other type of service pays and is available to everyone that desires electric service.

Under retail choice the price of electricity may be cheaper or higher, the conditions of that choice for the electricity portion of your bill might vary, and the door is open to get a lot of calls trying to sell you electricity. Different types of service might have implications: 1) Is your service firm (all the time)? 2) Is it interruptible (under certain conditions)? 3) Are there various prices during some hours each day or for different days of the week? 4) Is it subject to change with very little notice? 5) A host of other options. This also means you must read the fine print to determine the type of service you are going to receive.  

You service will likely have few interruptions under retail choice; however it may, from time to time, revert back to your original provider or the “default provider.” Default providers can then charge more than they normally do because you are now a part-time customer and not a full-time customer like you originally were. Your incumbent provider is now “standing-by” for your service when your new electricity provider can’t provide service and that might be at a premium cost.

Not a lot of states allow retail choice. Texas is the closest that does and each of us reads or hears about their service problems occasionally. Of the 14 states in the Southwest Power Pool (SPP), which includes Oklahoma, none of them allow for retail choice. To offer retail choice this option generally needs extra layers of regulation and administration, and this increases cost. 

Each of us as consumers needs to be cautious with these types of proposals—should they be allowed—that seem to be a way to save everyone money. What retail choice is more likely to do is save someone money at the expense of someone else. 

By Gary Roulet

Board President | Oklahoma Association of Electric Cooperatives