By the end of next year, American Electric Power customers in central and southern Ohio will have paid about 4 percent more for electricity each year since 2005, according to the state's consumer watchdog.

The increases have come a quarter here, a dollar there, in special surcharges. But it could have been -- and likely will get -- worse.

State regulators who paved the way for the increases said that without their actions, Ohio's utility customers would have been paying much more.

"If you take a look at other states, what we have done is pretty good," said Alan Schriber, chairman of the Public Utilities Commission of Ohio. "There's absolutely, unequivocally no doubt in my mind that we are in better shape with the rate-stabilization plans in place."

Two years ago, PUCO commissioners approved rate-stabilization plans for the state's utilities, including AEP Ohio. Schriber and other advocates of the plans hoped they would provide more time for competition to emerge in Ohio's recently deregulated electricity market.

They also hoped the plans would rein in rates, which were expected to skyrocket in an open market.

Between 2006 and 2008, utilities are able to charge customers more by way of "riders" -- small increases on bills that the PUCO could approve through a streamlined process.

The increases don't look like much individually. You might have noticed something like $1.38 a month on your bill to help AEP buy Monongahela Power's service territory in southeastern Ohio.

But taken together, the nickels and dimes add up.

The average AEP customer in central and southern Ohio will have paid $138 in these special charges between Jan. 1, 2006, and Dec. 31, 2008, according to the Ohio Office of Consumers' Counsel. The numbers are based on the average customer who uses about 1,000 kilowatt-hours of electricity each month.

Judging by what the average customer in those areas paid in 2005, before riders were allowed, bills jumped about 4 percent a year.

It's hard to say whether such an increase is worthy of an outcry, said Robert Burns, a researcher at the National Regulatory Research Institute at Ohio State University.

"I don't think it reaches the level where you say this is absolutely outrageous," he said. "But any time you have some kind of plan that calls for rates to be stable, you have to look very carefully as to what the (riders) are.

"Then, you have to ask yourself if these are really justified -- and that's something people can argue over."

For Schriber, there's no question. Rate-stabilization plans saved Ohioans money, especially compared with other states in similar situations, he said.

In Illinois, for example, deregulation caused bills to rise by as much as 55 percent in some parts of the state this year. Consumers in Maryland, Rhode Island, Connecticut and Delaware all faced higher rates when the electricity market was deregulated.

But Janine Migden-Ostrander, the Ohio consumers' counsel, isn't willing to say the rate plans saved Ohioans money. The downside to the rate-stabilization plans was that utilities didn't have to open their books in order to levy surcharges, she said.

"We don't have a chance to look at things in the depth that we think is appropriate," she said. "The ends do not justify the means when the process is not appropriate."

For most Ohio utilities, the current rate plans expire at the end of 2008. Even though that is more than a year away, representatives of companies and consumer groups are taking positions, knowing that whatever kind of system is approved, state regulators will need time to work out the kinks.

Ohio was one of many states that deregulated their electricity market in the 1990s, with large industrial customers leading the way.

But the energy environment had changed by the time that deregulation began to be phased in during this decade. A competitive market in which independent power providers compete with utilities and end up reducing prices didn't develop during the transition period of 2001 to 2005.

The rate-stabilization plans were devised to avoid "sticker shock" and give competition a chance to develop.

But that didn't happen. Ask why and you'll get a variety of answers, ranging from poor decisions by federal regulators and surging natural-gas prices after the Enron debacle to badly written regulations and the existence of already-inexpensive electricity in southern Ohio.

Industrial groups that fought for deregulation a decade ago now support a return to rules, with some changes.

AEP and other utilities oppose that and support a gradual phase-in of market rates or a continuation of rate-stabilization plans. They also want state law to guarantee that the PUCO has the clear authority to approve the rate plans, which has been challenged in court, said Beverly Martin, managing director of the Ohio Electric Utility Institute.

Gov. Ted Strickland is developing his own proposal. He thinks the state would have been better off had it not approved deregulation in 1999, but he doesn't think Ohio can reregulate utilities.

He expects to achieve a hybrid approach while promoting renewable resources such as wind and solar power, upgrading energy efficiency and modernizing Ohio's electricity system.

paul.wilson@dispatch.com