FirstEnergy generation rates to decrease slightly on June 1

Effective June 1, 2010, FirstEnergy is reducing the standard generation rates by about 0.3%.  This applies to customers of the Illuminating Company, Ohio Edison and Toledo Edison who are not buying generation services from an alternative supplier.  The reason for the decrease is a reduction in the Midwest ISO’s (MISO) transmission rate.

This adjustment is permitted under the the terms of FirstEnergy’s Electric Security Plan.  Certain other riders may be adjusted quarterly, with the next opportunity for change coming on July 1.  These adjustments could be increases or  decreases.  Please contact us if you want to know how these rate changes impact your electric costs.

Effective May 21, FirstEnergy will extend discounts not only to customers who had the all-electric rate prior to January 1, 2007, but also to customers who rented electrically heated apartments or bought all-electric homes after that date.  For more details, see John Funk’s article in the May 11th Plain Dealer:  FirstEnergy discount

These lower rates will now apply to 348,000 homes at least through next winter.  No decision has yet been made about who will pay for these subsidies that could amount to $100 million to $150 million annually.  The Public Utilities Commission of Ohio (PUCO) is working on a permanent resolution to the issue.

In any event, electric costs are expected to increase significantly in the next three to five years.  If you have an all-electric home and you want to minimize the risk of losing your discount to political whims, we recommend that you look into ways to become more energy efficient.  First, do all you can to reduce drafts and heat losses from your house.  Switch from incandescent light bulbs to compact fluorescent bulbs or LEDs.  If you replace an appliance, look for an energy efficient model. Finally, if you currently have baseboard (resistant) heating, look into heat pumps or geothermal systems. Heat pumps are twice as efficient as resistant heating, and geothermal is up to 4 times more efficient.  For more ideas, see our report on the Pursuit of a Net Zero Energy Home.

In the spring of 2008, Dominion East Ohio (DEO) got out of the natural gas supply business.  The utility now only provides gas delivery services.  The charge for residential delivery climbed from $1.8204 per Mcf to $2.96 in April in order to cover the cost of a program that allows low-income customers to pay only a portion of their bills.

You may buy your natural gas from another supplier and have it delivered by Dominion East Ohio.  If you have not selected an alternative supplier, your gas supply was assigned to another company under the variable Standard Choice Offer (SCO).  In this case, regardless of which supplier you are assigned, you are charged DEO’s SCO rate, which varies each month based on New York Mercantile Exchange (NYMEX) month-end settlement price, plus a “Retail Price Adjustment” (RPA) of $1.20 (dropping from $1.40 in April). Based on recent NYMEX natural gas prices, for the period from May 20 to June 19, the SCO rate will be $5.47 per Mcf.

Based on the most recent information on the PUCO website (Publication Date: April 29, 2010), marketers are not offering one-year fixed rate contracts for less than $7.30 per Mcf (see highlights below).

• Ohio Natural Gas: 6 months for $6.97; cancellation fee of $100
• Constellation NewEnergy, Inc.: 12 months for $7.30; cancellation fee of $25
• Gateway Energy Services, Corp.: 24 months for $8.43; cancellation fee of $12.50
• Just Energy: 60 months for $7.86; cancellation fee of $100

Just Energy’s 5-year fixed price offering is actually 57 cents lower than Gateway’s 2-year contract. We like the fact that marketers are offering multi-year contracts again.  However, we want to see the prices fall a little further.

We recommend staying with DEO’s variable SCO rate if you have not locked in with another supplier.  I will be curious to see if the 60-month fixed rate might fall under $7 this summer.   If you have an alternative supplier contract at a rate significantly higher than $6 per Mcf, and there is no early termination fee, you might want to consider returning to DEO.  You would do this by contacting your supplier and telling them that you want to default back to DEO.

This week, the Public Utilities Commission of Ohio (PUCO) announced that it will not make a decision by May 5th on FirstEnergy’s rate proposal, as requested by FirstEnergy and supporters of the proposal.  This rate proposal concerns electric rates for the 3-year period beginning in June 1, 2011.  The May 5th deadline was requested so that FirstEnergy could hold auctions this summer to set the generation prices for that period.

For more information, see John Funk’s article in Friday’s Plain Dealer: PUCO decides to slow down new electric-rate approval plan

Last Wednesday, the Public Utilities Commission of Ohio (PUCO) gave FirstEnergy until May 7 to adjust its billing for all-electric customers.  The lower rates will only apply in the “winter” months of September through May.  For more information, see John Funk’s article from the Plain Dealer of April 29: Wait for adjusted electric rates