The NYMEX settlement price at the end of October was $3.524 per thousand cubic feet (Mcf), down 6% from $3.759 at the end of September. For Dominion East Ohio commercial and residential customers, this means that the default price to beat will be $4.524 per Mcf for the month beginning in mid-November. Columbia Gas of Ohio’s price to beat in November is $0.5404 per hundred cubic feet (Ccf). You may read more about this in John Funk’s article in the Plain Dealer: Dominion and Columbia customers will see gas prices fall in November
After years of increases, natural gas prices have been falling primarily due to the increase in supplies as a result of breakthroughs in shale drilling technology. The NYMEX settlement price at the end of September was $3.759 per thousand cubic feet (Mcf), down from $3.857 at the end of August. For Dominion East Ohio (DEO) commercial and residential customers under Choice, the price to beat is NYMEX plus $1, or $4.759 in October. If you are willing to take a little risk, we are recommending that these customers stay with the utility’s default variable rate plan for now because this is likely to save you money this winter over the fixed price plans that are currently available. The lowest fixed price offer for DEO customers that we saw on the PUCO’s Apples to Apples Chart was Constellation NewEnergy’s $5.99 per Mcf for 12 months. If you are risk-averse, you might check and see if your community has a lower fixed rate plan. For more details, see this John Funk article from Tuesday’s Plain Dealer: Natural gas prices falling as supplies near a record
AEP-Ohio’s electric rates include a Provider of Last Resort (POLR) charge that was intended to compensate AEP for the risk of both customer migration to retail electric suppliers and customers returning to AEP for generation services. Several parties, including the Industrial Energy Users – Ohio, challenged this charge in court. In April, the Ohio Supreme Court directed the Public Utilities Commission of Ohio (PUCO) to reconsider the appropriateness of the POLR charge. The PUCO recently determined that the POLR charges are not appropriate. The PUCO directed AEP to refund the amount of POLR charges collected since June of 2011 by credits on customer bills beginning in November. You may read more about this in this article from the Columbus Dispatch: Credits coming for AEP customers
On Wednesday, September 28th, we attended and participated in the 6thAnnual Northern Ohio Energy Management Conference in Akron. The luncheon keynote address was given by Tony Banks, Vice President Competitive Market Policies for FirstEnergy Solutions. He commented that:
- The deregulation of electric utilities that began in 1999 in Ohio has resulted in competition that is working.
- About 1.6 million residential and business customers are buying generation from competitive suppliers and finding cost savings.
- FirstEnergy customers have saved over $100 million annually.
- AEP-Ohio’s current rate proposal includes hurdles to generation shopping that, if approved by the PUCO, would limit competition for their customers
John Funk had an interesting article in Thursday’s Plain Dealer about Tony Bank’s speech: FirstEnergy exec says utilties’ competition has lowered costs. Mr. Funk states that “…the 70 percent who are taking advantage of competition to get a lower price are buying from FirstEnergy Solutions. They get a 6 percent discount on the price of power charged by CEI, Ohio Edison and Toledo Edison”. However, our experience has been better:
- We have helped our commercial and industrial clients contract about 180 accounts with FirstEnergy Solutions. Over the past 12 months, their average savings were 13% off the entire electric bill as opposed to a 6% discount off the generation portion of the bill!
- We have a few clients who have contracted with other generation suppliers, such as Constellation NewEnergy, Duke Energy Retail and Glacial Energy. However, these suppliers were not ready to go when competition fully opened up in 2009. In addition, the terms of their contracts are not right for every customer.
These savings have helped our clients, who are served by FirstEnergy’s distribution utilities, reduce their electric costs and remain competitive in the global marketplace. We expect to have the same success with companies who are served by AEP-Ohio, depending upon the outcome of AEP’s rate proposal.