AEP Proposes modifications to ESP

April 12, 2012 By

On March 30, 2012, AEP filed its proposed modifications to the January 2011 ESP application.  A copy of the modified ESP application is located on AEP’s website.  This plan is proposed to set rates as of June 1, 2012 and includes a capacity pricing structure that retains the two-tiered system.  However, under the modified ESP, the lowest capacity charge a shopping customer will pay is $146 per megawatt (MW)-day, not RPM capacity, which is set to drop to $16.46 per MW-day on June 1.  Shopping customers above AEP shopping caps will continue to pay the $255 per MW-day capacity price, set in the original ESP.  As a result, this modified ESP appears to be, in the aggregate, worse than the ESP ultimately rejected by the Commission.   It is unknown what the final ESP and corresponding rate structure will look like.  On April 2, the PUCO set a procedural schedule for the modified ESP, which includes technical conferences, testimony, an evidentiary hearing and oral arguments up through July 3, 2012.  Brakey Energy continues to monitor the situation closely, and is also actively participating in the rate proceedings through its membership in the Industrial Energy Users of Ohio

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Filed Under: AEP-Ohio, ESP

Natural Gas Update

April 6, 2012 By

The NYMEX settlement price at the end of March was $2.191 per thousand cubic feet (MCF), down about 10% from $2.446 at the end of February.  This is the lowest month-end close in 10 years.  For Dominion East Ohio (DEO) commercial and residential customers under Choice, the price to beat is NYMEX plus 60¢, or $2.791 per MCF beginning in mid-April. Columbia Gas of Ohio’s price to beat is currently NYMEX plus 15.3¢ per hundred cubic feet (CCF) or 37.2¢ per CCF for April.  You may read more about this dip in prices in this recent Associated Press article that appeared in the Cleveland Plain Dealer:  Natural gas dips after US supplies grow We expect variable rate plans for natural gas to continue to be more attractive than fixed rate contracts.  Natural gas storage space is at a premium because of the warmer than normal winter and the increased output from Ohio’s Utica shale region.  By July or August, there may be no storage space left, which would cause natural gas prices to further collapse to under $2.  You may read more about the Utica shale well production in a recent Columbus Dispatch article. The natural gas from Ohio’s Utica share region is “wet gas”, which means that it has a higher BTU content than the so-called “dry gas” found elsewhere.  Wet gas also contains other useful liquids, including oil and glycol, which makes it more valuable to extract.  Because EPA rules do not permit the flaring of excess natural gas, it must be collected, stored and sold.  This results in downward pressure on natural gas prices.

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Filed Under: Columbia Gas, Dominion East Ohio, Natural Gas, NYMEX, Utica Shale