PUCO Grants AEP-Ohio’s Request to Continue Two-tiered Capacity Pricing Mechanism

May 31, 2012 By

As many of you are aware, on March 7, the PUCO issued an order that permitted AEP to continue its two-tiered capacity pricing mechanism until May 31.  The first tier is based on RPM capacity pricing and the second tier, for shopping customers above AEP shopping caps, is $255 per MW-day.  Based on the PUCO’s order we anticipated that, starting June 1, all capacity would be priced at RPM, which drops to $16.46 per MW-day on June 1.

However, yesterday the PUCO issued an entry granting AEP’s April 30th request to continue the interim capacity rates of $146 per MW-day (first tier) and $255 per MW-day (second tier) authorized by the March 7, 2012 entry.  The entry authorized the interim capacity rates to continue until July 2, 2012 unless the PUCO issues an order in the proceeding.

The PUCO’s action permits AEP-Ohio to continue penalizing shopping customers by charging artificially high capacity prices.  Under this capacity pricing mechanism, it will be difficult for many AEP customers to save money through generation shopping.  Through our association with the Industrial Energy Users (IEU) of Ohio, Brakey Energy continues to advocate for the shopping rights of all Ohio electric customers.

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Filed Under: AEP-Ohio, Capacity Pricing, IEU-Ohio, PUCO

PJM Announces 2015/2016 Base Residual Auction Results

May 24, 2012 By

On May 18, 2012, PJM announced the results of the 2015/2016 Base Residual Auction (BRA).  The objective of each BRA is to procure capacity reserve for the RTO in the least costly manner.  Auctions are held three years in advance of the targeted delivery years.  The 2015/2016 BRA covers the period June 1, 2015 through May 31, 2016.

The overall clearing price that load will pay in most of the RTO (including the AEP zone) was $134.62 per megawatt-day (MW-day).  Due to planned generation retirements and transmission constraints, the ATSI local delivery area (LDA) in northern Ohio experienced much higher prices than the rest of the RTO.  As a result, the price that load will pay in the ATSI zone was $294.03 per MW-day.  This price reflects a blend of the higher clearing prices in the ATSI zone with some lower cost external resources that are available subject to some constraints.   A detailed report explaining the BRA results are located on the PJM website.

The result will be significantly higher prices for electricity users in Northern Ohio starting June 1, 2015.  An article by John Funk in The Plain Dealer discusses some of the reasons for and ramification of the higher prices.

There are strategies that consumers can employ to alleviate the impact of these high capacity prices on future electric bills.  In addition, consumers who have the ability to curtail usage during times of peak demand can benefit financially by participating in demand response programs, such as those offered by Enernoc and other curtailment service providers.  Check out the June issue of the Brakey Energy newsletter for details regarding the auction and ways you can start preparing to reduce the impact of these capacity prices.

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Filed Under: Base Residual Auction, John Funk, PJM