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Ohio Energy Report

December 2021





AEP Expands Access to Transmission Pilot Program


As a result of a settlement in American Electric Power’s (AEP) recent distribution rate case, AEP has agreed to expand the number of participation slots available in its transmission pilot program. As a result, there are now a limited number of slots available for new participants. Eligibility for AEP’s transmission pilot program is narrowly limited to members of those sponsoring organizations identified in the Joint Stipulation and Recommendation filed in AEP’s recent distribution rate case. This includes members of the Industrial Energy Users of Ohio (IEU-Ohio). Brakey Energy clients quality for the expanded spots via the Brakey Energy Client Group, an IEU-Ohio member.


Customers that would like to enroll in AEP’s transmission pilot program in 2022 have only until December 15, 2021 to provide notice to AEP via the customer’s sponsoring organization. If you would like more information about AEP’s transmission pilot program and how you might be able to reduce your electric costs by enrolling, please contact Matt Brakey.


Take Steps This Winter to Mitigate Your 2023 Transmission Costs


Eligible customers in AEP and FirstEnergy (FE) Ohio service territories can participate in pilot programs that permit customers to pay for transmission based on an alternative framework. Under the pilot programs, a customer is charged for transmission based on how the customer uses power during the one-hour intervals of the year when demand on each zonal electric grid peaks (referred to as “Transmission Coincident Peaks” or “Transmission CPs”). This is in comparison to the default method in which the customer pays for transmission based on its monthly billed demand. Pilot program eligible customers can reduce transmission costs by implementing measures to reduce demand during Transmission CPs.


For a customer enrolled in one of the transmission pilot programs, transmission charges for the 2023 calendar year will be calculated based on the customer’s demand during the Transmission CPs set during the 12 months ending October 31, 2022. Historically, Transmission CPs in FE’s Ohio service territory have occurred exclusively during the summer months. However, in the last 14 years, Transmission CPs in AEP’s Ohio service territory have occurred nearly as often in the winter months as in the summer months. Of the AEP Transmission CP events that occurred in the winter, 100% occurred during the hour ending 8:00 AM Eastern Standard Time (EST).


We recommend that AEP customers currently enrolled in AEP’s transmission pilot program (or those intending to enroll in 2022 or 2023) that want to mitigate transmission costs for 2023 take steps this winter to curtail load in response to potential Transmission CPs. The most critical hour to target will be from 7:00 AM to 8:00 AM EST.


To assist customers in their efforts to reduce demand during Transmission CPs, Brakey Energy has devised an alert notification system. Customers that participate in the system can opt to reduce electric usage during alerted times. This is a service available only to Brakey Energy clients. If you are a participating client and would like to change your registration preferences, including adding or deleting which employees receive the alerts, please email Catherine Nickoson.


FE Files Updates to SSO Riders


Electric costs will be decreasing on January 1, 2022 for Ohio customers that take electric generation service under FE’s Standard Service Offer (SSO). The SSO is the default rate charged by the utility for electric generation service to customers that do not contract with an alternative supplier. The SSO generation rate is higher in the three summer months of June, July, and August than it is in the other nine months of the year.


The current and January 1 SSO rates for Ohio Edison (OE), the Illuminating Company (CEI), and Toledo Edison (TE) Residential (RS), Secondary (GS), Primary (GP), Subtransmission (GSU), and Transmission (GT) rate schedules are shown in the tables below. These rates will change again on April 1, 2022.


Table 1: OE SSO Rates



Table 2: CEI SSO Rates



Table 3: TE SSO Rates



If you would like more information about how FE’s SSO rate updates will impact your monthly electric costs, please contact Jennifer Lemley.


Residential Corner


The highly competitive generation offers we have been able to highlight for residential customers have disappeared. We are now recommending customers with expiring contracts default to the SSO until further notice. The SSO is the default price customers pay that are not competitively sourcing power. This rate varies by electric distribution utility but is likely below current market conditions. To the extent you are in expiring contract, make sure you provide notice to your supplier that you would like to default back to the SSO as to avoid being swept up in extremely costly holdover provisions.


Brakey Energy has long and often found defaulting to distribution utilities’ Standard Choice Offer (SCO) a prudent strategy for natural gas supply. We encourage our readers to employ this strategy if they’re comfortable riding the highly volatile natural gas market. While this strategy has performed extremely well for years, customers who are employing this strategy are in store for notably higher winter heating bills.


Natural Gas Market Update


The NYMEX settlement price for December is $5.447 per Million British Thermal Units (MMBtu), down 12.2% from November’s price of $6.202 per MMBtu. This settlement price is used to calculate December gas supply costs for customers that contract for a NYMEX-based index gas product.


The graph below shows the year-over-year monthly NYMEX settlement prices for 2018, 2019, 2020, and 2021. Prices shown are in dollars per MMBtu of natural gas. Natural gas prices have decreased since October due to warmer-than-normal temperatures across much of the country that have put downward pressure on natural gas demand.


Figure 1: NYMEX Monthly Natural Gas Settlement Prices



Electricity Market Update


The graph below shows the Around-the-Clock (ATC) 12-month price strip for electric generation and how it has changed over the past 36 months for three Ohio utility service territories: AEP, FE (the ATSI zone), and AES-Ohio (formerly Dayton Power & Light (the DAY zone)). Prices have decreased approximately 13% since November commensurate with decreases in natural gas prices.


Figure 2: 12-Month Energy Price Strip



*ATC pricing as of December 9, 2021. Data provided by Direct Energy Business.


The graph below provided by Direct Energy Business shows the December 9, 2019 through December 9, 2021 ATC forward prices for calendar years 2022, 2023, 2024, 2025, and 2026 for the AD hub. Forward calendar year strip prices for all years are at two-year highs. The forward price for calendar year 2022 has fallen significantly in recent days but is still trading at a premium to all other years. Despite the dramatic pullback in 2022, outlier years remain largely unchanged.


Figure 3: AD Hub Calendar Year Strip Prices



*ATC pricing as of December 9, 2021.


Calendar of Events




Tuesday, February 22, 2022 - Wednesday, February 23, 2022


The Columbus Renaissance Hotel

50 North Third Street

Columbus, Ohio 43215


This is Ohio’s premier conference on energy rates, regulations, and efficiency. Make plans to attend this conference and receive priceless insights into energy prices, trends, savings opportunities, and the forces that influence the price and quality of power in Ohio.


This year’s conference will be a hybrid event. Attendees will have the option to participate in-person at the Columbus Renaissance Hotel or online using the virtual conference platform & mobile app, Whova.


Brakey Energy team members will be leading an interactive workshop during this year’s event. At 1:45 p.m. on Tuesday, Matt Brakey, President, Jennifer Lemley, Energy Analyst, and Katie Emling, Engineer, will be presenting “Cost of Electricity in Ohio … Managing Electric Costs in a Volatile Market and Regulatory Environment.” This workshop will provide valuable insights into Ohio’s energy market and regulatory environments, the potential impacts of volatility on costs for commercial and industrial energy users, and strategies that users may employ to manage volatility risks.


A complete agenda with a list of presentation topics, speakers, and times is available on the event website.




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