Make Plans to Attend the Upcoming Ohio Energy Management Conference
The Brakey Energy team will have a strong presence at this month’s Ohio Energy Management Conference. The conference, which takes place February 22 and 23, 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 is a proud sponsor of the Ohio Energy Management Conference.
Brakey Energy team members will be leading two interactive workshops during this year’s event. At 10:45 a.m. on Tuesday, Matt Brakey, President, and Jennifer Lemley, Energy Analyst, will be joining Kevin Murray, Executive Director of the Industrial Energy Users of Ohio, to present “FirstEnergy: Significant Developments Impacting Electric Rates.” This workshop will provide insights into developments affecting electric rates in FirstEnergy’s service territory, including a review of recent rider updates, rising transmission costs, customer refunds, and smart grid deployment, as well as the status of investigations into FirstEnergy’s political and charitable spending.
At 1:45 p.m. on Tuesday, Matt Brakey, Jennifer Lemley, 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.
To see a complete agenda and to register online, please visit the event website.
AEP Peak Load for 2022
Brakey Energy provides email alerts in advance of potential American Electric Power-Ohio’s (AEP) Transmission Coincident Peak (1CP) to those clients that elect to receive them. As of February 14, 2022, Brakey Energy has issued one AEP 1CP alert for 2022.
The 1CP for AEP customers occurs during the one-hour interval when demand on AEP’s zonal grid is at its highest. This peak demand interval may occur either on a very hot summer afternoon or a very cold winter morning. In the last 14 years, AEP’s 1CP has occurred during the winter on six occasions.
The table below lists AEP’s single highest load this year, as well as the day and time of the occurrence and the percent probability that Brakey Energy assigned to the event that it would ultimately set AEP’s 1CP for 2022. This is based on preliminary data.
Table 1: AEP Zone Highest Load to Date through February 14, 2022
In its 2022 Load Forecast Report, PJM Interconnection predicted that AEP’s peak load this winter will register at 22,238 Megawatts (MW). AEP’s 1CP for 2021 (which occurred on August 24 during hour ending 5:00 PM) was 21,939 MW. AEP’s highest load to date for 2022 falls below both of these values.
The highly competitive generation offers we highlighted in the past for residential customers have disappeared. We are now recommending customers with expiring contracts default to the Standard Service Offer (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 experiencing notably higher winter heating bills.
Natural Gas Market Update
The NYMEX settlement price for February is $6.265 per Million British Thermal Units (MMBtu), up nearly 56% from January’s price of $4.024 per MMBtu. This settlement price is used to calculate February 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, 2021, and 2022 to-date. Prices shown are in dollars per MMBtu of natural gas. Natural gas prices increased sharply in late January in response to colder-than-average temperatures throughout much of the Southern U.S. and what was likely a trader or traders that got caught short at settlement.
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, FirstEnergy (the ATSI zone), and AES-Ohio (formerly Dayton Power & Light (the DAY zone)). Prices have rebounded notably since January following natural gas prices.
Figure 2: 12-Month Energy Price Strip
*ATC pricing as of February 14, 2022. Data provided by Direct Energy Business.
The graph below provided by Direct Energy Business shows the February 14, 2020 through February 14, 2022 ATC forward prices for calendar years 2023, 2024, 2025, 2026, and 2027 for the AD hub. Forward calendar year price for 2023 is continuing to trade at a premium to future years.
Figure 3: AD Hub Calendar Year Strip Prices
*ATC pricing as of February 14, 2022.