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Ohio Energy Report

January 2022





Nonmarket-Based Services Rider Rates Decreasing for FE-Ohio Customers


Nonmarket-Based Services (NMB) rider rates will be decreasing for all customers of FirstEnergy’s (FE) three Ohio operating companies: Ohio Edison (OE), The Illuminating Company (CEI), and Toledo Edison (TE). The NMB rider is used to recover FE’s nonmarket-based costs for transmission and ancillary services. New rates will go into effect on March 1, 2022.


Decreases in NMB rider rates are primarily the result of FE’s overcollection of an estimated $96,862,970 in NMB rider revenue through February 2022.


Current and March 1, 2022 NMB rider rates for OE, CEI, and TE Residential (RS), Secondary (GS), Primary (GP), Subtransmission (GSU), and Transmission (GT) rate schedules are shown in the tables below. Rates are per kilowatt hour (kWh) for RS customers and per kilowatt (kW) or kilovolt-ampere (kVa) for GS, GP, GSU, and GT customers.


Table 1: OE NMB Rider Rates



Table 2: CEI NMB Rider Rates



Table 3: TE NMB Rider Rates



Clients that are participating in FE’s transmission pilot program are opted out of paying the NMB rider. If you have any questions about this pilot program or how the new NMB rates will impact your electric costs, please contact Jennifer Lemley.


AEP Files April 1, 2022 Update to Basic Transmission Cost Rider


Transmission costs for most Ohio customers of American Electric Power (AEP) will increase on April 1, 2022 in response to AEP’s updated Basic Transmission Cost Rider (BTCR) rates. Increases in BTCR rates are primarily the result of a 21% increase in the NITS rate for 2022 for the AEP-Ohio service area. NITS charges are the largest component of the BTCR rates.


Select interval-metered customers, including Brakey Energy clients, may elect to participate in a transmission pilot program. The demand portion of BTCR charges for a customer participating in the pilot program is calculated based on the customer’s load during AEP’s one Coincident Peak (1CP). The 1CP is the one hour of the year when load on AEP’s zonal electric grid peaks. This is an alternative to the default method in which the demand portion of the BTCR charge is calculated based on monthly billed demand.


BTCR rates for customers participating in AEP’s transmission pilot program will decrease on April 1, 2022. Decreases in Pilot BTCR rates are primarily the result of a recent settlement in AEP’s base distribution rate case. As part of the settlement, AEP agreed to increase the pilot program participation cap from 700 Megawatts (MW) to 900 (MW) for 2022. AEP permits enrollment above the cap into the pilot program, but decreases the per unit financial benefits for all MWs enrolled above the cap. In 2021, pilot program enrollment exceeded the cap by approximately 50 MW. However, due to the increase in the participation cap, AEP does not anticipate enrollment to exceed the cap in 2022.


The tables below show the current and April 1, 2022 BTCR rates for non-transmission pilot program customers and transmission pilot program customers of AEP-Ohio. The BTCR has both kWh consumption and kW demand components.


Table 4: Current and April 1, 2022 BTCR Rates for AEP-Ohio Customers



Table 5: Current and April 1, 2022 BTCR Rates for AEP-Ohio Customers Participating in the Transmission Pilot Program



If you would like more information about how the BTCR impacts 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 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 an 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 January is $4.024 per Million British Thermal Units (MMBtu), down 26.1% from December’s price of $5.447 per MMBtu. This settlement price is used to calculate January 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 have decreased since December due to increases in domestic natural gas production and relatively mild temperatures across much of the Northeast in December.


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 rebounded slightly since December and remain significantly higher than prices in early 2021.


Figure 2: 12-Month Energy Price Strip



*ATC pricing as of January 24, 2022. Data provided by Direct Energy Business.


The graph below provided by Direct Energy Business shows the January 24, 2020 through January 24, 2022 ATC forward prices for calendar years 2022, 2023, 2024, 2025, and 2026 for the AD hub. Forward calendar year strip prices for all years remain near two-year highs. We are continuing to see backwardation in the forward market with prices for 2023 trading at a premium to future years.


Figure 3: AD Hub Calendar Year Strip Prices



*ATC pricing as of January 24, 2022.


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 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.

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




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