Avoid Aggregation Aggravation
Ohio electric customers defaulting to the utility’s Standard Service Offer (SSO) for generation service may find themselves paying a lot more than SSO rates if they do not take action to avoid being swept up in government aggregation. Aggregation providers coordinate with communities across the state to bundle the electric load of residents and businesses to allegedly increase buying power for retail electric service. Per Section 4928.20 of Ohio Revised Code, many SSO customers located in aggregated communities can be automatically enrolled in aggregation programs.
Under current market conditions, aggregated pricing will likely significantly exceed SSO rates for most, if not all, Ohio electric customers. For example, Ohio’s largest aggregation program, the Northeast Ohio Public Energy Council (NOPEC), has been charging customers in its Standard Program 12¢ per kilowatt hour (kWh) for generation service. This is more than double the average SSO rate for nonresidential electric customers located in NOPEC member communities.
Customers can avoid aggregation by joining the Public Utilities Commission of Ohio’s (PUCO) “Do Not Aggregate” list. You may join the list by either completing and submitting the PUCO’s Electric Do Not Aggregate Form or calling the PUCO at 800-686-PUCO (7826). Regardless of the method you choose, you will need to provide the following for each of the accounts you want added to the list: (1) customer name as it appears on the bill, (2) service address, and (3) customer number. (For American Electric Power (AEP) customers, the customer number is a 17-digit number beginning in either “0004” or “0014.” For FirstEnergy (FE) customers, this is a 20-digit number beginning in “08”).
Once added to the “Do Not Aggregate List,” customer names and service addresses will be publicly available on the PUCO website. Customer account and identification numbers will remain confidential.
If you have any questions or would like assistance adding your account(s) to the “Do Not Aggregate List,” please email Mathew Nickoson.
Peak Loads for Summer 2022
For customers with electric generation contracts that pass through capacity, capacity costs are allocated according to each customer’s share of the load during PJM’s five regional load peaks (known as “Capacity Coincident Peaks,” or “Capacity CPs”). Likewise, for customers participating in FE’s or AEP’s transmission pilot programs, transmission costs are primarily allocated according to each customer’s share of the load during FE’s or AEP’s respective zonal load peaks (known as “Transmission CPs”). By actively managing load during potential CP events, these customers can mitigate future capacity and transmission costs.
Brakey Energy provides email and text alerts in advance of potential Capacity and Transmission CPs to those clients that elect to receive them. As of August 15, 2022, Brakey Energy has issued eleven Capacity CP alerts, seven FE Transmission CP alerts, and five AEP CP alerts for Summer 2022.
Capacity CPs occur during the five one-hour intervals when demand on the PJM regional grid is at its highest. Transmission CPs for FE customers occur during the five one-hour intervals when demand on FE’s zonal grid is at its highest. The Transmission CP for AEP customers occurs during the one-hour interval when demand on AEP’s zonal grid is at its highest.
The tables below list PJM’s and FE’s five highest loads and AEP’s single highest load this year, as well as the day and time of each occurrence. This is based on preliminary data.
Table 1: Five Highest Loads for PJM through August 21, 2022
Table 2: Five Highest Loads for FE through August 21, 2022
Table 3: Single Highest Load for AEP through August 21, 2022
In our 2022 Coincident Peak Forecasting Report, we forecasted that the 1CP and 5CP for PJM will be 148,237 MW and 145,070 MW, respectively. Two of PJM’s top five peak loads to date have fallen within this range.
In our 2022 Coincident Peak Forecasting Report, we forecasted that the 1CP and 5CP for FE would register at 12,606 MW and 12,125 MW, respectively. All five of FE’s top peak loads to date have fallen in or above this range.
In our 2022 Coincident Peak Forecasting Report, we forecasted that the 1CP for AEP would register at 22,306 MW. The highest load to date comes within 597 MW of this forecasted peak. Heavy curtailment in the AEP zone during days when Brakey Energy issued AEP Transmission CP and PJM Capacity CP alerts drastically impacted metered peak loads on those days. As a result, AEP’s single highest load to date occurred on a day when no Transmission or Capacity CP alerts were issued.
Brakey Energy will continue to monitor weather and load forecasts and will issue alerts to participating clients when warranted. If you are a Brakey Energy client that has not signed up for these alerts but would like to, please email Catherine Nickoson.
Electric Costs Decreasing on September 1 for FE SSO Customers
Electric costs will be decreasing on September 1 for FE customers that take electric generation service under the utilities’ SSO. The SSO is the default rate charged by the utility for generation services to customers that do not contract with an alternative supplier. The SSO generation rate is higher during the three summer months of June, July, and August than it is during the other nine months of the year.
The current and September 1, 2022 SSO rates per kWh for customers served under 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 October 1.
Table 4: OE SSO Rates
Table 5: CEI SSO Rates
Table 6: TE SSO Rates
If you would like more information about how FE’s SSO rate update will impact your monthly electric costs, please contact Jennifer Lemley.
The highly competitive generation offers we highlighted in the past for residential customers have long disappeared. We are now recommending customers with expiring contracts default to the SSO until Spring 2023. We will provide a new contracting recommendation then. The SSO 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 an extremely expensive holdover provision.
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 are comfortable riding the highly volatile natural gas market. Despite the runup in natural gas prices, we are seeing the SCO produce better pricing than many other competitive offers.
Natural Gas Market Update
The NYMEX price for August settled at $8.687 per Million British Thermal Units (MMBtu) on July 27, 2022. This price is up 32.6% from July’s price of $6.551 per MMBtu. This settlement price is used to calculate August 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 rebounded in August.
Figure 1: NYMEX Monthly Natural Gas Settlement Prices
Figure 2 below shows the historical August 22, 2020 through August 22, 2022 Around the Clock (ATC) forward NYMEX natural gas prices in dollars per MMBtu for calendar years 2023, 2024, 2025, 2026, 2027, and the 12-month strip price of September 2022 through August 2023 (labeled “Custom Strip” in the graph below). Forward natural gas prices are approaching the highs set in late May.
Figure 2: ATC Calendar Year and 12-Month Strip NYMEX Natural Gas Prices
*Pricing courtesy of Direct Energy Business.
Electricity Market Update
Figure 3 below shows the historical August 22, 2020 through August 22, 2022 ATC forward power prices in dollars per Megawatt hour (MWh) for calendar years 2023, 2024, 2025, 2026, 2027, and the 12-month strip price of September 2022 through August 2023 (labeled “Custom Strip” in the graph below) for the AD Hub. Forward power prices for the 12-month strip and calendar year 2023 are continuing to trade at extreme premiums relative to outlier years. Power prices continue to follow the natural gas market.
Figure 3: ATC Calendar Year and 12-Month Strip Power Prices for the AD Hub
*Pricing courtesy of Direct Energy Business.