Brakey Energy Files Public Comment in NOPEC Case
On Monday, December 19, Brakey Energy weighed in on the ongoing debate regarding the manner in which the Northeast Ohio Public Energy Council (NOPEC) decided to drop its 550,000 customers to FirstEnergy’s Standard Service Offer (SSO).
In particular, we filed public comment with the Public Utility Commission of Ohio (PUCO) in In the Matter of the Certification of Northeast Ohio Public Energy Council as Government Aggregator. This newsletter, The Ohio Energy Report, was previously cited by NOPEC in a filing.
Brakey Energy expressed concern “that NOPEC would knowingly allow its customers to pay a materially higher rate than the SSO for as long as it did and only cease doing so when it became a political liability.” While NOPEC started to drop its customers in August 2022, this very newsletter has been advising residential customers to default to the SSO since October 2021.
Whether NOPEC is allowed to continue operating as a Certified Retail Electric Service (CRES) supplier in Ohio remains an open question. The PUCO has extended the deadline for public comment until next month.
Questions regarding Brakey Energy’s filing or NOPEC can be directed to Carolyn Brakey.
USF Rates Increasing for 2023
Universal Service Fund (USF) charges will be increasing on January 1, 2023 for all customers of Ohio’s investor-owned utilities. The USF provides funding for the state’s Percentage of Income Payment Plan (PIPP) program and low-income customer energy efficiency programs.
USF revenue is collected through a rider that incorporates a two-step declining block rate design. This design, which has been in place since the rider’s inception in 1999, benefits customers that use over 833,000 kilowatt hours (kWh) per month. The Ohio Department of Development, which administers the PIPP program, filed preliminary 2023 USF rider rates on October 31, 2022. These rates were subsequently amended on November 21. The PUCO accepted the amended rates in its December 14, 2022 Opinion and Order.
First tier USF rates will increase substantially for customers served by American Electric Power’s Ohio Power (OP) operating company, Dayton Power & Light (d/b/a AES Ohio), and Duke. Customers served by FirstEnergy’s (FE) Ohio operating companies -- Ohio Edison (OE), The Illuminating Company (CEI), and Toledo Edison (TE) -- will see more modest increases in tier 1 USF rates. Tier 2 rates for customers of all utilities will remain unchanged for 2023.
The table below shows 2022 and 2023 USF rider rates for customers served by OP, AES Ohio, Duke, OE, CEI, and TE.
Table 1: 2022 and 2023 USF Rider Rates for Ohio Electric Customers
If you have any questions about the USF rider, please contact Jennifer Lemley.
FE Files Updates to SSO Riders
Electric costs will be decreasing on January 1, 2023 for Ohio customers that take electric generation service under FE’s 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 OE, CEI, and 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, 2023.
Table 2: OE SSO Rates
Table 3: CEI SSO Rates
Table 4: 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.
The highly competitive generation offers we highlighted in the past for residential customers have long disappeared. We have been recommending since October 2021 that customers with expiring contracts default to the SSO until Spring 2023. We will provide a new and urgent contracting recommendation then. The SSO rate varies by electric distribution utility but is materially 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.
AEP Energy is currently offering a 36-month fixed price natural gas contract for $6.39 per hundred cubic feet with no early termination fees. We think this offer represents a compelling value. This is especially true because customers can cancel at any time and enter into a lower priced agreement if it becomes available. Please note that the price listed will vary based on service territory.
Natural Gas Market Update
The NYMEX price for December settled at $6.712 per Million British Thermal Units (MMBtu) on November 28, 2022. This price is up 29.4% from November’s price of $5.186 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, 2021, and 2022. Prices shown are in dollars per MMBtu of natural gas.
Figure 1: NYMEX Monthly Natural Gas Settlement Prices
Figure 2 below shows the historical December 21, 2020 through December 21, 2022 Around the Clock (ATC) forward NYMEX natural gas prices in dollars per MMBtu for the first quarter of 2023 (labeled “Custom Strip” in the graph below) and calendar years 2023, 2024, 2025, 2026, 2027. Following increases last week, natural gas forward prices for the first quarter of 2023 and calendar year 2023 have dropped sharply in the last two days in response to a warmer-than-normal post-Christmas forecast. Prices for 2024, 2025, 2026, and 2027 continue to be deeply discounted relative to near-term prices.
Figure 2: ATC First Quarter 2023 and Calendar Year NYMEX Natural Gas Prices
*Pricing courtesy of Direct Energy Business.
Electricity Market Update
Figure 3 below shows the historical December 21, 2020 through December 21, 2022 ATC forward power prices in dollars per Megawatt hour (MWh) for the first quarter of 2023 (labeled “Custom Strip” in the graph below) and calendar years 2023, 2024, 2025, 2026, 2027 for the AD Hub. Forward power prices for first quarter of 2023 and calendar year 2023 are continuing to trade at extreme premiums relative to outlier years. Power prices have followed falling gas costs.
Figure 3: ATC First Quarter 2023 and Calendar Year Power Prices for the AD Hub
*Pricing courtesy of Direct Energy Business.
Calendar of Events
27TH ANNUAL OHIO ENERGY SAVINGS & MANAGEMENT CONFERENCE
Tuesday, February 28, 2023 - Wednesday, March 1, 2023
The Columbus Renaissance Hotel
50 North Third Street
Columbus, Ohio 43215
The Manufacturers’ Education Council energy conference 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 energy in Ohio.
This year, we are excited to announce that Brakey Energy clients can receive complimentary registration to the conference. Please contact Catherine Nickson if you are interested in attending one or both days.
Brakey Energy will be participating in several workshops at this year’s conference.
- On Tuesday at 10:45 A.M., Matt Brakey, President of Brakey Energy, and Jennifer Lemley, Energy Analyst at Brakey Energy, will join Jim Lamson, Operations Service Manager at ASHTA Chemicals, and David Proano, Regulatory Counsel of the Industrial Energy Users of Ohio and Partner at BakerHostetler, to discuss significant developments impacting FE electric rates.
- On Tuesday at 1:30 P.M., Matt Brakey and Katie Emling, Engineer at Brakey Energy, will join David Zadeh, Chief Operating Officer of Toshi CMC, to discuss the innovative ways that an upstart Ohio bitcoin mine is managing energy costs in a highly volatile energy and cryptocurrency marketplace.
- On Tuesday at 2:45 P.M., Jennifer Lemley will join David Proano to discuss significant developments impacting AES Ohio electric rates.
- On Wednesday at 10:45 A.M., Jennifer Lemley will join David Proano and Jim Loder, Director of Energy Management at Pixelle Specialty Solutions, to discuss significant developments impacting AEP electric rates.
A complete agenda with a list of presentation topics, speakers, and times is available on the event website.