Higher electric prices in northern Ohio are in the works and one way to deal with them is to use less.
View full sizeExactly how much rates here will jump in June 2015 and then fall in June 2016 has not been determined. VALLEY FORGE, PA. -- Part of your electric rate in the summer of 2016 is being determined right now.
And if you live in northern Ohio, it will be higher than rates in other parts of the state, or nearby states.
But the good news is that it will be less than what you'll have to pay starting in the summer of 2015.
That's the bottom line for customers in the results of a week-long auction conducted over the Internet by the independent company in charge of high-voltage power flows in a region stretching from New Jersey to Illinois.
PJM Interconnection late Friday said the annual auction determined that beginning June 1, 2016, the charges to customers for building and maintaining power plants and transmission lines in the region will fall -- thanks to thousands of megawatts of new gas-fired power plants coming on line and to formal commitments to reduce demand through energy efficiency upgrades and conservation, which are also part of the competitive bidding.
That total cost, expressed in the auction as the average daily price for every million watts of generating capacity in the region, is passed onto to customers through transmission charges.
For northern Ohio, these charges will be about a third what last year's May auction determined for the 2015-16 year, but still nearly twice the rates in most of the region. To read the complete PJM report, click here.
"FirstEnergy's Ohio territory one again cleared separately from the rest of the PJM wholesale market," wrote Matt Brakey, president of Brakey Energy, a Shaker Heights consulting company, in a note to clients. "This will put the region at a competitive disadvantage."
Determining exactly how the auction's bulk prices will affect consumer retail rates three years from now is difficult, but generally the consensus is that the May auction accounts for about 10 percent of the final cost of the power.
FirstEnergy's customers currently pay about 12 cents per kilowatt-hour and use and average of 750 and 1,000 kilowatt-hours per month.
About half of that rate pays for the price of the power itself. The rest pays for long-distance and local delivery and a host of other charges set by federal and state regulators.
FirstEnergy's decision a year ago to close its small power plants on Lake Erie rather than upgrade their pollution controls to meet new federal rules skewed last year's PJM auction results for 2015.
The Sierra Club and the Natural Resources Defense Council have contended since last year that FirstEnergy's refusal to bid the results of state-mandated energy efficiency projects into the auction also helped drive up rates. By law, the company must help its customers reduce their peak demand and their overall consumption annually through energy efficiency upgrades.
Ohio regulators in March ordered FirstEnergy to bid at least 75 percent of these demand reductions into the auction, and the PJM report shows it did.
"The results of this auction demonstrate in real dollars how including energy efficiency lowers electricity prices for all Ohioans," said Dan Sawmiller, Senior Ohio Campaign Representative from the Sierra Club's Beyond Coal Campaign
John Moore, an attorney with the NRDC, noted that in American Electric Power Co.'s portion of the grid, energy efficiency commitments fell below last year's levels.
"We believe that there are between 200 megawatts and 300 megawatts (of lowered demand) that are not getting bid into the auction," he said.
Bricker & Eckler, a law firm with offices in Columbus, Cleveland and Cincinnati, also noted the auction results on its web page and urged readers to invest in energy efficiency upgrades before 2015.