Cheap electricity? No. But there will be enough power to get us through future heat waves, arctic blasts

Power shortages won't be a problem in Ohio and the region, says the company charged with making sure the high-voltage grid from here to New Jersey is stable. But there will be a price for that stability, a price that consumers will have to pay. Find out why.

AKRON, Ohio -- Consumers from here to the East Coast can have confidence there will be enough power during future summer heat waves and winter's most arctic weather, says the company responsible for managing the high-voltage grid in Ohio and 12 other states. But you most likely will have to pay more for it.

The results of PJM Interconnection's annual auction to determine -- and reward -- the most efficient power plants are in. They show a commitment from power companies in the region to meet demand three years from now, said PJM, despite a dip in the amount of energy efficiency bid into the auction.

Called a "capacity auction," the annual bidding commits the winning power plants to produce electricity as PJM demands it. Capacity charges are folded into the future price of electricity.

Today's auction results will affect power prices beginning June 1, 2018.

The results are also expected to make it harder for FirstEnergy Corp. to argue for its controversial 15-year "power purchase agreement" committing the Illuminating Co., Ohio Edison and Toledo Edison to buy all of the power generated by the Davis-Besse nuclear power plant and the coal-fired R.W. Sammis plant on the Ohio River at whatever it costs to generate.

Finally, the results show the region will have a reserve capacity of nearly 20 percent, meaning PJM dispatchers will have that much extra power to rely on during times of peak demand -- such as a heat wave or arctic cold snap.

In the Polar Vortex outbreak of January 2014, PJM briefly had to consider rolling blackouts to keep portions of the grid from collapsing under high demand and a shortage of power. The commitment by some big power users to cut back when PJM needed the power elsewhere helped stabilize the situation.

Capacity charges in Northeast Ohio this year, which were set by an auction in the spring of 2012, are at a record high, mostly because FirstEnergy three years ago announced it would shut down rather than upgrade its old coal-fire plants along Lake Erie. That put the region into a projected power deficit.

The company then built a new transmission line from Northeast Ohio to the R.W. Sammis coal plant on the Ohio River to push more power north.

Capacity auctions last year and the year before reflected the planned completion of that power line and other transmission upgrades and drove capacity charges down for 2016, 2017 and the first half of 2018. 

The auction is normally in May but objections by FirstEnergy to PJM's inclusion of energy efficiency in the auction held up things. Energy efficiency, as well as voluntary cutbacks called "demand response," were included in the auction.

In a statement regarding this year's auction, FirstEnergy said the auction gave "clearing prices that come closer to reflecting the true operating cost of our generating plants.

"However the prices only reflect capacity payments for a one-year period and it's still unclear whether the results are a long-term trend."

Asked whether the company's two biggest coal-fired power plants, Sammis and the Bruce Mansfield power plant in southwestern Pennsylvania "cleared" the auction, and would now begin receiving capacity payments, the company said it would be in a better position to answer that question after PJM holds two auxiliary auctions in the near future.