Ohio Energy Report: December 2023

Matt Brakey Testifies in FirstEnergy ESP V Case

An evidentiary hearing in FirstEnergy’s fifth Electric Security Plan (ESP V) began on November 7, 2023 at the Public Utilities Commission of Ohio (PUCO). Over the course of 14 days, nearly 40 expert witnesses submitted testimony in the case.

Matt Brakey was one of those expert witnesses who testified at the hearing on behalf of the Ohio Energy Leadership Council (OELC). OELC’s mission is to promote customer-driven policies to ensure an adequate, reliable, and efficient supply of energy for all Ohio consumers at competitive prices. A number of Brakey Energy clients are represented in OELC through the Brakey Energy Client Group.

On November 28, 2023, Matt formally submitted his testimony at the PUCO at which time he was also cross-examined by a number of intervening parties. In his testimony and cross-examination (beginning on page 45), Matt voiced his support for the continuation and expansion of (1) FE’s Non-Market-Based Services Rider (“Rider NMB”) Pilot Program, and (2) FE’s interruptible program, known as the Economic Load Response Program Rider (“Rider ELR”).

The evidentiary hearing in FE’s ESP V case concluded on December 6, 2023. Post-hearing briefs from intervening parties in the case are due January 19, 2024. After those briefs are filed, the PUCO commissioners will issue their Opinion and Order in the case. FE’s ESP V is scheduled to commence on June 1, 2024.

USF Rates Decreasing for 2024

Universal Service Fund (USF) charges will be decreasing on January 1, 2024 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, 2023. These rates were subsequently amended on November 17. The PUCO accepted the amended rates in its December 13, 2023 Opinion and Order.

First tier USF rates will decrease substantially for customers served by AES Ohio, Duke, and FE’s Ohio operating companies — Ohio Edison (OE), The Illuminating Company (CEI), and Toledo Edison (TE). Customers served by American Electric Power’s Ohio Power (OP) operating company will see more modest decreases in tier 1 USF rates compared to the revised rates that went into effect in October 2023. Tier 2 rates for customers of all utilities will remain unchanged for 2024.

The table below shows the current and 2024 USF rates for customers served by OP, AES Ohio, Duke, OE, CEI, and TE.

Table 1: Current and 2024 USF Rates for Ohio Electric Customers

If you have any questions about the USF rider, please contact Katie Emling.

FE Files Updates to SSO Riders

Electric costs will be increasing on January 1, 2024 for Ohio customers that take electric generation service under FE’s Standard Service Offer (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, 2024.

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 Katie Emling.

Carolyn’s Campaign

Carolyn has been busy fighting on behalf of Geauga County property owners set to see a massive tax hike in 2024 because of state-mandated property revaluations. Carolyn collected 1,750 petitions from taxpayers and presented them to State Senator Sandra O’Brien to aid her efforts in getting a legislative fix in Columbus.

Picture 1: Carolyn Presents State Senator Sandra O’Brien with 1,750 Petitions

With the filing deadline having arrived, Carolyn officially has a primary challenger for her Geauga County Commissioner race. The Brakey family is looking forward to a subdued Christmas season before turning to an all-out sprint to the March primary.

Thanks to everyone who has supported Carolyn so far. It will be a resource-intensive election and your continued support has been greatly appreciated! Please don’t hesitate to contact Carolyn to learn more.

Residential Corner

The best offer we are currently seeing is from AEP Energy for 12 months at a rate of 5.55¢/kWh. With winter prices softening with mild weather, this represents a further discount from the offer we highlighted last month.

Regarding natural gas, if you entered into a fixed-price residential natural gas contract that does not include an early termination fee, including the residential offers Brakey Energy highlighted prior to this past winter, you should seek to exit and either enter into a new agreement or default to the Standard Choice Offer (SCO).

Brakey Energy has long and often found defaulting to distribution utilities’ SCO a prudent strategy for natural gas supply. We encourage our readers to utilize this strategy if they are comfortable riding the highly volatile natural gas market – especially through the fall. To employ this strategy, you simply need to provide termination notice to your existing supplier and you will automatically be defaulted to the SCO.

Natural Gas Market Update

The NYMEX price for December settled at $2.706 per Million British Thermal Units (MMBtu) on November 28, 2023. This price is down 14.5% from November’s price of $3.164 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 2019, 2020, 2021, 2022, and 2023. 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 20, 2021 through December 20, 2023 Around the Clock (ATC) forward NYMEX natural gas prices in dollars per MMBtu for calendar years 2024, 2025, 2026, 2027, and 2028. Natural gas forward prices have continued to remain in a state of contango where prices in prompt calendar years are cheaper than outlier years. Prices for the 2024 calendar year have experienced a slight uptick after a gradual decline and are currently trading at around $2.70 per MMBtu. Calendar year 2025 prices are trading at around $3.50 per MMBtu, with outlier years trading at around $0.35 per MMBtu higher than 2025 prices.

Figure 2: ATC Calendar Year NYMEX Natural Gas Prices

*Pricing courtesy of Direct Energy Business.

Electricity Market Update

Figure 3 below shows the historical December 20, 2021 – December 20, 2023 ATC forward power prices in dollars per Megawatt hour (MWh) for calendar years 2024, 2025, 2026, 2027, and 2028 for the AD Hub. Like natural gas markets, power markets continue to remain in a state of contango. Following recent volatility, forward prices for calendar years 2025 through 2028 are hovering between approximately $43.30 to $45.60 per MWh. Prices for calendar year 2024 are trading just south of $40.00 per MWh.

Figure 3: ATC Calendar Year Power Prices for the AD Hub

*Pricing courtesy of Direct Energy Business.

Calendar of Events

28TH ANNUAL OHIO ENERGY SAVINGS & MANAGEMENT CONFERENCE

Tuesday, February 27, 2024 – Wednesday, February 28, 2024

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 energy in Ohio.

A complete agenda with a list of presentation topics, speakers, and times is available on the event website. Brakey Energy clients may have access to discounted – or even free – entries to the conference. Please contact Catherine Nickoson for more information.

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 Katie Emling, Engineer at Brakey Energy, will join Jim Lamson, Operations Service Manager at ASHTA Chemicals, and David Proano, Regulatory Counsel of the Ohio Energy Leadership Council and Partner at BakerHostetler, to discuss significant developments impacting FE electric rates.
• On Tuesday at 1:30 P.M., Matt Brakey and Brandon Powers, Energy Procurement at Brakey Energy, will discuss the state of the power and natural gas markets and how to manage energy costs in a volatile market through various procurement strategies.
• On Tuesday at 2:45 P.M., Katie Emling will join David Proano and Chris Hollon, Senior Counsel at AES Ohio to discuss significant developments impacting AES Ohio electric rates.
• On Wednesday at 10:30 A.M., Katie Emling will join David Proano and Jim Loder, Director of Energy Management at Pixelle Specialty Solutions, to discuss significant developments impacting AEP electric rates. Jaime Mayhan, Regulatory Services; Rich Williamson, Regulatory Pricing and Analysis Manager; Curt Heitkamp, Regulatory Case Manager; and Michael McCulty, Regulatory Consultant Principal at AEP Ohio are scheduled to present as well.

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