Ohio Energy Report: January 2024

AEP Zone Load Registers Near Predictive 1CP Level in Arctic Blast

Brakey Energy provides email and text alerts in advance of loads having the potential to set the year’s American Electric Power (AEP) Zone Transmission Coincident Peak (CP, or 1CP) to clients enrolled in AEP’s Basic Transmission Cost Rider (BTCR) transmission pilot program. In mid-January, an arctic blast swept across the country, plunging much of the AEP Zone into single digit temperatures. Due to the cold weather that impacted the AEP Zone from January 15 to 17, 2024 Brakey Energy issued three AEP Zone Transmission CP alerts.

As shown in the table below, the preliminary metered load on January 17 set the highest peak load to date in the AEP Zone since the current CP year began on November 1, 2023.

Table 1: Single Highest Load for AEP Zone through January 22, 2024

In our “2024 AEP Coincident Peak Forecasting Report – Winter Season,” we forecasted that the 1CP for the AEP Zone would be 22,336 MW. PJM predicted that AEP’s peak load this winter would register at 22,913 MW, while AEP’s 1CP for 2022/2023 was 22,826 MW. The preliminary metered load on January 17, 2024 is 4 MW below Brakey Energy’s forecasted 1CP and could set the 1CP come October 31, 2024 when the current CP year comes to a close.

Brakey Energy will continue to monitor weather and load forecasts and will issue alerts to participating clients when warranted.

Carolyn’s Campaign Corner

Carolyn’s final fundraiser before her all-important March 19, 2024 primary is just around the corner. Please join Carolyn for her 42nd birthday bash on 2/4/24.

Carolyn appreciates everyone who has contributed so far! Please don’t hesitate to reach out to her to discuss this final stretch.

NMB Rider Rates Increasing Significantly for FirstEnergy-Ohio Customers

Non-Market-Based Services Rider (Rider NMB) rates will be increasing for all residential and non-residential customers of FirstEnergy’s (FE) three Ohio operating companies: Ohio Edison (OE), the Illuminating Company (CEI), and Toledo Edison (TE). Rider NMB is used to recover FE’s non-market-based costs for transmission and ancillary services, the largest component of which is PJM’s Network Integration Transmission Service (NITS) charge. The 2024 NITS rate for the ATSI Zone, the transmission zone serving FE Ohio customers, is projected to be approximately 32% higher than the 2023 rate. New Rider NMB rates will go into effect on April 1, 2024.

Current and proposed April 1, 2024 Rider NMB 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. Rates are per kilowatt hour (kWh) for RS customers and per kilowatt (kW) or kilovolt-ampere (kVa) for GS, GP, GSU, and GT customers.

Table 2: OE Rider NMB Rates

Table 3: CEI Rider NMB Rates

Table 4: TE Rider NMB Rates

Clients that are participating in FE’s transmission pilot program are opted out of paying the NMB rider. If you have any questions about this pilot program or how the new NMB rates will impact your electric costs, please contact Katie Emling.

AEP Files April 1, 2024 Update to Basic Transmission Cost Rider

The largest component of transmission costs for the majority of AEP Ohio non-residential customers are expected to decrease on April 1, 2024 in response to AEP’s updated Basic Transmission Cost Rider (BTCR) rates. Residential customers, however, are expected to see a 32% increase in BTCR charges.

Select interval-metered customers, including Brakey Energy clients, may elect to participate in a transmission pilot program. The demand portion of BTCR charges for a customer participating in the pilot program is calculated based on the customer’s load during AEP’s 1CP. This is an alternative to the default method in which the demand portion of the BTCR charge is calculated based on monthly billed demand.

BTCR rates for customers participating in AEP’s transmission pilot program will be increasing on April 1, 2024.

The tables below show the current and proposed April 1, 2024 BTCR rates for non-transmission pilot program customers and transmission pilot program customers of AEP-Ohio. The BTCR has both kWh consumption and kW demand components.

Table 5: Current and Proposed April 1, 2024 BTCR Rates for AEP-Ohio Customers

Table 6: Current and Proposed April 1, 2024 for AEP-Ohio Customers Participating in the Transmission Pilot Program

If you would like more information about how the BTCR impacts your monthly electric costs, please contact Katie Emling.

Residential Corner

The best offer we are currently seeing is from AEP Energy for 10 months at a rate of 5.35¢/kWh. Although this represents a price discount from the offer we highlighted last month, AEP Energy is carving out expensive winter 2025 months by not making it a full year offer.

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. 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 January settled at $2.619 per Million British Thermal Units (MMBtu) on December 27, 2023. This price is down 3.2% from the December 2023 price of $2.706 per MMBtu. This settlement price is used to calculate January 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 2020, 2021, 2022, 2023, and January 2024. Prices shown are in dollars per MMBtu of natural gas.

Figure 1: NYMEX Monthly Natural Gas Settlement Prices

Figure 2 below shows the historical January 23, 2022 through January 23, 2024 Around the Clock (ATC) forward NYMEX natural gas prices in dollars per MMBtu for the balance of 2024 (labeled as “Custom Strip”) and calendar years 2025, 2026, 2027, and 2028.

Figure 2: ATC Calendar Year NYMEX Natural Gas Prices

*Pricing courtesy of Direct Energy Business.

Despite the artic blast that has affected most of the country in mid-January, mild temperatures forecasted for late January and persisting into early February have kept a lid on 2024 forward gas prices.

In early December 2023, Exxon Mobile announced delays to the construction of its new Golden Pass liquefied natural gas (LNG) export terminal, now to be completed in Q2 2025 as opposed to Q4 2024. The delay is anticipated to keep gas that otherwise would have been exported as LNG in the domestic market through next winter, increasing supply, and has pushed down forward gas prices in 2025.

Electricity Market Update

Figure 3 below shows the historical January 23, 2022 – January 23, 2024 ATC forward power prices in dollars per Megawatt hour (MWh) for the balance of 2024 (labeled as “Custom Strip”) and calendar years 2025, 2026, 2027, and 2028 for the AD Hub.

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

* Pricing courtesy of Direct Energy Business.

In a similar pattern to natural gas, forward power prices have been volatile due to the arctic blast. These prices can rise quickly when abnormally cold weather is forecasted for the southern region of the PJM zone (such as southern Ohio, West Virginia, and Virginia), due to the widespread use of relatively inefficient electric heating in this region. With mild temperatures returning to forecasts to end the month, 2024 forward power has seen notable softness, but outlier years in 2025 and beyond remain relatively robust.

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.

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.