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COLUMBUS, Ohio (WJW) — The future of Ohio’s largest governmental energy aggregator remains in limbo, following its sudden move last summer to drop more than half-a-million electricity customers because it was unable to secure competitive rates for them amid a volatile energy market.
The Public Utilities Commission of Ohio is expected to soon decide on whether the Northeast Ohio Public Energy Council, or NOPEC, has the capacity to continue as an electricity aggregator in the state — a decision affecting hundreds of thousands of Northeast Ohioans’ energy choices and electricity bills.
How we got here
Government aggregators like NOPEC are able to secure better utility rates for their customers by buying in bulk. But this past summer — following months of increasing volatility in the global energy market and skyrocketing electricity rates due to several factors, including the ongoing war in Ukraine — NOPEC’s rate for electricity became nearly twice as expensive as what non-aggregated consumers were paying.
In August, NOPEC made the “unprecedented” move of returning about 550,000 electricity customers in its Standard Price program to their default service providers, expecting to re-enroll those customers this coming spring, when the energy market is expected to be more favorable. The commission said the move cast doubt on NOPEC’s capabilities and expressed concerns it could create problems for those customers’ electricity suppliers, resulting in higher rates — which would be a violation of state rules for providers and aggregators.
Meanwhile, as deliberations in NOPEC’s case drag on, competitive auctions to supply the electricity provided in Northeast Ohio by FirstEnergy are continuing as planned, but with a new layer of uncertainty that concerns consumer advocates.
FirstEnergy and other power providers use a competitive bidding process for the energy supply that goes to their customers for a year or years at a time, which now includes those dropped by NOPEC.
What’s next
At the latest auction on Tuesday, Jan. 10, 2023, the average bid price for a bundle of supply (called a tranche) to be delivered between June 2023 and May 2024 was just under $98 per megawatt-hour.
That’s down from the shockingly high average price of $122 seen in the prior October auction, but still well above the $53 price secured for power that’s being served through this May, suggesting more sticker shock is on the way for Northeast Ohio consumers later this year.
There’s still at least one more auction for the upcoming yearlong delivery period, expected to be set for March. The average price from that auction will be blended with the average prices from the other two.
In a Dec. 29 filing, the Office of the Ohio Consumers’ Counsel — a state-run legal office advocating for residential consumers — urged the commission to delay a Tuesday, Jan. 10, auction until the NOPEC matter was settled.
The office warned holding the auction then could have caused electricity suppliers to tack on additional risk premiums to account for uncertainty in the state’s energy marketplace due to the influx of former NOPEC customers, thereby raising prices for ratepayers everywhere.
One energy supplier said that the sudden influx of NOPEC customers in need of power threatened “chaos” in Ohio’s electricity market. The more information energy bidders have about the customers they’ll need to serve, the less risky the marketplace will be.
The commission has previously delayed FirstEnergy auctions due to uncertainty over pricing — as recently as March 2020, the office noted in its filing.
“Consumers already are being hurt by soaring energy prices and inflation,” the filing reads.
“Time is of the essence for consumers,” it continues. “The uncertainties impacting the auction … could result in more risk and higher prices.”
But the commission didn’t grant the postponement, finding that bidders had already “expended considerable time and resources” to prepare, and the auction went ahead Tuesday as planned.
“Postponing the auction on the eve of the auction would have caused more uncertainty and potential damage to the auction process, resulting in higher prices for SSO customers in both the short-term and the long-term,” reads the commission’s findings.
What could happen to NOPEC?
Right now, the Public Utilities Commission of Ohio is looking under the hood at NOPEC to determine whether the energy aggregator is able to continue buying electricity in bulk and getting a better deal for its ratepayers.
Under state statute, governmental utility aggregators have to demonstrate their “managerial, technical and financial capability” and be certified by the commission before they’re allowed to operate. That certification has to be renewed every other year. The commission can choose not to renew those certifications, and also suspend or rescind them if they fall out of standard.
One Texas-based electric supplier responsible for supplying “a substantial portion” of the electricity for non-aggregated customers in Ohio through May — including the more than half-a-million ratepayers NOPEC dropped back into that pool in August — intervened in NOPEC’s case before the commission.
Dynegy Marketing & Trade in an August filing to the commission said the sudden move “threatens chaos in the electricity market in Ohio,” and alleged the move abused the state’s aggregation rules. It called for the commission to investigate NOPEC for shifting its customers without first notifying them and giving them the chance to opt out, as required by law. The commission later waived that rule in this case. Dynegy also called for a stay in transitioning NOPEC’s customers back to the standard service offer, but was denied.
A commission hearing set for Wednesday, Jan. 18, will give both sides an opportunity to see evidence that could be presented in Dynegy’s case.
NOPEC in an August news release said the decision to drop those about 550,000 consumers was made in their “best interests,” since the aggregator could no longer offer them a competitive rate. In response to Dynegy’s August filing, NOPEC accused the supplier of “anti-consumer gamesmanship” that would result in consumers paying more. NOPEC also noted that Dynegy’s sister company is currently competing with NOPEC in energy aggregation and stands to gain if NOPEC is “out of the picture.”
In September, the commission ordered NOPEC — Ohio’s largest governmental aggregator and one of the largest in the nation — to defend its certification and explain why it shouldn’t be suspended. It’s the first time that’s ever happened. The commission was expected to rule in the case soon after Oct. 20, but the deadline for filings in the case was pushed back multiple times. Now, it’s Feb. 3.
“I hope that means they’re actually investigating and that there are things they’re looking into for consumers — for residential consumers, in particular,” said Rachel Belz, executive director of Ohio Consumers Power Alliance, an advocacy group focused on keeping electricity rates low by diversifying Ohio’s energy portfolio, according to its website.
The alliance and several local officials in September laid several questions before the aggregator — Why wasn’t it prepared for spiking energy costs? Could it have better communicated the cost increases with consumers? — but they haven’t gotten any answers, Belz told FOX 8 News.
“There do seem to still be a lot of questions,” she said. “I’m assuming the investigation has something to do with ‘How did this happen?'”
It’s unclear when the commission could rule on the case. Typically, after public comment periods, more hearings are scheduled before a decision comes down, said commission spokesperson Matt Schilling. Normally, the commission would have 90 days to make a decision in a case like this — or the certificate in question would automatically be renewed — but in NOPEC’s case, that three-month window was suspended while the commission investigates, he said.
Since NOPEC was put under state regulators’ microscope, several dozens of its member communities have gone to bat for the aggregator in filings to the commission.
“NOPEC’s decision to make that change this summer (and not wait until the end of its aggregation program) maximized lower electric rates for the residents and small businesses in our community and is in alignment with NOPEC’s mission of serving customers,” said Lakewood councilperson Tom Bullock in one October letter. “It did the right thing for our community and residents.”
Andrew Thomas, director of Cleveland State University’s Energy Policy Center, told the commission that NOPEC has “played a critical role” in keeping the electricity marketplace competitive for regular consumers and that it’s “imperative” NOPEC be allowed to continue in that role.
A joint study between CSU and Ohio State University on Ohio’s deregulated energy market showed Ohio’s smaller energy consumers, including households, who shopped around for energy saved a total $630 million between 2011 and 2015 — an average of $125 million per year.
How and when it will affect your bill
If the commission decides to renew NOPEC’s certificate, the aggregator intends to start re-enrolling customers this coming spring, with the first meter reading planned for June, said spokesperson Dave Jankowski.
Billing would return to the way it was before NOPEC dropped its half-a-million electric customers. The same goes for enrollment, which would be automatic in existing NOPEC communities, unless consumers choose to opt out and pick their own supplier by sending back the opt-out letter they would receive in the mail. They can also choose to enroll in NOPEC’s monthly variable price or a 12- and 24-month fixed term products, Jankowski said.
Even though NOPEC’s goal is to secure better rates for its communities, Northeast Ohio consumers should still check out FirstEnergy’s “Price to Compare” — the rate FirstEnergy got through its electricity supply auctions — to make sure NOPEC’s rate is lower. For Ohio Edison and Illuminating Company, that price through March 2023 is a little more than 5 cents per kilowatt-hour.
If NOPEC is not renewed, then consumers may have some choices to make. The Office of the Ohio Consumers’ Counsel offers some tips on its website to make them easier:
1. Consumers can stick with FirstEnergy’s “Standard Service Offer,” or SSO, which are often “economical” due to the competitive electricity auction system, according to the office.
2. They might also be called on by door-to-door energy marketers offering to switch the home’s utility services. However, the consumer counsel office recommends against making those deals, since their rates are often higher, or they start low with a “teaser rate,” then increase over time.
3. Resident communities may also choose to join another energy aggregator, similar to how they joined NOPEC. Residents decide at the ballot box whether to use an aggregator, which is then picked by officials.
In any case, consumers should compare offers for electricity service using the state’s Apples to Apples tool, which compares electricity and natural gas providers’ current rates and contract terms.
If rejected by the commission, NOPEC intends to appeal, Jankowksi told FOX 8 News in an email.
“Given that NOPEC remains unwavering in our belief that we acted in the best interest of our customers and communities — and in accordance with Ohio law and PUCO rules — in transitioning our customers back to the utilities’ standard service offer, we would vigorously appeal any decision declining our certificate,” he wrote.
What does the future hold for residential electricity prices?
There’s no crystal ball. But the U.S. Energy Information Administration projects prices in the mid-Atlantic market that includes Ohio and parts of a dozen other states will stay relatively flat through 2023, in contrast to the prior year’s upward slope.
The average residential electricity price in Ohio’s market rose about 1.7 cents per kilowatt hour from 2021 to 2022, up to 18.2 cents per kilowatt-hour — about 3 cents higher than the national average, according to the administration’s data. But it’s expected to rise only about 0.1 cents from 2023 to 2024.
