AEP wins, the rest of us, not so much.

[Orion]

The Public Utilities Commission of Ohio (PUCO) last week adopted two agreements that will determine electric generation and distribution rates for AEP-Ohio customers beginning Jan. 1, 2012. Under last weeks PUCO orders, AEP will merge its Ohio operating companies and transition to a new business model where competitive bid auctions set default generation rates.

 

“Our decisions in the AEP electric security plan case and distribution rate case move the utility and its customers in the right direction,” PUCO Chairman Todd A. Snitchler stated. “The Commission has significantly improved the customer benefits in the electric security plan. Taken together, the two agreements will provide shopping opportunities, rate stability, improved service reliability, and a clear path for customers to receive electricity from fully competitive markets as originally directed by the Ohio General Assembly.”

 

In September 2011, AEP and 19 other parties representing a wide range of interests filed an electric security plan (ESP) agreement with the PUCO. The agreement was signed by the PUCO staff, the Ohio Manufacturers Association, the Ohio Energy Group, environmental organizations, and energy suppliers among others. The PUCO publicly vetted the agreement during 13 days of hearings at which 30 witnesses provided testimony and faced cross-examination.

 

Under the modified ESP adopted by the Commission, AEP will merge its Columbus Southern Power and Ohio Power operating companies and transition to a market-based generation rate structure over a four and a half year period between January 2012 and May 2016. AEP will sell its generation assets subject to a PUCO approved corporate separation plan.

 

In modifying the ESP, the PUCO lowered the base generation rate increases to half of what was proposed in the agreement. While the total impact to monthly customer bills will not be known until AEP files new rate schedules consistent with today’s Commission order, customers will pay base generation rates of 2.27 cents/kilowatt hour (kWh) in 2012, 2.33 cents/kWh 2013, and 2.41 cents/kWh in 2014. These gradual increases from the current base rate of 2.1 cents/kWh allow for a smooth transition to market-based pricing in 2015.

 

Beginning in June 2015 and through May 2016, standard generation rates will be set through a series of competitive auctions in which energy suppliers will bid for the right to provide electricity to AEP customers. Each auction will be conducted by an independent bidding manager, and the PUCO will review the process to ensure each auction was fair. Similar auctions have led to lower generation rates for customers of other Ohio electric utilities.

 

The PUCO increased the market-based capacity set-aside levels outlined in the ESP agreement to accommodate the load of communities that approved a governmental aggregation program for customers in the November 2011 election. This modification will allow all municipalities with recently passed governmental aggregation initiatives to take advantage of supplier generation rate offers that may be lower than AEP’s rate.

 

The Commission expanded the $10 per megawatt hour (MWh) credit offered to small business customers (GS-2 rate schedule) to the first 2,000,000 MWh of usage per calendar year. This change, when coupled with the base generation rate decrease, helps mitigate the potential rate impact to GS-2 customers by increasing the likelihood that GS-2 customers are provided with additional shopping credits.

 

The distribution rate agreement adopted by the Commission provides Columbus Southern Power and Ohio Power with revenue increases of $8.5 million and $38.1 million respectively. AEP will apply a $46.6 million credit to offset the company’s base distribution revenue increase, resulting in zero base distribution revenue increase on residential customer bills. Residential customers will also receive additional credits totaling more than $14 million annually from January 2012 through May 2015.

 

AEP will collect a new charge called the Distribution Asset Recovery Rider to collect the deferred cost of distribution system improvements and expenses accrued over the past decade. As a result, the total bill impact of the distribution rate agreement is an increase of approximately $2 per month for an average Columbus Southern Power residential customer using 1,000 kWh of electricity and $1 per month for an average Ohio Power customer.

 

Under the ESP and distribution rate agreements, AEP will boost investment in energy efficiency, economic development, and customer assistance initiatives. The company will contribute $5 million annually from 2012 to 2015 to the Ohio Growth Fund for economic development, $3 million annually to the Partnership with Ohio program benefiting low-income customers, and $1 million annually to the Neighbor to Neighbor program for bill payment assistance. The company will also establish a 3-year revenue decoupling pilot program from 2012 to 2014 that encourages the implementation of additional plans to maximize energy efficiency.

 

What this means for most small businesses, who, incidentally, were not represented by any organization throughout the hearing and deliberation process, is increased charges to the tune of anywhere from 10 to 35(!) percent. Add to that the fact that the new tariff calls for a capacity charge for customers that leave the base tariff for an alternative energy supplier that is 15 times what is has been in past years, and small business owners that had not switched before the September 2011 proposal date will be almost certainly unable to avoid the higher costs by switching to an alternative supplier.

 

Perhaps an explanation is in order. Say you are a small church, and you use around 325,000 kWh of electricity in a year. A peak load of 145kW (a fairly normal peak for a church) would result in a total load factor of around 22%. As the tariff is currently written, you would find that your total rate would be right around 13.6 cents per kWh, including distribution. Under the new tariff, the same church would be paying upwards of 15.2 cents per kWh, an annual increase of over 12%. That would be over $300 dollars per invoice, taking your total bill from around $3,200 to just under $3,600 per month. For many small organizations, this is a huge deal.

 

Let’s say that, as a church, you decided that the costs were simply too great and begin searching for an alternative supplier to fill your needs. You are able to secure a contract with an energy cost of 6 cents per kWh for your generation and transmission components (distribution, the third component, is regulated and therefore will ALWAYS be supplied by your local utility). Given that you would currently be spending 8.5 cents for the same two components, that seems like a great deal, right? Well, it would be, except that the new tariff specifies that anyone who obtains an alternative energy source for the next 3 years will pay a capacity charge that is fifteen times what the users who stay on tariff will pay. That would raise the total price to over 19 cents per kWh, effectively forcing you to stay on tariff and pay AEP their higher rates.

 

Well, some might think, that sucks, but energy costs are crazy right now, right? No. Here is the day ahead pricing curve for Natural Gas since just before 2008. It bears stating that Natural Gas, for many traders, is the commodity price most closely tied to electricity prices. For much of the time, those two move in lockstep with one another.

 

http://i60.photobucket.com/albums/h23/lhiannonshee/Capture-10.png

 

 

Right now, Natural Gas is close to an all-time low in costs. If Governor Kasich is able to convince the voting public that horizontal fracturing is a good idea, you can expect those prices to come down even more.

 

Almost any way you slice it, this is a bad deal for the majority of Ohio consumers inside of AEP territory.

[RyM3rC]

AEP wants my business and says they can save me $20 monthly over DP&L. We'll see AEP, we'll see.

[Orion]

AEP wants my business and says they can save me $20 monthly over DP&L. We'll see AEP, we'll see.

 

Actually, if you are in DP&L territory, AEP Retail (which is a different entity than AEP Ohio) probably CAN save you money, and wouldn't be a bad company to sign with.

 

AEP Retail is the "Alternative Supplier" side of AEP's business. They are actually kind of a small shop in the grand scheme of things. I work with them on a daily basis and can tell you that they are very concerned about this new ESP as well, as it is going to damage a large portion of their business.

 

This is the best analogy I can come up with. Your company makes widgets. Widgets require thingamabobs in order to work correctly. You live in an area where all the thingamabobs are produced by one company, and that company ALSO owns all the means to ship the thingamabobs to you. In fact, the government has regulated the shipping, so that you have no option to have them shipped through any other carrier. It's ok, because for years, you have paid fair prices for your thingamabobs, and everyone is happy.

 

Then someone calls you from upstate and says, "we will sell you the exact same thingamabobs for 25% less than the company you are getting them from now, if you sign an contract with us for the next 2 years". Great deal, you think, so you sign. You pay less for your thingamabobs to the new company, but still pay the regular shipping rates to the old company. Everything is copacetic. (That is an example of shopping with an alternative supplier in the rest of Ohio)

 

Let now pretend the company you have been purchasing from is AEP Ohio. They tell you that they are raising the rates of their thingamabobs because the material they use to make them has increased in cost. Well, you know that isn't true, because you can see that traders are selling it for less. The same guy calls you from upstate and offers you the same deal, 25% off the thingamabobs. AEP says, "Sure, you can get your thingamabobs from the other guy, but we will be forced to raise the shipping costs on them by 1500%. Sorry, shipping is expensive." Because you are required to use them for shipping, you have no choice but to make either a very poor business decision, or stay with AEP Ohio and just pay the increased rates.

[RyM3rC]

Yep, and installing new power lines and such everywhere isn't going to happen.

 

So the AEP trying to get my business isn't the asshole AEP? Interesting, thanks.

[Draco-REX]

Yep, and installing new power lines and such everywhere isn't going to happen.

 

So the AEP trying to get my business isn't the asshole AEP? Interesting, thanks.

 

No. But they might go up as well, or completely "out of business", because Asshole-AEP can now crank their costs up.

[Big Chief2011647545501]

there's a simple fix for this increase in price....don't use electricity or make your own. Also, this is part of a bigger problem if you don't want your prices to go up tell the EPA to stop trying to crack down on our generation plants. They are killing our generation supply. Which will ultimately raise your prices because we have to go out and either make up for it using the more expensive gas turbines or buy it to meet YOUR demand.

[RyM3rC]

there's a simple fix for this increase in price....don't use electricity or make your own.

 

While that would make a nice statement, it is beyond impractical to accomplish this on a scale large enough to impact a company like AEP. We don't have good wind here, it's not sunny often enough, solar panels take forever to pay for themselves by which time they need replaced, gas/diesel generators aren't economically practical, the natural gas/coal underground is impractical for a homeowner to exploit, etc.

 

What do you suggest? Ammonia power? Methane trapping for the farmers? wood-burning power? Drastically cutting power usage?

[TTQ B4U]

We don't have good wind here

 

 

What? Not enough wind? You do realize that there's a HUGE windmill farm not more than an hour from us right? Ohio has a nearly a dozen huge farms from here to Toledo and the Indiana border. Just watch the one at Byers Mazda, it spins all the time.

 

Costs on Solar panels have plummeted in the past 3 years too. I worked on projects for both Walmart and Home Depot, both of whom have several stores running entirely on Solar as part of a development project to save on taxes in the future. Costs are very much in line today for a decent ROI. Walmart has committed to go that route, whereby Home Depot is simply studying the viability as it relates to savings. Walmart is a very Green company.

[RyM3rC]

What? Not enough wind? You do realize that there's a HUGE windmill farm not more than an hour from us right? Ohio has a nearly a dozen huge farms from here to Toledo and the Indiana border. Just watch the one at Byers Mazda, it spins all the time.

 

Don't get me started on Byers Mazda.

 

I really seriously looked into buying a couple small windmills last year (in Union county), and after talking with two locals who bought them and reading around it would take longer than the service life of the windmill to pay it off. Total waste of money, unless someone gives it to you, you get a grant, or you're somewhere else. This is from real people, verifying their generation and consumption. Not BS marketing, agenda-pushing, grant-sucking lobbyists. If you have information to the contrary I would be very interested to discuss.

[smokin5s]

from what I understand from when I looked into wind up at my place, it has to deal with being converted down to DC for storage then converted back to AC for usage in the house and that is why it's not really worth it for residential use. I don't think it had anything to do with how much wind we get. As far as solar, I'm pretty sure they work even through cloud cover.

[RyM3rC]

from what I understand from when I looked into wind up at my place, it has to deal with being converted down to DC for storage then converted back to AC for usage in the house and that is why it's not really worth it for residential use. I don't think it had anything to do with how much wind we get. As far as solar, I'm pretty sure they work even through cloud cover.

 

I remember the wind being a lot better the further northwest you get. Somewhere there was a nice map that showed the wind patterns and something about a glacial ridge, blah blah blah. There were some decent incentive programs for awhile which is what got me interested, but 10+ years to see something even resembling a return just doesn't work for me.

 

Yeah, doing it for a residence is a whole different ballgame than doing it for a business. I'm pretty sure my dad still has some of the literature and shit.

[TTQ B4U]

Don't get me started on Byers Mazda.

 

I really seriously looked into buying a couple small windmills last year (in Union county), and after talking with two locals who bought them and reading around it would take longer than the service life of the windmill to pay it off. Total waste of money, unless someone gives it to you, you get a grant, or you're somewhere else. This is from real people, verifying their generation and consumption. Not BS marketing, agenda-pushing, grant-sucking lobbyists. If you have information to the contrary I would be very interested to discuss.

 

 

I'll keep you posted as the wife and I and other family are in the process of doing both Solar and Wind Generators at our various property locations. I have 50 acres near Zainesville and between Athens and Cambridge our family has over 200 more. We're meeting in February to discuss the tax abatement and funding from Uncle Sam. Costs to build them are way down too. The property we just closed on in Florida has had solar power for the past 5 years and zero issues.

[RyM3rC]

I'll keep you posted as the wife and I and other family are in the process of doing both Solar and Wind Generators at our various property locations. I have 50 acres near Zainesville and between Athens and Cambridge our family has over 200 more. We're meeting in February to discuss the tax abatement and funding from Uncle Sam. Costs to build them are way down too.

 

Yes please do, I'm very interested if the costs have come down enough. Even if it's not a residential system I'm always interested in actual facts. Watch out, there's a metric shitton of marketing BS and propaganda out there from "green-energy" groups, and people trying to sell this stuff.

[Rally Pat]

I wouldn't say that solar is completely out of the question. Some panels and a few grid tie inverters would at least slow the meter down. In addition, they just recently discovered how to "print" solar panels on to paper, which should soon massively drive down the cost of solar systems.

 

I'm thinking about building a tiny home, so I have been doing a lot of research on this stuff recently.

Edited December 20, 2011 by Rally Pat
typo

[RyM3rC]

I wouldn't say that solar is completely out of the question. Some panels and a few grid tie inverters would at least slow the meter down. In addition, they just recently discovered how to "print" solar panels on to paper, which should soon massively drive down the cost of solar systems.

 

I'm thinking about building at tiny home, so I have been doing a lot of research on this stuff recently.

 

Please, share! I haven't looked into this in awhile, looks like I'm out of the loop.

[Rally Pat]

http://hackaday.com/2011/12/02/printable-solar-cells-that-can-be-folded-up-when-not-in-use/

[Big Chief2011647545501]

While that would make a nice statement, it is beyond impractical to accomplish this on a scale large enough to impact a company like AEP. We don't have good wind here, it's not sunny often enough, solar panels take forever to pay for themselves by which time they need replaced, gas/diesel generators aren't economically practical, the natural gas/coal underground is impractical for a homeowner to exploit, etc.

 

What do you suggest? Ammonia power? Methane trapping for the farmers? wood-burning power? Drastically cutting power usage?

 

 

What I'm trying to say is AEP is a for profit company and if you want to use their "product" you have to pay their rates. If you dont want to use their "product", you'll need to find some way around it like making your own power. Having electricity available to you at your discretion at all times isnt really a right its more of a privilege of living where we do. I compare this arguement to protesters that protest AEP's pollution but then go home and use their electricity.

[BigOxley]

group buy on solar panels and wind turbines?

[Green Bastard]

I wouldn't say that solar is completely out of the question. Some panels and a few grid tie inverters would at least slow the meter down. In addition, they just recently discovered how to "print" solar panels on to paper, which should soon massively drive down the cost of solar systems.

 

I'm thinking about building a tiny home, so I have been doing a lot of research on this stuff recently.

 

iirc the solar panels are the cheap part of a solar power system, its the inverters and batteries that kills someone in cost, I know a guy that was lookin into solar power for his house a couple years ago, he told me for him it wasn't worth it because he would have to cover his entire garage roof with solar panels to have a little more energy than required to run a window air conditioner, unless they made advancements that much in a couple years, solar power would prolly just bring your bill back to where it was (residentially anyhow)

[RyM3rC]

he would have to cover his entire garage roof with solar panels to have a little more energy than required to run a window air conditioner

 

Well yeah, if your window a/c uses 1000 watts you need a 1kWh solar array to support it running constantly (during sunlight) assuming 100% perfect efficiency. In retard-laymen's terms. Living on your own energy is doable, especially with a solar/wind/generator setup but major lifestyle changes are required.

 

Hey, if you want to run a window a/c and a fridge here's a nice little 2.25kWh solar system for only $16.5k.amazon solar panel

Edited December 20, 2011 by RyM3rC
Included some prices and figures

[TTQ B4U]

Well yeah, if your window a/c uses 1000 watts you need a 1kWh solar array to support it running constantly (during sunlight) assuming 100% perfect efficiency. In retard-laymen's terms. Living on your own energy is doable, especially with a solar/wind/generator setup but major lifestyle changes are required.

 

Hey, if you want to run a window a/c and a fridge here's a nice little 2.25kWh solar system for only $16.5k.amazon solar panel

 

 

I pulled some records from a property that my wife and I own that has 10 solar panels on the roof. The system was installed prior to us buying the property and here's what it consists of.

 

It's a small system (10 panels) and doesn't power anything specific like a pool or anything. All of the electricity to pushed on to the power grid for the electrical utility.

 

The system is now 4 years old and out the door costs including installation was $7,200 (after all rebates). Original estimates were that there was a savings of about $50 per month, but it turns out that was actually low.

 

The savings are difficult to measure because there are so many variables. However, the current tenants (it's a rental for us) have tracked their bills and today shared that they have been calculating it at roughly $75/month.

 

One factor many don't take into account is panel cleaning. Dirty panels can cut production and the cost of cleaning often isn't included in the savings calculations. I have them cleaned twice per year, usually with other typical maintenance that I have done there.

 

Now, many providers only offer leased system but on the system we plan on using on our home, I am likely going to assemble the panels on my own and buy the equipment outright again. Again, pricing of the panels today is 1/3 what they used to so I expect a much better ROI on the next system.

 

Hope that provides you a bit more information.

[RyM3rC]

I pulled some records from a property that my wife and I own that has 10 solar panels on the roof. The system was installed prior to us buying the property and here's what it consists of.

 

It's a small system (10 panels) and doesn't power anything specific like a pool or anything. All of the electricity to pushed on to the power grid for the electrical utility.

 

The system is now 4 years old and out the door costs including installation was $7,200 (after all rebates). Original estimates were that there was a savings of about $50 per month, but it turns out that was actually low.

 

The savings are difficult to measure because there are so many variables. However, the current tenants (it's a rental for us) have tracked their bills and today shared that they have been calculating it at roughly $75/month.

 

One factor many don't take into account is panel cleaning. Dirty panels can cut production and the cost of cleaning often isn't included in the savings calculations. I have them cleaned twice per year, usually with other typical maintenance that I have done there.

 

Now, many providers only offer leased system but on the system we plan on using on our home, I am likely going to assemble the panels on my own and buy the equipment outright again. Again, pricing of the panels today is 1/3 what they used to so I expect a much better ROI on the next system.

 

Hope that provides you a bit more information.

 

$75/month savings is outstanding. Is that in Ohio? Was that averaged out over the year or during a specific period? So they're generating around 600 extra kW per month I'd guess, and my ultra-rough mental math guesses your system is a 2 kWh (probably 10 200w panels)? The 2kWh systems are around $10k-$13k+ right now (not including installation) for name-brand panels, which would take a bit over 11 years to pay for themselves (just the cost of materials), assuming no maintenance, insurance, or repairs.

The typical installed cost I was seeing awhile back was closer to $15k (for a 2kWh system, which is popular) so it looks like it has come down a little. You can see how at a $15k installed cost it would take 15+ years to pay themselves off, and given solar panels were estimated for 90% of rated generation for 10 years, 80% for 20 years, and generally a 25-year life cycle it didn't make much sense. Given I'm no expert, these figures are pretty rough.

 

$7200 is pretty good, I'm assuming they were getting the 30% federal credit, plus some Ohio credit/rebate on top of that unless it's a smaller system than I'm thinking. It's definitely getting better.

[TTQ B4U]

$75/month savings is outstanding. Is that in Ohio?

 

No, it's in Virginia Beach, VA. It's a 1,900sq ft home not far from the water.

 

$7200 is pretty good, I'm assuming they were getting the 30% federal credit, plus some Ohio credit/rebate on top of that unless it's a smaller system than I'm thinking. It's definitely getting better.

 

I'm not sure of all the details. Again, I'm going by what the previous owner provided us at the time we purchased the property. We are looking at a larger system as well. Depends on what we decide to do with our home and other properties this year. That all depends on the market.

[RyM3rC]

No, it's in Virginia Beach, VA. It's a 1,900sq ft home not far from the water.

 

Okay, that makes sense. Good info, thanks.