Electric aggregation efforts endorsed by local voters in recent years could soon save more than 225,000 area residents hundreds of dollars a year on their utility bills, a Dayton Daily News analysis found.
This would be a welcome break from rising utility costs for many residents like Teriauna Dixon, who moved to West Carrollton from Dayton three years ago. Dixon said her bill has risen from around $130 a month in early 2022 to more than $300 despite the fact that long work hours means she’s barely at home and rarely turns on the lights when she is there.
She said the fact that local communities have negotiated a rate that will see her bill reduced later this year is “wonderful.”
Numerous area municipalities went to voters in November and May asking for the authority to pool resources and seek out more competitive utility prices through aggregation. Ohio law has allowed for aggregation for more than 20 years, but the surging cost of electricity sparked a greater interest in such efforts in recent years.
Among the latest is a coalition of up to 16 Dayton-area cities that recently signed a contract for its residents and small businesses to receive electricity for nearly 40% less than current rates.
The projected savings for that group’s residential participants are estimated to average $350 in the first year, and nearly $1,000 for small businesses in that same time frame, records show.
The city of Dayton’s electric aggregation program, one official said, saved customers an average of $350 last year, but is projected to save about $150 on average this year.
A price surge
A “significant” AES rate increase last June — from a “standard offer” price of 4.805 cents per kWh (kilowatt-hour) to 10.91 cents — was the primary motivator for cities to re-examine potential energy savings through aggregation, said Jay Weiskircher, executive director for the Miami Valley Communications Council.
The group organized by the MVCC this year is expected to include 16 cities in Greene, Miami, Montgomery and Preble counties by next year.
“I think it all goes back to the large jump that AES had in their rates that occurred last year about this time,” Weiskircher said. “It has everything to do with that. Up until that time the market had been relatively stable and that’s one of the reasons (cities) decided not to do anything back in the early 2000s because … the market was stable at that time.”
A kilowatt-hour (kWh) is the amount of energy required to power a 1,000-watt appliance for one hour. It takes 10 hours for a 100-watt bulb to consume a kilowatt-hour, while a 2,000-watt appliance can consume a kilowatt-hour in just 30 minutes.
Electricity prices increased nationwide in recent years due to various factors including inflation, natural gas cost increases, supply chain problems, and increased demand for power after the pandemic.
The cost of natural gas increased drastically nationwide last year, going from $2.65 per million BTU in 2020 to $10.17 per million BTU in June 2022. That almost 300% increase in gas, one of the underlying fuels that powers electric generation, then was reflected in electricity prices.
Consumers saw Ohio electric rates increase dramatically last year. Rates which were 5.2 cents per kWh four years ago, dipped slightly at the start of the pandemic to 4.6 cents per kWh and 4.81 cents per kWh, in 2021 and 2022, respectively, before leaping to 10.91 cents per kWh in June 2022.
The MVCC group this month approved a 28-month contract with Energy Harbor of Akron starting Sept. 1 for a rate of 6.57 cents per kWh, records show.
Consumers can also choose the green option, meaning their electricity comes from renewable energy sources, and pay 6.97 cents/kWh.
The coalition now includes Centerville, Clayton, Englewood, Fairborn, Germantown, Kettering, Miamisburg, Moraine, Trotwood, Vandalia and West Carrollton. Later this year the group also is expected to add Brookville, Eaton and Union, with Troy joining in 2024, records show.
Oakwood city officials say they intend to present a resolution to city council July 17 that would allow Oakwood customers to opt in to the MVCC program.
“We chose to go the opt-in route so that our Oakwood customers make a deliberate choice on their own whether to: 1) join the aggregation program; 2) stay with the AES standard offer; or 3) choose a different supplier altogether,” wrote Oakwood City Manager Norbert Klopsch in an email.
These communities have a combined population of more than 225,000, according to last year’s U.S. Census data.
Dayton paying more
The city of Dayton’s history of electric aggregation stretches back to 2016, when the city first adopted it, according to Meg Maloney, Dayton’s sustainability specialist.
“The initial impetus was led by our commissioners, as they saw it as a way for city of Dayton residents to save money on their supply rate,” Maloney told this news outlet.
In May 2021, the mayor and Dayton City Commission unanimously approved restarting its electric aggregation program. It selected the Sustainable Ohio Public Energy Council, or SOPEC, to procure energy for residents.
“When we restarted the program in 2022, average estimated savings were $350 compared to the SSO (standard service offer),” she said. “This year, the estimated savings are $150 compared to the SSO.”
This month, the city purchased electricity supply with 100% green attributes at 9.65 cents per kWh.
Dayton’s electric aggregation program will be continued through May 2025. Those who were enrolled in the city’s program last year do not need to do anything.
Maloney said the biggest misunderstanding the city has when it comes to its electric aggregation program is what is its main purpose.
“Our main goal is to beat the standard service offer from AES Ohio and provide 100% renewable energy,” she said. “I can’t guarantee we will always have the lowest rate available on the market, though we will try.
In 2021, the average annual electricity consumption for a U.S. home was 10,632 kilowatt-hours (kWh), or about 886 kWh per month, according to the U.S. Energy Information Administration, or EIA.
So when a community can work out a better deal for its residents and small businesses, those few cents off in kilowatt hours can end up saving hundreds of dollars each year.
For the MVCC group, the average residential customer agreeing to its rate would save about $360 with small businesses saving about $984 in the first year, according to Palmer Energy, its consultant.
Those estimates are based on an average monthly usage of 705 kWhs for residents and 1,942 for small businesses, Palmer records show.
Palmer is the energy consultant recommended by the Ohio Municipal League, said Bevan Schenck, public affairs director of the statewide organization. The Toledo-based firm’s services for cities “meet the highest standards for the lowest possible cost,” according to the OML.
Palmer Energy President Mark Frye has been the lead person on the MVCC’s project, Weiskircher said. Attempts to talk with Frye for this report were unsuccessful.
Resident John Farren splits his time between homes in West Carrollton and Miami, Florida.
Farren said his recent bills in Ohio have “just gone way through the roof,” costing him $100 more than usual each month.
“My FPL (Florida Power & Light Company) bill down here is nowhere near what it is with AES,” Farren said. “It’s absolutely shocking.”
How rates are set
Utility rates are determined in auctions that occur in the spring and fall on a date set by the Public Utilities Commission of Ohio, said Mary Ann Kabel, AES Ohio corporate communications director.
An outside consultant appointed by the PUCO bids on market prices and the auction prices are passed on to the utilities. The utilities share the prices with the PUCO, which gives an order for the specific rates, she said.
“The rates are based on the market. So, whatever the market conditions are the date we go to auction.” Other utilities and competitive retail energy suppliers “will face the same situation.”
Cities combining to pool resources is common.
The Northeast Ohio Public Energy Council (NOPEC) is the largest nonprofit governmental energy aggregator in Ohio, providing electricity and natural gas aggregation services. It serves Ohio residents and small businesses in 240 communities in more than a dozen counties, according to its website.
NOPEC currently offers residential electric rates as low as 6.45 cents per kWh or 6.875 cents for renewable content, records show.
Single communities can also create their own program.
Washington Twp. recently entered into an agreement to establish an electric aggregation program for its residents. The township embarked on a competitive bid process, soliciting multiple suppliers before Energy Alliances locked in two rates with Energy Harbor: 6.9 cents per kWh through the May 2025 meter read, plus a rate of 7.3 cents per kWh for renewable energy.
“If renewable energy is something that residents are interested in pursuing for their home or small business, they can opt-in to that rate,” said township spokeswoman Kate Trangenstein, noting that in their case the source is wind and it’s still lower than the AES standard rate.
Officials anticipate that residents should start seeing savings on their electric bill by September, according to township Trustee President Dale Berry.
“We know how much our residents have been impacted by the burden of higher electric prices and, with the rise of energy rates, many communities decided to aggregate around the same time,” Trangenstein said.
Beavercreek rates increasing
Beavercreek residents and small businesses also among those who will see their electric bill rise late this year, but still cost less than the standard AES Ohio rate of 10.81 cents per kWh.
The city’s agreement with Dynegy to charge customers a fixed rate of 4.580 cents per kWh will end in August.
Beavercreek City Council recently renewed the electric aggregation program for another 24-month term with Dynegy as the selected supplier, with customers set to pay a fixed price of 6.928 cents per kWh from this August until August 2025. Customers can choose to opt for a renewable energy alternative at 7.310 cents per kWh.
Miami Twp. Board of Trustees this springapproved an amended electric aggregation agreement to authorize an electricity supply agreement for customers in the Duke Energy service territory.
As a result, Trebel Energy was able negotiate a fixed price with Energy Harbor for 6.89 cents per kWh for a 24-month term from this month until June 2025 for Duke customers. The plan also includes a carbon-free option for 7.18 cents per kWh.
Miami County commissioners on June 15 approved a new electric generation supply agreement for residents and small businesses in unincorporated areas of the county, excluding Newberry Twp. which already has its own program.
The county agreement of 6.49 cents per kWh is with Energy Harbor of Akron and will cover electric supply beginning with the August meter reading date and ending with the December 2025 billing. The county is working with Palmer Energy and the County Commissioners Association of Ohio on the program.
The city of Troy established it own electricity aggregation program in 2011 via supplier Energy Harbor. Residents and small businesses are automatically enrolled in the program, but can choose to leave at any time.
Troy is in the middle of its fourth contract, this one a 1-year contract after three three-year contracts according to Lauren Karch, the city’s communication coordinator. Members of the electricity aggregation program pay 7.26 cents per kWh, which runs through April 31, 2024.
The previous rate from April 2020 through April 2023 was 4.49 cents.
While residents often ask the city about the specifics of electric aggregation, their inclusion in it is usually the foremost concern.
“Really, the biggest questions we receive are about how to tell if you are in the aggregation,” Karch said. “You can see your electric provider on the back of the first page of your AES Ohio bill.”
Reporting by contributing writer Nancy Bowman was included in this report.
Coming Monday: Local households have choice to make: Do the research and opt out of electric aggregation or do nothing and let it happen. Here’s what the experts say.