Rising utility rates: Electric, gas aggregation aimed at giving residents savings opportunity

A slew of ballot measures next month are aimed at giving area residents better gas and electric rates through the power of collective negotiations.

Ohio consumers can choose their electricity generation suppliers — where their energy comes from. Under aggregation, a community entity negotiates with suppliers on behalf of eligible households, nonprofits and small businesses to save money on bills by grouping together.

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West Carrollton City Manager Brad Townsend said the city had residents in mind when it put electric aggregation choice on the ballot for voters.

“With the current utility rates as high as they are, city council wanted to be sure that in the future residents and small businesses have another electric supply option to choose from that is safe and offers a savings opportunity,” Townsend said.

All residents automatically receive a better rate once it is negotiated, he said.

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Over the past four months elected and appointed officials in nearly every community in the Miami Valley have talked about the pros and cons of community aggregation programs, he said.

There’s no guarantee that if an aggregation option is approved by the voters, and offered to the community, that residents and small businesses will have access to rates that are less than what they could have obtained on the open market, Townsend said.

“Aggregation simply guarantees a market competitive energy rate,” he said. “Hopefully, by offering an aggregation program that is open to other communities, rates will be less than what West Carrollton would have received had they solicited energy proposals on their own.”

The price of electricity has risen nationwide, and inflation, natural gas cost increases, supply chain problems and other issues — like growing post-pandemic demand for power — are complicating factors, officials have said.

As of June 1, AES Ohio’s price became 10.91 cents per kWh (kilowatt-hour), up from its “standard offer” price of 4.805 cents. A kilowatt-hour is how much energy you need to run a 1,000-watt appliance for an hour. A 100-watt bulb takes 10 hours to use a kilowatt-hour of energy. A 2,000-watt appliance takes 30 minutes.

But under most aggregation programs, home and small business owners have the opportunity to opt out.

St. Clair Newbern IV, CEO of LiveEnergy.com, who has 21 years of experience as an energy broker, said his advice for those who have the time and resources to follow rates and lock them in when they improve is to “always opt out.”

“When you become part of an aggregation, you’re giving up optionality to take action when the prices are best for you,” Newbern said.

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Aggregation, “is usually not going to affect the price so much,” when it comes to residential aggregation, he said, because the vast majority of those users have a similar profile, Newbern said.

“So if any one of them went to the market, they’re going to get about the same price,” he said.

But when it comes to business aggregation, each one has a very different profile, so businesses should carefully weigh whether they should go along with it or opt out, Newbern said.

For many years, electric rates have been very cheap, because “if you look at natural gas prices, that’s pretty much going to tell you what electricity prices have done,” Newbern said.

Back in 2020, the price for natural gas was $2.65 per million BTU. That rocketed higher this year, going all the way up to $10.17, per million BTU.

“That’s like a 300% increase on the underlying fuel, and so that’s going to be reflected in electricity prices,” he said.

The reason for the steep increase is because when COVID-19 pandemic started, demand dropped, giving the nation excess supply. Prices then plummeted before the economy came roaring back, Newbern said.

“As demand came back, the supply didn’t come back as quick, and so we have a tight market, he said.

Then the Ukraine-Russian War caused global supply issues, he said.

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Greene County Administrator Brandon Huddleson said the county is putting an aggregation choice on the ballot for voters “because commissioners understand the gas market is volatile and inflation is out of control.”

“If voters approve natural gas aggregation, we can pool their usage to obtain a better rate for them than they are able to get on their own from the supplier,” Huddleson said.

Huddleson said Greene County works with an energy broker, Palmer Energy.

“They would go out for bid in the spring and are confident we would have plenty of bids to consider right away,” Huddleson said. “Gas suppliers are interested in picking up large blocks of users so they are aggressive with their rates.”

Gas and electric markets remain volatile and rates can vary widely depending on when the bids are received, he said.

Greene County’s gas aggregation program would work just like the electric aggregation program it has had in place for many years, Huddleson said.

Voters in Miami County’s unincorporated areas will be asked to vote on establishing electric and natural gas government aggregation programs.

The Miami County commissioners voted in May to approve the request to voters in all townships except Newberry Twp., which already has an aggregation program.

The proposal came before commissioners when AES said its electric price per kilowatt hour would increase this summer and the natural gas commodities market was “well over double what it was last year,” Charlotte Coffey, the commissioners’ administrator, said at the time of the commission vote.

The county is talking with the County Commissioners Association of Ohio and its Ohio Service Corporation aggregation program. Those organizations are working with more than two dozen counties on efforts to save money for eligible customers, Colley said.

The city of Troy currently has an electric aggregation program along with West Milton, Covington and Bradford, all villages.

Nancy Bowman contributed to this report.

Aggregation ballot issues throughout the Dayton area

MONTGOMERY COUNTY

City of Clayton, electric aggregation program vote

City of Englewood, electric aggregation program vote

City of Englewood, natural gas aggregation program vote

City of Riverside, electric aggregation program vote

City of Riverside, natural gas aggregation program vote

City of Trotwood, electric aggregation program vote

City of Trotwood, natural gas aggregation program vote

City of Vandalia, electric aggregation program vote