Will New Auctions Cost You More?
AES Ohio holds it electricity supply auctions once a year auction. But that may soon change with the utility moving to multiple auctions per year. Dayton energy customers have felt the effects from these yearly auctions hard this year. Did you struggle when Ohio utility rates surged from 4.508 cents per kWh to 10.91 cents per kWh in June? Will the new auctions save AES Dayton energy customers money?
What Is The Effect Of Auctions On PTC Rates?
First, remember that the PTC is a pass-through rate for generation supply. Utilities can’t profit from it. Customers pay exactly what the utility pays. Utilities set the PTC rate by holding periodic auctions. PUCO must approve both auction results and the final rate. As a result, the whole process usually takes a little time before the PTC rates go into effect.
Other Ohio utilities bring in generator companies several times in the year to hold auctions for electricity supply. This way Ohio utility companies can spread out their costs over the year. This usually helps keep Ohio electricity rates lower by reducing the chance for sudden price spikes. However, each spring AES Ohio only holds one auction to purchase all the electricity they require for the upcoming year.
But this year, natural gas prices have risen to levels not seen since 2008. Additionally, high temperatures this summer have forced homes and businesses to use more electricity. Because natural gas powers electric generators, high natural gas costs and high demand has pushed up electricity rates.
Unfortunately, AES Ohio had to pay this higher rate for their generation supply all at once.
Multiple Auctions Can Hurt and Help Consumers
On one hand, laddering price increases may make them easier for consumers to stomach. On the other hand, these slow increases over the year can lull consumers into a false sense of security. Think of it like the frog-in-a-pot parable. Consumers are less likely to shop for Ohio electricity plans if the PTC rate doesn’t rise too fast.
But just because you don’t recognize the water is getting hot, doesn’t mean that you’re being fooled. Multiple energy auctions can also signal when PTC prices are increasing. And that can give families a chance to shop fixed rate plans and avoid paying high electricity bills later. For example, earlier this year consumers in other utility service areas saw their PTC rates were going to rise. So, they shopped fixed rate electricity plans at what then seemed to be high prices. But, after the June price spike, they are now seeing massive savings.
Saving Money With Multiple Energy Auctions
Having multiple energy auctions per year keeps you informed when rates will change. This also means that providers will need to be more agile to compete with changing PTC rates. So, you’ll be able to shop for great plans.