Electricity rates in Valley to soar
Default customers of FirstEnergy — those who purchase their electricity directly from the company, not another retail supplier — should expect much higher bills next month.
At the start of June on Thursday, residential customers of each of FirstEnergy’s Ohio electric companies — Ohio Edison, Toledo Edison and the Cleveland Illuminating Company — will pay more than 12 cents per kilowatt hour (kWh).
Before Thursday, the rates were: 5.8 cents / kWh for Ohio Edison customers, 5.9 cents / kWh for Toledo Edison customers and 5.9 cents / kWh for Illuminating Company customers.
The rates will last through May 2024 and impact only customers on FirstEnergy’s standard service offer, known as the price to compare on utility bills.
Simply put, FirstEnergy is paying more to purchase wholesale electricity.
“Our energy supply prices are based on the results of a competitive auction process in which we buy power on behalf of customers who receive electricity from their utility,” information from the Akron-based company states.
“FirstEnergy does not control the prices, and the electricity is provided at cost to customers,” according to the company.
Energy markets have experienced some volatility in the past 18 months, driven mostly by the war in Ukraine and inflation, Matt Schilling, spokesman for the Public Utilities Commission of Ohio, said.
When the auctions took place in the spring and fall of last year, natural gas prices were up because of those issues, so they fetched pretty high prices, he said. The price of natural gas, however, has since come down some.
“So there’s kind of a double-edge sword of holding the auctions and the timing that they happened because this price that got locked in from the auctions is relatively high, but as we stand today, gas prices have come down,” Schilling said.
Natural gas is a major fuel source to generate electricity and as “natural gas future prices change, wholesale electricity prices typically follow suit,” Schilling said.
FirstEnergy electric bills are divided into two parts — delivery and supply. A FirstEnergy electric company, such as Ohio Edison, is responsible for delivering electricity, but it does not generate the electricity, which is the role of the power supplier.
The structure goes back to a 1999 law that restructured energy markets in the way utilities are regulated, otherwise known as deregulation.
“One of the things that happens now, customers have the option to chose their energy supplier … so the way it works, our local utilities, Ohio Edison, works as a distribution utility only. They own and operate all of the infrastructure to bring electricity to our homes and businesses,” Schilling said. “That is completely regulated by us at PUCO.”
Still, the power company is obligated to make sure there is power in the wires for consumers who do not choose a supplier — the default customers who receive electricity through FirstEnergy’s standard service offer.
“Customers who do not shop for electricity are charged a default energy supply rate we negotiate,” the company states.
Through March — the latest data available to PUCO — 51 percent of Ohio Edison customers were on the standard service offer, meaning, Schilling said, “they did not shop” for a supplier.
According to FirstEnergy, a typical “non-shopping” residential customer using 750 kilowatt hours can expect their bill to go up 47 percent from May to June. The prices, which update once a year June 1, are seasonal, with summer pricing June to August and winter pricing the remaining months, according to the company.
Winter prices also are expected to be higher than last winter’s prices.
WHAT TO DO?
The public utilities commission is encouraging consumers to compare offers from retail suppliers at energychoice.ohio.gov, where they will find the Apples to Apples comparison chart. There, customers can evaluate the price-to-compare on residential bills against other supplier offers.
But, Schilling cautions consumers to read the “fine print” of the contract terms and conditions, whether it contains a variable of rate, if there is an early termination fee or any other fees or charges.
Since the cost of wholesale power has come down recently, “we might see a lot of shopping activity this summer,” Schilling said.
FirstEnergy also is encouraging consumers to look for ways to conserve energy. More information on saving energy can be found at www.firstenergycorp.com/help/saving–energy.