Important information if you are serviced by AEP Ohio

If your company is located in the AEP Ohio services area, you need to completely understand what you are contracting in order to avoid the surprise of added RPM fees that might add as much as 15% to 20% onto what you thought was a good contract price.

In the AEP Ohio service area, customers who want to contract electricity with a competitive supplier must  secure a place in the Queue for an RPM (Reliability Pricing Model) set aside allotment.  There are only slots for 21% of commercial users to sign up with a competitive supplier.  If you don’t get through the Queue for 2011, then you can try for 2012.

In order to get into the RPM Set Aside Queue, you must first have a contract in place with a Qualified Electricity Supplier. Certain sized customers must wait 90-days to enroll with a competitive supplier.  If upon completion of the 90-day notice period, the customer has not enrolled with a Qualified Electricity Supplier, then the customer must continue to take service under the AEP’s standard service schedules for a period of not less that twelve (12) consecutive months. 

If you, as a customer, have signed a contract with a Qualified Electricity Supplier, but you have not made it through the Queue, you will be forced to pay a monthly RPM fee on your AEP bill that, as of this writing, amounts to $0.010625/kWH.  Based on today’s prices, this effectively increases your cost of electricity supply as much as 20%!!!!

How can you avoid this problem?

  1. Sign your contract to start in 90 days.
  2. Make sure that your contract has the following language in it:

The Parties acknowledge that the Pricing contained in this Pricing Attachment is based on the Supplier’s costs and the assumption that Customer will either be allocated a RPM Set Aside (similar to that described in any Stipulation or Order resulting from PUCO Case Number 11-0346-EL-SSO, et al) for the electric load covered by this agreement, or that capacity pricing associated with Customer’s electric load will otherwise be set by the PJM RPM.  Within the 30 days after Supplier receives notice that the Customer was not allocated a RPM Set Aside for the electric load covered by this agreement or that capacity pricing for Customer’s electric load will not be determined by the PJM RPM, both Parties shall have a one time right to terminate this agreement without cost or penalty by providing prompt notice to the other Party and the Customer hereby pre-authorizes Supplier to exercise its rights to terminate in accordance with this provision.

If the above language is not in your contract and you are not allocated in the RPM Set Aside, which is a very real possibility, expect your total effective electricity supply price to be 20% more than you planned on.

When you purchase electricity and natural gas, working with an experienced broker like Better Cost Control will help your company get the best prices, contract terms AND help you avoid the contract “gotchas” that are so easy to fall victim to.

AEP Service Territory: https://www.aepohio.com/service/choice/cres/ServiceTerritory.aspx

AEP Filing: https://www.aepohio.com/global/utilities/lib/docs/service/choice/OH/AS_FILED_AEP_v_PJM_Section_206_Complaint_04_04_11.pdf

Understanding Load Factor

What is Load Factor?

Load factor is an expression of how much energy was used in a time period, versus how much energy would have been used, if the power had been left on during a period of peak demand.  It is a useful indicator for
describing the consumption characteristics of electricity over a period of time. Customers whose facilities are metered for demand can readily determine the load factor for any given month. Facilities billed at highest peak demand during the billing period should avoid periods of increased demand whenever possible.

How to Calculate Load Factor

The load factor percentage is derived by dividing the total kilowatt-hours (kWh) consumed in a designated period by the product of the maximum demand in kilowatts (kW) and the number of hours in the period. In the example below, the monthly kWh consumption is 36,000 and the peak demand is 100 kW. There were 30 days in the billing period.

Load Factor = 36,000kWh/(100kW x 30 days x 24 hours/day

Load Factor = 36,000 kWh/72,000kWh

Load Factor = 50%

This load factor indicates the monthly energy consumption of 36,000 kWh used by the customer was 50% of the total energy available (72,000 kWh) for use at the 100 kW level.

Why is Load Factor Important?

Electricity Distribution Companies must meet the customers’ peak demand at all times. The demand rate structure automatically rewards customers for improving their load factor. Since load factor is an expression of how much energy was actually used compared to the peak demand, customers can use the same amount of electricity from one month to the next and still cause their average cost per kilowatt-hour to drop as much as 40% simply by reducing the peak demand. For instance, a 25% load factor in the summer would yield an average cost per kWh of 13.2 cents, while an 80% load factor would yield an average cost per kWh of 7.9 cents. Remember, this is comparing two months in which the customer used the same amount of electricity (kWh) with different peak demands.

How to Improve Load Factor

Lowering the facility’s peak demand is the primary step to improving load factor and will reduce the amount paid monthly for electricity.

To determine the potential for improving load factor, analyze billing records to identify the seasons during which the peak demand is the greatest. In general, the greatest demand for electricity occurs on hot days in the summer. While this implies that a large electric load is dedicated to space cooling, it is not necessarily true for every facility. It is always best to observe operations at the facility to determine what equipment may be causing the peak demand. Once the contributing equipment loads have been identified, determine what can be done to sequence or schedule events or processes in order to minimize the simultaneous operation of high wattage equipment.

With a variable index price, what is my price???

The market price charge equals the weighted average of the Real Time Locational Marginal Prices (“LMP”) for the zone you are located in for each calendar month. LMPs are hourly wholesale prices in dollars per megawatt-hour (MWh). Wholesale prices are converted to retail prices by adding distribution losses of 4.48% and dividing by 1000 to convert to dollars per kilowatt-hour (kWh).  To this number you add the “adder” that the electicity supplier charges.

If you are interested in source data for market price charges, you can access New England wholesale LMP data on the ISO-NE websiteVisit our resources page for links to the Independent System Operator (ISO) for your particular location:

At the destination page:

  • In Step 1, select “Load Zone.”
  • In Step 2, select your Load Zone.
  • In Step 3, select the start and end dates you wish to receive .
  • Click “Download CSV” (comma separated values) and save the file locally. You can open the file with any text editor or spreadsheet program, such as Microsoft Excel.

In the data file, the LMP data can be found in the eighth column, which is labeled “Real Time LMP.” The twelfth column, labeled “Real Time Status“, indicates the Status of the real time pricing (“preliminary” or “final”). The monthly price will be calculated and posted after the end of each month, when all LMP data for the prior are final.  This is the number that will be used as the monthly LMP price.

Please note that a single query is limited to 45 days worth of data and that hourly pricing data is only available for the past 12 months.

Why you should have Better Cost Control manage your energy procurement

It is our desire to be the #1 electricity and natural gas consulting company in the Northeast. If not in terms of volume, then in terms of professionalism, integrity and best business practices. We are well on our way!

Many of our clients have attempted to negotiate electricity contracts themselves with the list of electric power companies they find online. After spending weeks trying to compare confusing offers and listening to the biased sales pitch of individual electric or gas companies, they have decided to outsource utility negotiations to us. These are our best references.

The greatest challenge in this business is choosing the right Supplier. There are over 60 electricity suppliers and over thirty gas suppliers, choosing the right one for your business is a daunting and time consuming task.

The owner and president of our company has 9 years of energy procurement experience. His main job is to evaluate the Suppliers and determine who the top 10 Suppliers in the industry are. We have them competitively bid on your business.

We have made a significant investment in developing and training a highly skilled staff specializing in electricity and gas deregulation.

As of July, 2011 we have 350,000,000 kWh under our management. We service all sizes of business clients, and take great pride in giving the same level of service to all sizes of clients, from the Fortune 500 client to the “mom and pop” restaurants.

We are in the business of energy procurement for the long-term. Our core values are Integrity and Professionalism. These are things that we have seen a shortage of in our field.

80% of our clients sign an Exclusivity Agreement that states that we are to completely handle all negotiations and correspondence for and behalf of our client. This is a testimony to our professionalism and energy procurement expertise. It is also the best way for a client to be assured of getting the best service.

Our pricing desk utilizes a variety of web based automation tools. This enables a quick Request for Quotation process, timely negotiations, preparation of Bid Comparison and Savings analysis.

Our desire is to completely manage your Energy Procurement, with as little effort from our Client is possible. At the same time, our energy consultants bring significant business to our Suppliers with the least amount of effort on their part. We make a concerted effort to be “easy” to do business with.  This helps you, the customer, to get the best possible prices on your energy.

Reliability Maintained Through the Heat Wave

ISO New England (ISO-NE) started taking emergency actions Friday under its Operating Procedure No 4 — titled “Action during a capacity deficiency”  — as a result of the high power demand triggered by the heat wave late last week.  That move and the associated warnings that went out triggered a slew of calls from reporters, the ISO’s press office told us. National news outlets carried the story Friday including at least one interview with an ISO press officer on a nationally syndicated radio show.

The first level of emergency response in the ISO’s rules is mostly notification requirements that offer no extra power or demand relief — except the step to “begin to allow the depletion of 30-minute reserve.” That one can deliver about 600 MW, said an appendix to OP4.

The next level can deliver about 550 MW, said the appendix, by dispatching “real-time demand resources in the amount and location required.” At 1:30 PM, the ISO implemented Action Three under OP4, requesting voluntary load curtailment of market participant facilities and office complexes.

PJM breaks record

PJM Thursday broke its August 2006 peak record by delivering 158,450 MW and started releasing alerts for Friday at 7:13 AM that day with a heavy load voltage schedule warning.  That was followed by 54 entries on
PJM’s emergency message webpage ending at 10:55 PM Friday, mostly “post contingency local load relief” warnings.  The purpose of those is to give advanced notice to a transmission owner of the potential for manual load dump
in their area only, explained the PJM website.

Other messages included “non-market post contingency local load relief” warnings, the same message but for non-market facilities.

PJM issued at 11:00 AM an emergency mandatory load management with short lead time for Baltimore Gas & Electric.  “Load reduction is expected to be fully implemented within one hour,” of the alert time, said the PJM website, “and should remain off for six hours unless released earlier by PJM.

Others of the 54 entries included NERC-mandated alerts and letting generation owners boost generation above the normal economic limit — for BG&E, Duquesne Light and Public Service Electric & Gas (PSE&G).

Alerts started back up just after midnight on Saturday with a hot weather alert for the entire RTO, warning the temperature was expected to hit 103°F later that day.  A “heavy load voltage schedule warning was issued
at 7:30 AM and by noon a 60 MW load relief warning was posted for an area of AEP.

The Maryland PSC reminded customers that utilities in the state are not allowed to disconnect service for non-payment during a heat wave.

BG&E, PPL respond

Customers of BG&E were told Friday that members of the firm’s PeakRewards emergency load management program that they were being phased down to the level they had agreed to — 50%, 75% or 100% demand reduction — although they all were cycled to 50% during a transition period, said the firm.

What did they get for that? Participating customers receive bill credits of up to $200 in the first year of participation and up to $100 for each subsequent year, regardless of whether the program is activated.

The program cut peak demand by about 500 MW, said BG&E.

Early figures showed the demand at PPL Electric Utilities (PPL) at 2 PM Friday reached 7,622 MW — breaking the firm’s all-time summer peak of 7,554 MW set Aug 1, 2006 and the all-time winter peak of 7,577 MW set on Feb 5, 2007.  The
firm kept the power on and cited attention to maintenance and inspection, the increasing investments in the grid plus system planning for that.  It plans to spend over $450 million in capital investments this year, mainly to upgrade and expand the grid and address aging infrastructure, the IOU said.

“Investing in reliability means we’re prepared for the hottest days of summer and the frigid cold of winter,” said Gregory Dudkin, senior VP of operations.

The mark set Friday was the sixth day this year peak demand topped 7,000 MW and four of those six days occurred last week.  The others two were June 6 (7,049 MW) and Jan 24 (7,365 MW).

Over the past 10 years, PPL’s average summer peak was 6,949 MW, so Friday’s peak was about 10% higher than the firm’s summer average.

PSE&G has outages

About 6,600 PSE&G customers were without power due to the weather, the New Jersey IOU reported late Saturday morning.  The unofficial peak during this heat wave for the firm was 10,883 MW, set Friday at
about 3:00 PM — shy of the all-time peak of 11,108 MW set in August 2006, said PSE&G.  The utility has additional crews on hand to respond to service interruptions as they occur.  PJM, the regional grid operator, has had adequate power supplies to meet the increased demand.

The utility asked customers to use power wisely and conserve when possible to help the environment and save money.  “Turn off everything you’re not using, including TVs and computers,” said the firm.  The message listed many other actions customers could take including turning air conditioners warmer, using ceiling fans among lots of others.

New York calls DR

Con Edison (ConEd) said Friday it broke its all-time record, reaching 13,189 MW at 4 PM that day, “eclipsing” the all-time record of 13,141 MW set Aug 2, 2006.

DR programs were credited with cutting peak demand by about 500 MW when 3.2 million customers “heeded calls to conserve power.” The utility “saluted” them “and credited them with a key assist in keeping the power flowing reliably.”

The IOU did experience scattered power outages and as of 7 PM Friday the firm had restored power to over 16,500 of the 24,000 customers affected since Thursday.

New York ISO (NYISO) reported Thursday’s peak at 33,454 MW between 4-5 PM, 485 MW below the all-time peak of 33,939 MW set in August 2006.  The peak Thursday was 2 MW above the 2010 peak of 33,452 MW set July 6.

NYISO activated DR programs in the “downstate” region to help manage load between 1-6 PM where over 800 MW of DR is enrolled in the Lower Hudson Valley, New York City and Long Island.
DR was called statewide Friday where over 2,000 MW is available, said the ISO.

“While New York’s power system performed well and sufficient resources were available to meet the higher demand, it’s important for all electricity consumers to heed the conservation advice of their local utility,” NYISO CEO Stephen Whitley said.

Meanwhile, New York PSC Chairman Garry Brown Friday asked New Yorkers to conserve energy to help take stress off the power.  “It is critically important for consumers to reduce their energy use at this time.  Equally important is for our state’s residents to stay cool and stay hydrated as hot and humid weather continues to stay with us.  We must all work together to reduce unnecessary electricity usage during this heat wave.”

Wind keeps blowing

Cape Wind took the constrained power situation as an opportunity to point out its offshore wind power project could help supply clean power in such an event.  The wind farm “planned for Nantucket Sound would have been
running at its full capacity of 420 MW yesterday and today Cape Wind would be running above average in power production,” said the firm Friday, citing wind data gathered both days.

“People sometimes think about the ‘dog days’ of summer and wonder if wind turbines will help,” Communications Director Mark Rodgers said in a prepared statement.  The “data shows us that offshore in Nantucket Sound, those
hot summer afternoons tend to be quite windy.”

In average conditions, Cape Wind will meet about 75% of the electricity demand of Cape Cod and the islands of Martha’s Vineyard and Nantucket, it added.

Comparison of New England and PJM Power Generation Sources

People often wonder why electricity is more expensive in the Northeast versus in the PJM area.  PJM covers PA, NJ, DE, MD, WV, VA, OH and parts of IN and MI.  In a word, it comes down to the cost of the fuel powering their generators.  The PJM uses coal for 40% of their fuel versus NEPOOL uses coal for only 12.8% of their fuel, coal being the least expensive.

Here is the comparison:

Power Sources New England Power Pool System Mix

  • Coal 12.81%
  • Natural Gas 37.59%
  • Oil (Diesel, Jet, Oil) 5.58%
  • Nuclear 30.46%
  • Renewable Sources 5.24%
  • Other, Misc. 8.31%
    Total 100.00%

Power Sources PJM System Mix

  • Coal 40%
  • Natural Gas 29%
  • Oil (Diesel, Jet, Oil) 6%
  • Nuclear 19%
  • Renewable Sources 6%
    Total 100.00%

Opportunities for Sales in Electricity and Natural Gas

In tough economic times, there are always slick salespeople who take advantage of the economy to sell dreams. Today, the dream being sold by Multi-Level-Marketing (MLM) companies is the recurring commissions of residential electricity sales.  Sell everyone you know to sell everyone they know and you will make a fortune and retire.  The pitch and the web site are slick.  The opportunity makes sense.  It seems like a no-brainer.  But believe me: It is a dream.  It really doesn’t turn out that way.

If you have sales skills and an interest in building a business in commercial electricity and natural gas sales, that is another story.  You build your own business.  Better Cost Control operates as the licensed broker and performs the back office work.  We provide an online portal for CRM, Contact Management, Commission Tracking and Forecasting, plus automatic reminder emails to you and your customers when contracts are approaching renewal dates, so nothing slips by.

We have relationships with more suppliers than any independent electricity or natural gas broker.  This means we can honestly obtain the lowest prices for our and your customers.  You make recurring commissions.  No secrets.  No meetings.  Just honest people who have been doing this since 2002 and plan on continuing to broker energy for the long term.  We’re honest enough to tell you that no sales job provides easy money.  You need sales skills. You need to work hard. You won’t be selling to your friends, but to businesses. Never pay anyone for the opportunity to sell on their behalf.

If electricity and/or natural gas sales might be in your future, call us at 617-332-7767 x150.  Learn more by visiting: http://bettercostcontrol.com/energy-sales-opportunity/

First Energy Ohio Sets New Prices Today

What First Energy customers in Ohio pay for electricity for the next three years will be determined this week.  A better economy means higher prices.  The price bidding process for the Illuminating Company, Ohio Edison and Toledo Edison, with results reviewed by the Ohio Public Utilities Commission.  This auction will determine the “Price to Compare”, which is the price to compare to competitive suppliers to see whether you will save money or pay more if you contract electricity with another supplier.  Stay tuned for the results.