(c) 2009 F. Bruce Abel
This is the renewal application for Don Marshall to be an aggregator in Ohio:
http://dis.puc.state.oh.us/TiffToPDf/A1001001A08D16B35039F49674.pdf
Showing posts with label green township. Show all posts
Showing posts with label green township. Show all posts
Wednesday, November 11, 2009
Tuesday, November 10, 2009
Rider FPP
(c) 2009 F. Bruce Abel
This is for those who have been following the excellent special meetings of Symmes Township, which can be viewed on ICRC this week (the second meeting) and on the ICRC website (first meeting; supposedly the second meeting but my computer hangs up on this one).
Here is what was missing from these meetings, and this is important:
No one from Duke Energy appeared to tell about Rider FPP, which is essential to evaluating any competing offer regarding electricity. (Search "Rider FPP" on my blog herein for explanation).
Without this data a fixed three-year electric contract is a gamble.
No one was there from Duke Energy Retail Sales, which is different from Duke Energy. They (Duke Energy Retail Sales) are there to match whatever the competitor is offering, whereas Duke Energy is not, and will not even refer us to "Duke Energy Retail Sales."
Also missing was Don Marshall of Eagle Energy, the most knowledgeable of the middlemen ready to serve the southern Ohio, Duke territory.
Instead in attendance you had brokers who have served northern Ohio, whose situation is quite different from southern Ohio. Nevertheless, they had valuable presentations.
The best single negotiating observation from the two special meetings:
"In most cases you must multiply the competitor's offer per kwh by 1.065 because there is a 6 1/2 percent sales tax that applies to that competitor's offer."
Of interest is the transcript of Duke's last conference call to Wall Street and other investors:
http://seekingalpha.com/article/170230-duke-energy-corporation-q3-2009-earnings-call-transcript?source=trans_sb_previous&page=7
This covers the 3rd quarter. The 2nd quarter transcript, on first glance, is more informative on our topic. i refer to this 2nd quarter in an earlier blog.
This is for those who have been following the excellent special meetings of Symmes Township, which can be viewed on ICRC this week (the second meeting) and on the ICRC website (first meeting; supposedly the second meeting but my computer hangs up on this one).
Here is what was missing from these meetings, and this is important:
No one from Duke Energy appeared to tell about Rider FPP, which is essential to evaluating any competing offer regarding electricity. (Search "Rider FPP" on my blog herein for explanation).
Without this data a fixed three-year electric contract is a gamble.
No one was there from Duke Energy Retail Sales, which is different from Duke Energy. They (Duke Energy Retail Sales) are there to match whatever the competitor is offering, whereas Duke Energy is not, and will not even refer us to "Duke Energy Retail Sales."
Also missing was Don Marshall of Eagle Energy, the most knowledgeable of the middlemen ready to serve the southern Ohio, Duke territory.
Instead in attendance you had brokers who have served northern Ohio, whose situation is quite different from southern Ohio. Nevertheless, they had valuable presentations.
The best single negotiating observation from the two special meetings:
"In most cases you must multiply the competitor's offer per kwh by 1.065 because there is a 6 1/2 percent sales tax that applies to that competitor's offer."
Of interest is the transcript of Duke's last conference call to Wall Street and other investors:
http://seekingalpha.com/article/170230-duke-energy-corporation-q3-2009-earnings-call-transcript?source=trans_sb_previous&page=7
This covers the 3rd quarter. The 2nd quarter transcript, on first glance, is more informative on our topic. i refer to this 2nd quarter in an earlier blog.
Monday, November 2, 2009
Aggregation
(c) 2009 F. Bruce Abel
This article below cannot be gainsaid, but has an "I told you so" flavor. Looking backwards is a traditional selling point, and implies that the future will replicate the past. But comparing what happened over the past year ignores the technical fact, as I pointed out in my last aggregation post, ("I told you so") that one cannot anticipate what the Duke electric rate will be beyond the next quarter of the year, due to the Rider FPP, whose components have been declared a trade secret.
Green residents saving on electric bill
By Kurt Backscheider • kbackscheider@communitypress.com • October 15, 2009
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Green Township residents and business owners enrolled in the township's electric aggregation program have saved a total of $2.4 million in energy costs so far this year.
Don Marshall, president of Eagle Energy, attended the Green Township Board of Trustees meeting Monday, Oct. 12, to update the board on the savings residents and business owners have realized since the program began in April. Eagle Energy is a Bridgetown-based consultant group assisting the township with administration of the aggregation program at no cost to the township.
Aggregation is a process by which a community combines its residents into large buying groups, which can result in increased buying power and lower rates for members. Township voters approved adopting the electric aggregation program in November 2004, but township officials held off contracting with an energy supplier until December 2008 because prices on the wholesale market were not competitive.
Trustees voted last December to enter into an agreement with Dominion Retail Inc. to be the electricity supplier to residents, small businesses and township facilities. Dominion Retail provides electricity, natural gas and energy related products to 1.6 million customers in 12 states.
"The trustees and the administration of Green Township should really be commended for taking the initiative to give customers in Green Township a choice, to allow them to participate in the choice program and achieve what we believe are significant savings so far," Marshall said.
He said those who are buying their electric through Dominion are paying a little less than 7 cents per kilowatt hour, while those who are not in the program are paying a little more than 9 cents per kilowatt hour right now. He said on Jan. 1, 2010, those who aren't in the program are projected to pay 9.5 cents per kilowatt hour, and Dominion's rate will increase to 7.45 cents per kilowatt hour.
"There will still be a significant savings, about 2 cents per kilowatt hour difference," he said.
Township residents and business owners enrolled in the program are saving between $15 to $20 per month in electricity costs. Marshall said the average customer in the program will save more than $150 in a one-year period.
He said there are about 16,000 residents in the program who have saved a total of $1.9 million so far this year, and the roughly 1,300 small business owners in the program have saved $500,000 so far this year.
"That's pretty phenomenal," Marshall said.
Residents and business owners who want to learn more about enrolling in the aggregation program can call the township at 574-4848.
This article below cannot be gainsaid, but has an "I told you so" flavor. Looking backwards is a traditional selling point, and implies that the future will replicate the past. But comparing what happened over the past year ignores the technical fact, as I pointed out in my last aggregation post, ("I told you so") that one cannot anticipate what the Duke electric rate will be beyond the next quarter of the year, due to the Rider FPP, whose components have been declared a trade secret.
Green residents saving on electric bill
By Kurt Backscheider • kbackscheider@communitypress.com • October 15, 2009
Post a Comment •
Recommend --> • Print •
ShareThis Click To Listen --> • Type Size: A A
Green Township residents and business owners enrolled in the township's electric aggregation program have saved a total of $2.4 million in energy costs so far this year.
Don Marshall, president of Eagle Energy, attended the Green Township Board of Trustees meeting Monday, Oct. 12, to update the board on the savings residents and business owners have realized since the program began in April. Eagle Energy is a Bridgetown-based consultant group assisting the township with administration of the aggregation program at no cost to the township.
Aggregation is a process by which a community combines its residents into large buying groups, which can result in increased buying power and lower rates for members. Township voters approved adopting the electric aggregation program in November 2004, but township officials held off contracting with an energy supplier until December 2008 because prices on the wholesale market were not competitive.
Trustees voted last December to enter into an agreement with Dominion Retail Inc. to be the electricity supplier to residents, small businesses and township facilities. Dominion Retail provides electricity, natural gas and energy related products to 1.6 million customers in 12 states.
"The trustees and the administration of Green Township should really be commended for taking the initiative to give customers in Green Township a choice, to allow them to participate in the choice program and achieve what we believe are significant savings so far," Marshall said.
He said those who are buying their electric through Dominion are paying a little less than 7 cents per kilowatt hour, while those who are not in the program are paying a little more than 9 cents per kilowatt hour right now. He said on Jan. 1, 2010, those who aren't in the program are projected to pay 9.5 cents per kilowatt hour, and Dominion's rate will increase to 7.45 cents per kilowatt hour.
"There will still be a significant savings, about 2 cents per kilowatt hour difference," he said.
Township residents and business owners enrolled in the program are saving between $15 to $20 per month in electricity costs. Marshall said the average customer in the program will save more than $150 in a one-year period.
He said there are about 16,000 residents in the program who have saved a total of $1.9 million so far this year, and the roughly 1,300 small business owners in the program have saved $500,000 so far this year.
"That's pretty phenomenal," Marshall said.
Residents and business owners who want to learn more about enrolling in the aggregation program can call the township at 574-4848.
Tuesday, October 27, 2009
Aggregation of Electricity
© 2009 F. Bruce Abel[1]Tuesday, October 27, 2009
Re: Electricity Aggregation – I Vote “No”
Electric Aggregation is now up for a vote November 3, 2009, at a time an electric rate of Dominion Retail, Inc., a competitor to Duke Energy, is “strongly competitive.”[2]
Aggregation implies many things. It implies that deregulation is a fait accompli and that we as individuals are left on an island without the traditional support of our local utility in supplying us low-cost power. It implies that combining with our neighbors can give us sufficient market power to have some say in what our rate is. Aggregation implies that our Village officials will know best how to control our utility prices.
I truly doubt all these things.
Aggregation takes 100/hrs per year of the City Administrator’s time the first year, less thereafter.
Aggregation generally is, in my opinion, somewhat of a deregulatory diversion because there is no need to “slice and dice” our lives up any more for a one-time $13/month savings even if it lasts for a year: there is no great need for up to two more additional middlemen (the Village and, perhaps, another true middleman advising the village) between each of us and our utility.
Aggregation nevertheless is not totally irrelevant today, however, because the competitive wholesale electric market in Nymex futures (New York) has collapsed by one-half and Duke, for the foreseeable future, appears to be undercut on that score.
Aggregation does not give Glendale “market power” as the market is controlled by Nymex electricity futures. Green Township, 28,000 in population, signed up for one Dominion Retail, Inc. deal and later smaller communities got better deals as the recession continued and futures market prices for electricity went down. Single individuals (such as me) also got the better deals with Dominion Retail, Inc. through direct solicitation of Dominion two months ago or so.
Aggregation, in my opinion, puts our officials unnecessarily “on the line” in “predicting” to some extent regulated electricity prices of Duke Energy into the future. However, such predicting is no longer possible because Duke’s near- and far-term plans have been put under seal, declared trade secrets to avoid the competitors from gaining insight. And, as noted below, the Rider FPP remains a quarterly uncertainty.
Aggregation of Electricity is a Game of Trust in the Village Officials, Which May Mean the Middleman They Must Rely on.
Duke Energy and a Competitor
Duke Energy is the “default” and its rates “known,” only until the next quarter, as described below. Once off of Duke, I believe, one loses one’s rights to refunds for the period if challenges are made to Duke’s high rates. One can go back without penalty after the contract with the competitor, however.
“CG&E” (Duke) of course generates its own electricity. But from what I recently read (from testimony and actions at the PUCO in Columbus), Duke has an affiliate which is itself a trader, and you can see by the Symmes Township video I refer to below, that Duke is gung-ho towards playing this game, in order that it may try to sell elsewhere in Ohio through its affiliate.Aggregation is “costless” to the village, at least on the surface. A city or village administrator initially spends as much as 100 hours of his valuable time the first year of aggregation talking to citizen/inquirers/-complainers who are opposed to government stepping into anything it does not need to. The administrator does this even though the new competitor (Dominion Retail or Integrys) happily carries out that function as well. But what ratepayer wants to talk to some stranger in New York who doesn’t even know where Morse Avenue is or the name of the latest Bearcat quarterback?
Third Party Experts
Also, of course, if a majority of the electorate in Glendale votes in favor of aggregation, Glendale might then rely on a third-party expert or middleman. One third-party middleman is Don Marshall, a thoroughly-decent CEO of his company Eagle Energy in Green Township, and a former manager at CG&E. If anybody “knows the territory” it is he.
The Dominion Retail, Inc. Electricity Offer
One recent offer to individuals, not through a middleman, is the specific direct-mail offer of Dominion Retail, Inc.:Dominion Retail, Inc. offered a one-year savings on the generation part of Duke’s electric bill, generation being roughly 2/3 of one’s electric bill. So if you use exactly 1000 kwh and your Duke cost is $.10 per kwh you save $66.67 x .20 or $13.34 per month, more or less. If you use a lot more kwh in the summer because of air conditioning and do not heat your house with electricity, your savings, other things being equal, will be much more than $13.34 per month as Duke has a penny higher rate per kwh for a residential above 1000 kwh per month in the summer. (It has a stunningly lower rate for above 1000 kwh in the winter months.)So Dominion can give us the lower rate – but technically it is lower for sure for two months. It only lasts for sure until we wake up with a hangover New Year’s Day 2010, not December, 2010, as Dominion promises.Why is this assured savings so short?
If you must know, the answer to the question is that Duke Energy has “Rider FPP” (fuel and purchased power) as a component of its generation portion of its electric rates. Rider FPP is adjusted quarterly, and is as volatile as energy itself, being currently 3.38 cents per kwh, and having been one cent in the not-too-distant past.The smaller the quarterly Rider FPP of Duke, the more advantage to staying with Duke and the less savings there will be in switching to Dominion. If Rider FPP went negative, or even down to 1.38 cents per kwh, on January 1, 2010, April 1, 2010, July 1, 2010, or September 1, 2010, there would then be a loss by switching to Dominion Retail, Inc.Is this reduction in Rider FPP likely? “No,” but I have no way of knowing without having been in Duke’s PUCO filings the past few years, but since there haven’t been rate case filings for nigh-on twenty years, things are fuzzy even for those attending the recent hearings.A correct analysis (“guesstimate”) depends on Duke’s reserve margins, power pool agreements, coal contracts, and other things one could know when there were regular rate cases -- Duke, under the current depressed economy, could come in with a much lower Rider FPP – even a negative rate! -- for the first quarter of 2010 and thereafter. (I called Duke September 14, 2009, and drilled down to some key employees involved; I remained in the dark; they either do not know or are not allowed to give out projections nor, under the weird rules of deregulation, are they able to simply lower their rate to match competitors.)By the way if you are a heavy user of electricity (over 1000 kwh per month) in the winter but not the summer, don’t even think of switching to Dominion Retail, Inc. It does not have the steeply declining rate for usage above 1000 kwh in the winter that Duke does.
Before you vote, try to go on http:/icrctv.com/symmes-township-special-trustee-meeting-9-24-09 and, if it is posted, the second meeting of 10-22-09. This hour-long or so meeting is very informative and has a panel of all the relevant players in the field. You will note the “smallness” of the savings by and large.
The comments of Glenn Bryant, President of the Symmes Township Board of Trustees, and Chris Gilbert, Assistant Administrator, Springfield Township, are excellent. Springfield Township has the most experience doing aggregation in southern Ohio and, after trial and error, has come down to a contract which goes up and down with Nymex, I believe. An excellent choice.
Bruce Abel
[1] For 17 years I represented Armco (now AK Steel) in electric rate cases. They, had there been deregulation then, presumably had “market power,” taking 280 megawatts of power in Middletown. Glendale residents, collectively, take 1.5 megawatts. GE in Evendale takes 20 megawatts, or used to.
[2] Dominion Retail, Inc. is offering a discount which I have taken them up on individually. Thus individual residential electric ratepayers are being direct-mail solicited by Dominion Retail, Inc. also with a very attractive offer. So the process works, for electricity only, at the individual level for the two-month or perhaps one-year period offered. And it would work similarly if the village got the same deal after aggregation.
Re: Electricity Aggregation – I Vote “No”
Electric Aggregation is now up for a vote November 3, 2009, at a time an electric rate of Dominion Retail, Inc., a competitor to Duke Energy, is “strongly competitive.”[2]
Aggregation implies many things. It implies that deregulation is a fait accompli and that we as individuals are left on an island without the traditional support of our local utility in supplying us low-cost power. It implies that combining with our neighbors can give us sufficient market power to have some say in what our rate is. Aggregation implies that our Village officials will know best how to control our utility prices.
I truly doubt all these things.
Aggregation takes 100/hrs per year of the City Administrator’s time the first year, less thereafter.
Aggregation generally is, in my opinion, somewhat of a deregulatory diversion because there is no need to “slice and dice” our lives up any more for a one-time $13/month savings even if it lasts for a year: there is no great need for up to two more additional middlemen (the Village and, perhaps, another true middleman advising the village) between each of us and our utility.
Aggregation nevertheless is not totally irrelevant today, however, because the competitive wholesale electric market in Nymex futures (New York) has collapsed by one-half and Duke, for the foreseeable future, appears to be undercut on that score.
Aggregation does not give Glendale “market power” as the market is controlled by Nymex electricity futures. Green Township, 28,000 in population, signed up for one Dominion Retail, Inc. deal and later smaller communities got better deals as the recession continued and futures market prices for electricity went down. Single individuals (such as me) also got the better deals with Dominion Retail, Inc. through direct solicitation of Dominion two months ago or so.
Aggregation, in my opinion, puts our officials unnecessarily “on the line” in “predicting” to some extent regulated electricity prices of Duke Energy into the future. However, such predicting is no longer possible because Duke’s near- and far-term plans have been put under seal, declared trade secrets to avoid the competitors from gaining insight. And, as noted below, the Rider FPP remains a quarterly uncertainty.
Aggregation of Electricity is a Game of Trust in the Village Officials, Which May Mean the Middleman They Must Rely on.
Duke Energy and a Competitor
Duke Energy is the “default” and its rates “known,” only until the next quarter, as described below. Once off of Duke, I believe, one loses one’s rights to refunds for the period if challenges are made to Duke’s high rates. One can go back without penalty after the contract with the competitor, however.
“CG&E” (Duke) of course generates its own electricity. But from what I recently read (from testimony and actions at the PUCO in Columbus), Duke has an affiliate which is itself a trader, and you can see by the Symmes Township video I refer to below, that Duke is gung-ho towards playing this game, in order that it may try to sell elsewhere in Ohio through its affiliate.Aggregation is “costless” to the village, at least on the surface. A city or village administrator initially spends as much as 100 hours of his valuable time the first year of aggregation talking to citizen/inquirers/-complainers who are opposed to government stepping into anything it does not need to. The administrator does this even though the new competitor (Dominion Retail or Integrys) happily carries out that function as well. But what ratepayer wants to talk to some stranger in New York who doesn’t even know where Morse Avenue is or the name of the latest Bearcat quarterback?
Third Party Experts
Also, of course, if a majority of the electorate in Glendale votes in favor of aggregation, Glendale might then rely on a third-party expert or middleman. One third-party middleman is Don Marshall, a thoroughly-decent CEO of his company Eagle Energy in Green Township, and a former manager at CG&E. If anybody “knows the territory” it is he.
The Dominion Retail, Inc. Electricity Offer
One recent offer to individuals, not through a middleman, is the specific direct-mail offer of Dominion Retail, Inc.:Dominion Retail, Inc. offered a one-year savings on the generation part of Duke’s electric bill, generation being roughly 2/3 of one’s electric bill. So if you use exactly 1000 kwh and your Duke cost is $.10 per kwh you save $66.67 x .20 or $13.34 per month, more or less. If you use a lot more kwh in the summer because of air conditioning and do not heat your house with electricity, your savings, other things being equal, will be much more than $13.34 per month as Duke has a penny higher rate per kwh for a residential above 1000 kwh per month in the summer. (It has a stunningly lower rate for above 1000 kwh in the winter months.)So Dominion can give us the lower rate – but technically it is lower for sure for two months. It only lasts for sure until we wake up with a hangover New Year’s Day 2010, not December, 2010, as Dominion promises.Why is this assured savings so short?
If you must know, the answer to the question is that Duke Energy has “Rider FPP” (fuel and purchased power) as a component of its generation portion of its electric rates. Rider FPP is adjusted quarterly, and is as volatile as energy itself, being currently 3.38 cents per kwh, and having been one cent in the not-too-distant past.The smaller the quarterly Rider FPP of Duke, the more advantage to staying with Duke and the less savings there will be in switching to Dominion. If Rider FPP went negative, or even down to 1.38 cents per kwh, on January 1, 2010, April 1, 2010, July 1, 2010, or September 1, 2010, there would then be a loss by switching to Dominion Retail, Inc.Is this reduction in Rider FPP likely? “No,” but I have no way of knowing without having been in Duke’s PUCO filings the past few years, but since there haven’t been rate case filings for nigh-on twenty years, things are fuzzy even for those attending the recent hearings.A correct analysis (“guesstimate”) depends on Duke’s reserve margins, power pool agreements, coal contracts, and other things one could know when there were regular rate cases -- Duke, under the current depressed economy, could come in with a much lower Rider FPP – even a negative rate! -- for the first quarter of 2010 and thereafter. (I called Duke September 14, 2009, and drilled down to some key employees involved; I remained in the dark; they either do not know or are not allowed to give out projections nor, under the weird rules of deregulation, are they able to simply lower their rate to match competitors.)By the way if you are a heavy user of electricity (over 1000 kwh per month) in the winter but not the summer, don’t even think of switching to Dominion Retail, Inc. It does not have the steeply declining rate for usage above 1000 kwh in the winter that Duke does.
Before you vote, try to go on http:/icrctv.com/symmes-township-special-trustee-meeting-9-24-09 and, if it is posted, the second meeting of 10-22-09. This hour-long or so meeting is very informative and has a panel of all the relevant players in the field. You will note the “smallness” of the savings by and large.
The comments of Glenn Bryant, President of the Symmes Township Board of Trustees, and Chris Gilbert, Assistant Administrator, Springfield Township, are excellent. Springfield Township has the most experience doing aggregation in southern Ohio and, after trial and error, has come down to a contract which goes up and down with Nymex, I believe. An excellent choice.
Bruce Abel
[1] For 17 years I represented Armco (now AK Steel) in electric rate cases. They, had there been deregulation then, presumably had “market power,” taking 280 megawatts of power in Middletown. Glendale residents, collectively, take 1.5 megawatts. GE in Evendale takes 20 megawatts, or used to.
[2] Dominion Retail, Inc. is offering a discount which I have taken them up on individually. Thus individual residential electric ratepayers are being direct-mail solicited by Dominion Retail, Inc. also with a very attractive offer. So the process works, for electricity only, at the individual level for the two-month or perhaps one-year period offered. And it would work similarly if the village got the same deal after aggregation.
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