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Electric aggregation changes explained


City editor

Upper Sandusky residents have recently raised alarm on community social media pages about the city’s plan to switch to Dynegy Energy on a 32-month contract beginning April 1 as part of an electric aggregation.

Residents of Upper Sandusky approved electric and gas aggregation in the November 2021 election with 646 voting yes and 385 voting no.

Since the passage of aggregation, Upper Sandusky Mayor Kyle McColly has waited for the right opportunity to enter into an agreement for a fixed rate contract that would save the residents of Upper Sandusky money.

That moment came earlier this year when McColly announced at a Jan. 18 Upper Sandusky City Council meeting that he had signed a 32-month contract at a fixed rate of 6.97 cents per kilowatt hour.

“We waited until the market gave us an opportunity at savings,” Palmer Energy representative Bob Snavely said. “Part of that is the wholesale market dropping and the other part is the utility rate rising in June. Both are equally important.”

Upper Sandusky residents who are currently on a plan with public utility AEP for their electric will automatically have their plan switched to Dynegy beginning April 1 unless they chose to opt out of electric aggregation.

Snavely explained why the timing was right for a savings opportunity for the Upper Sandusky residents.

“AEP bought its energy for next year already in a standard service offer auction results for the time period of June 2023 to June 2024, the November 2022 auction of 45 tranches, which is what they measure their capacity at, came in at 11.998 cents per kilowatt hour, basically 12 cents,” he said. “The March 2023 SSO auction of 55 tranches at 8.855 per kilowatt hour, basically 8.8 cents for a total weighted average for the year of 10.269, so basically 10.3 cents. That’s what’s coming in June and the utility is starting to tell people that. They print the price to compare on the month of bill.”

AEP currently charges 6.77 cents per kilowatt hour while the city’s contract will be 6.97 cents per kilowatt hour. The difference is the 6.97 cents is a fixed rate and AEP’s is a variable rate, which is expected to increase significantly in June.

“For the people that are opting out, there’s a good chance that they’re probably going to opt back in once this hits them in their July bill,” Snavely said. “It’s already happened in the Dayton area. These are SSO results you can look up on the internet and it’s one of the reasons aggregation is growing around the state at a rapid, rapid rate. It’s not only happening with AEP, it’s happening in other parts of the state as well.”

Snavely also explained why Upper Sandusky residents are automatically entered into the program unless they either choose to opt out in advance or already were in a private energy contract different than a regular bill with the public utility.

“If you do an opt-in program, you’re not going to get the pricing that an opt-out program gets because the participation is so much lower,” he said.

Some residents on social media expressed concern about the use of the company Dynegy for the fixed rate contract. Snavely said Dynegy was simply the lowest bidder with the best offer.

“We went through an independent bidding from energy suppliers,” he said. “All the utility stuff remains the same. In fact, you get the same bill. The only difference is it’ll say Dynegy Energy and the kilowatt price.”

On why McColly chose to sign the contract in January, knowing it’s possible the electric rate would be slightly higher for a month, Snavely explained the overall savings were too big to ignore.

“Basically, we’ve got a good price now,” he said. “We don’t know what will happen in the next few months or even weeks. When we know what the SSO pricing is going to be and we know what number we’re gonna get, you don’t go broke making a profit. Come July, everyone who’s complaining is going to be singing a different tune.”

McColly also explained why he decided to offer electric and gas aggregation to the community in the first place.

“We were already using electric and gas aggregation for the city of Upper Sandusky to save money and pay our electric and gas bills for city-owned buildings, which are paid by the taxpayers,” McColly said. “All I wanted to do was to help pass those savings on to the residents of Upper Sandusky as well. That’s why it was put on the ballot in the first place. That’s why city council passed it.”

McColly said he understands that until people see the rate increase in June, they will remain skeptical. 

In the meantime, residents are welcome to opt out of the electric aggregation or opt back in to electric aggregation at no cost. There are not penalties or fees for opting out or opting back into the program

“I’m not a fan of big government making decisions for everybody,” McColly said. “That was my biggest hesitation going into this at all, but the potential to save the residents of Upper Sandusky hundreds of thousands if not millions of dollars over the next two and half year period was too much to ignore.”

The fixed rate contract of 6.97 cents per kilowatt hour will expire with a meter read date of December 2025.

Once the term is over and another agreement is not signed, everyone will switch back to the public utility.

“That’s why we weren’t in a contract up to this point,” McColly said. “Up until this summer, the public utility was the best option.”

A gas aggregation agreement also is expected to be put in place later this year.

“The utility pricing structure is different for natural gas,” Snavely said. “For Columbia, The reason we moved on natural gas is because the natural gas market came down 70% in the last two months. Council and the mayor thought it would be a good idea to lock something in based on that drop.”

The Wyandot County commissioners also agreed with Snavely and McColly. The commissioners have worked with Snavely and Palmer Energy on gas and electric aggregation for buildings owned by the county for a decade.

Commissioner Bill Clinger said Palmer Energy has full approval from the state’s commissioner’s association and he wishes he could have been able to pass the upcoming savings Upper Sandusky residents are going to receive this summer on to county residents.

The commissioners attempted to pass electric and gas aggregation in 2021, but residents of Wyandot County who don’t live in municipalities voted against electric and gas aggregation when it was on the November 2021 ballot with 878 voting no and 761 voting yes.