AEP Rate Increase Illustrates Value of Aggregation

MOUNT VERNON, May 9, 2023 – For 15 years now, residents of the City of Mount Vernon have
had the opportunity to save money on their electric and natural gas bills through the City’s utility
aggregation program.
These savings have varied over the years, but they stand to be especially significant for
participants in the electric program for at least the next two and a half years. The City, through its
broker, Buckeye Energy, was able to negotiate a 41⁄2-year, fixed rate of 4.69 cents per kilowatt hour
(kWh) for electricity in mid-2021 with the supplier Energy Harbor, which continues through the end
of 2025.
By comparison, AEP has been charging 7.49 cents/kWh. However, AEP’s rate is scheduled to
climb by 30 percent on June 1 to 11.84 cents/kWh, which will cost AEP’s average residential user
about $40 more per month compared to what they’re paying this month. Residents in the City’s
electric aggregation program will continue to pay 4.69 cents/kWh for at least 30 more months.
“This savings is real. It could amount to several hundred, even thousands of dollars saved for a
typical resident over the life of our current electricity contract,” said Mayor Matt Starr. “And signing
up literally couldn’t be easier – residents are automatically enrolled unless they choose not to be.”
AEP’s rates are going up June 1 because of rising generation supply prices. According to the
utility, these prices are rising because of events like the war in Ukraine and “economic uncertainty.”
By law, AEP is required to pass this cost – technically, the price determined by the winning auction
suppliers – directly to its customers.
Consequently, “many government aggregators are enrolling customers with retail suppliers with
pricing options far lower than the local utility’s default rate,” the Public Utilities Commission of Ohio
stated in a recent press release.
Mount Vernon has been on board with this for years. Ohio began utility aggregation in 2001, but for
years the program languished because of an uneven distribution of suppliers across the state. As
soon as the PUCO’s regulatory structure was revised in 2008, the Mount Vernon City Council
decided to put a City aggregation program on the ballot, where it was approved.
The City’s utility aggregation program, which is able to arrive at lower rates via group participation,
is an opt-out process, meaning residents are automatically enrolled unless they actively choose to
opt out by contacting the supplier.
Although AEP contends it had no choice but to pass along this summer’s 30 percent rate increase
to customers, it may not be done hiking its prices just yet. In January AEP filed its Electric Security
Plan with the PUCO, which would raise rates beginning in June 2024 to improve the utility’s
infrastructure in the wake of last June’s windstorm, which cut power to 606,000 AEP customers
across Ohio for as long as a week, including in Mount Vernon. That rate increase would be more
modest, at 2 percent (or $4 per month) for each of the next six years, or 12 percent overall.

“Meanwhile, Mount Vernon residents participating in our electric aggregation program will continue
to be locked in at 4.69 cents through December 2025,” said Safety-Service Director Rick Dzik.
“They also have the option of looking for savings on their own, by going to the PUCO website and comparing what’s often apples and oranges, given all the various
pricing plans. But through our energy broker the City has already done all that work.”
“An aggregation program provides consumers a low, fixed-price option in an unpredictable market.
Residents and businesses can sidestep rate increases by joining the City’s electric program,” said
Tom Bellish, president of Buckeye Energy Brokers.
City residents will continue to have the option of keeping AEP as their electricity provider if they
wish. They can opt out of this and all future electric aggregation contracts permanently by visiting or calling the PUCO toll-free at 800-
686-7826. Customers will be asked to provide their name, service address and the account or
identification number on their utility bill.

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