Customers who receive their electric generation supply through AEP Ohio’s Standard Service Offer (SSO) will see higher bills beginning in June due to rising generation supply prices. Customers who are part of a municipal aggregation, participate in the Percentage of Income Payment Plan (PIPP) or shop in their individual capacity will not see this same increase.
We understand an increase – no matter how big or small – in your bill is not welcome news. We want to empower you with the latest information to save energy and find resources on payment assistance if you’re facing financial hardship.
UNDERSTANDING YOUR BILL
There are three common portions of your energy bill:
- Generation (Supply): The cost for the production of electricity. Customers in Ohio can choose their energy supplier or remain on the Standard Service Offer (SSO) rate.* Visit energychoice.ohio.gov to compare Competitive Retail Energy Suppliers (CRES) providers and their rates.
- Transmission: The cost associated with moving electricity from the generation site to substations near your community.
- Distribution: The cost for moving electricity from a substation directly to your home or business.
WHY ARE BILLS INCREASING?
There are many factors that can impact your bill. This increase is largely due to the results of recent auctions for the generation supply portion of your electric bill. AEP Ohio is a wires company, which means we deliver electricity to homes and businesses. In Ohio, customers are free to choose who provides the generation supply portion of their electric service. If you choose to receive your generation supply from AEP Ohio, a competitive market auction is used to procure generation supply. Energy supply companies submit bids in the auction for the ability to supply energy to AEP Ohio customers for a specified period of time at the lowest price possible. This generation supply component is called the Standard Service Offer (SSO) and these procurement costs are external to AEP Ohio and beyond our control. Customers may also choose to receive their generation supply from a Competitive Retail Electric Service (CRES) provider.
During the most recent auctions, held in November 2022 and March 2023, the cost of procuring generation supply increased significantly and AEP Ohio is required to pass these costs along to customers. Global demand, global supply chain issues, economic uncertainty, and the continued war in Ukraine have had an impact on the cost to produce electricity. The results of these two auctions are blended to create the new rate. Due to these rising costs, a typical residential customer using 1,000 kilowatt-hours of energy each month can expect their total bill to increase about 28% from today’s typical bill of about $155 to about $198. These rates will be in effect until May 2024.
The final prices for generation supply procurement set by the competitive auction are market-based and are reviewed and approved by the Public Utilities Commission of Ohio. It’s important to note that because we are a wires-only company we only pass through the exact cost of generation supply (the price determined by the winning auction suppliers) to customers, dollar-for-dollar, with no markup.
The present AEP energy rate is $.049 per kwh. With the 28% increase, the rate will increase to $.096 per kwh. It appears that sometime in the near future, AEP will cease to deliver electrical energy to its customers; therefore, encouraging them to seek alternate suppliers for their energy. This thought is taken from their last pharagraph, “…..because we are a wires-only company..” If you want to prevent your bill from increasing, check my website at lenzenergy.net to pick a rate that is suitable for you!