Columbus Residential Electric Rate Report - May 2023

‍Summary

Default price-to-compare supply rates for American Electric Power (AEP) customers are planned to increase by 58% on June 1st, 2023, this is making alternative supply plans favorable as the AEP default supply rate is higher than it has been in recent history - as of writing fixed supply plans from alternative suppliers with no fees are up to 43% lower than AEP’s default rate via Arbor's platform. 

Historical trend of AEP’s default price-to-compare rate

Once the supply rate in June increases, the price will be at historical levels, according to data going back to 2019 from the Ohio Public Utilities commission. This chart shows the default price-to-compare rates going back two years from July 2021:

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While there has been an average monthly increase of just under 2% since January 2021, this upcoming 58% increase will be the largest increase in at least 5 years.

This increase may seem dramatic and there are many factors that play into price-to-compare rate development. AEP Ohio has stated the primary reason for the sharp increase is that recent competitive wholesale auctions have increased due to factors such as global demand, supply chain issues, inflation, and the war in Ukraine affecting global electricity costs. Additionally AEP customers can expect their overall bill - which includes generation, transmission, and delivery - to increase 28% from an average of $155/month to $198/month for their average customer if they remain on the default price-to-compare supply rate, and suggests exploring alternative rate plans from third party competitive suppliers. 

Utility default supply rate compared to available alternative supply rates

AEP customers in Columbus and the greater AEP Ohio utility territory have access to alternative supply plans contracted with third party suppliers since Ohio’s retail deregulation in 2001. When a customer switches to an alternative supplier there are no interruptions in service and AEP remains responsible for the billing, transmission and delivery of a customer’s electricity. 

As of writing - May 12, 2023 - the current difference between the best available third party fixed supply plans with no additional fees and AEP’s upcoming June price-to-compare default rate are 43% via Arbor's platform. 

The best plans based on Arbor’s market data are currently at 6.79¢/kWh fixed for at least 9 months with no additional fees vs. AEP’s June price-to-compare of 11.85¢/kWh. 

AEP Ohio has announced that these new PTC supply rates will be active until May 2024, and after that will depend on wholesale generation auction prices among other factors. This means the fixed-rate plans with no fees that are 9-12 months in length are a safe choice to avoid overpayment for customers in Columbus.

Types of currently available plans in Columbus

There are a variety of different plan types available for Columbus residents right now that mix-and-match different attributes. The most common plan attributes for AEP customers in Columbus right now are:

1) Variable plans: Residents should pay close attention to this as the rate they signed up for may change - in many cases dramatically - after the first month of service. The rate will be tied to the energy market, seasonal factors, and the alternative supply company’s forecasted market pricing and can change at any time. 

2) Fixed-rate plans: These plans help avoid seasonal fluctuation as you pay the same rate throughout the length of your contract. Fixed plans are typically recommended because they provide price certainty and minimize risk. Residents though should also be aware that after the fixed-term of the plan ends it typically updates to a variable plan and then the price can increase. 

3) Renewable energy plans: When choosing an electricity plan the delivery to your home or apartment is the default energy mix in the Columbus area, but some providers offer plans - typically for a small premium - where you can offset your kWh usage with Renewable Energy Certificates (RECs) to help 

4) Plans with Early-Termination-Fees (ETFs or Cancellation fees): Plans may have early termination fees if you do not stay through the term, typically with fixed plans. While this is becoming less common, many still have them. 

5) Plans with fixed monthly fees: Some plans have a fixed monthly fee regardless of usage. For those with higher power bills this will end up a lower % of the bill, but for those with median to lower power bills this could be a meaningful difference in % overall cost.

Other plan attributes that customers should be aware of are price fluctuations with usage levels, budget billing, and built-in price increases or decreases. ‍

How Arbor can help Columbus residents lower their rate

Arbor helps AEP customers in Columbus optimize for being on the best rate plan. When customers sign up their AEP account for Arbor they can choose whether they have a preference for renewable energy or the lowest cost. Arbor then scans the market for the lowest cost plans based on their preference and compares it to what they are currently paying. Arbor additionally optimizes for plans with no fixed fees that are at a fixed term, and all of the contract-work is handled by Arbor for the customer, making the process easy for the customer. 

Arbor continues to monitor customers’ accounts and once their fixed term is up continue, and then gets them the best rate plan at that time. This prevents customers from having to schedule when to find a new rate plan and/or keep track of expensive variable rates that typically kick in after the fixed terms leading them to potentially pay significantly more than the original price they signed up for. Arbor is no cost to the customer, as electricity suppliers compensate Arbor when a customer is signed up for their rate plan. 

AEP Columbus customers can sign up for Arbor here, the entire process only takes a couple minutes and entirely online with no interruptions in service. 

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Sources:

• Arbor’s market supply rate research and first party data

• https://www.aepohio.com/company/about/rates/rising-fuel-costs

• https://puco.ohio.gov/utilities/electricity/resources/historical-ptc-chart-aep

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