In this Edition:   
AWhat to Expect in PJM?
Sketch of Equipment cables and piping as found inside of a modern industrial power plant

For the 61 million energy consumers in PJM Regional Transmission System, which oversees 13 states and the District of Columbia, PJM has made preparations to meet the expected power demand, forecasted to reach 152,131 megawatts at its peak this summer.  

PJM is responsible for keeping your lights on, buying and selling electricity through its market operations, and managing the growth of the electric system by identifying and improving ways to keep electricity flowing.  With 183,912 megawatts of installed generating capacity ready to use, as well as additional demand response power available, PJM's VP of Operations feels the reserve margin will be more than adequate to meet consumer's needs in the case of a higher than forecasted demand, or if generation is unexpectedly unavailable this summer.  

PJM has made continued transmission enhancements and reinforced their capacity commitments.  This summer will include capacity changes.  Capacity Performance resources (committed in an August 2015 auction) must produce electricity when called on regardless of the the weather or extreme system conditions.  Those resources that do not perform, when called upon, will face significant non-performance charges. Last year's summer peak demand occurred on July 28, at more than 143,500 MW.  The highest use of power in PJM was nearly 166,000 MW back in 2006. 

How Do These Capacity Performance Charges Affect You?

If you signed a contract with a supplier before September 10, 2015, and the contract extends beyond June 1, 2016, you will likely see some form of a pass-thru charge to cover this Capacity Performance, beginning on June 1, 2016.  The price  impact the Capacity Performance will have on your total electricity bill will vary depending on the specifics of your electricity account.  Those currently under contract may receive a letter from your supplier stating your modified capacity charge due to this increase.  If you are renewing your contract or signing a new one after Mid-September 2015, you can expect to have this Capacity Performance cost increase built into your energy price.  

It has been reported that the average customer will likely see an increase of $2 to $3 per MWh across the PJM region by the time the plan is fully implemented in 2018. We welcome any questions you may have regarding these charges and the impact they may have on your business.

BCustomers Behind FirstEnergy Corporation in PA Expected to See Higher Electric Bills in 2017

On April 28, 2016, the Akron, Ohio-based company filed rate increase requests with the PA Public Utility Commission seeking increases that would generate as much as $439 million in additional revenue at its four utilities: West Penn Power, Penn Power, Met-Ed and Penelec.  They are also seeking an increase in JCP&L in New Jersey.  The decision on the requests are pending with the PUC.
The increases would offset the cost of infrastructure improvements, energy efficiency programs, decreased sales and increased technology for workers to help streamline the power restoration process.  FirstEnergy will most likely face some scrutiny due to utility increases in early 2015--the first in more than 20 years.  Those increases did not provide the finances needed to complete the improvements.  
  • Met-Ed  - increase of $140 mil, or approx. 9.5% over current rates  
  • Penelec - increase of $158 mil, or approx. 11.4% over current rates
  • Penn Power - increase of $42 mil, or approx. 9.5% over current rates
  • West Penn Power - increase of $98 mil, or approx. 5.7% over current rates
FirstEnergy has requested that the new rates take effect on June 27, 2016, but the process could take up to seven months to be complete.  
In addition to utilities in five states, FirstEnergy operates power plants, including the Bruce Mansfield coal plant and Beaver Valley nuclear plant in Shippingport and a gas-fired plant in Springdale.
Additionally, PECO Energy is seeking an increase in distribution rates of $127 million, and PPL Electric utility customers had an increase of $124 million ( 5.1%), this past January.
CPhase III - Energy Efficiency and Conservation Plans for FirstEnergy Companies, PPL, PECO & Duquesne Light in Pennsylvania

The PA Public Utilities Commission (PUC) approved Phase III Energy Efficiency and Conservation (EE&C) plans submitted by several electric distribution companies, detailing efforts to reduce energy consumption and peak demand through 2021.  These plans help consumers and businesses save money and make our grid smarter, cleaner and more cost effective.  Reduction in power consumption ranges from 2.6 to 5%, and peak demand reduction ranging up to 2%, depending on the potential savings in each electric distribution territory.   These plans will go into effect on June 1, 2016.
DOhio - Power Purchase Agreement

FirstEnergy Corp. and American Electric Power have proposed a rate plan to the Public Utilities Commission of Ohio (PUCO) to help safeguard Ohio's energy future by protecting customers from energy price spikes and additional long term customer protections, by keeping a diverse set of fuel sources to generate electricity available in Ohio.  
The plan was devised to save Ohio Edison, Cleveland Electric Illuminating and Toledo Edison, as well as American Electric Power customers hundreds of millions of dollars during its eight-year term from June 1, 2016 through May 31, 2024 by using a rate mechanism of applying credits or charges to monthly electric bills, with both quarterly and annual reviews by the PUCO.  
By implementing this plan, the risk of plant closures and higher electric prices due to building costly transmission to import energy sources in the future, is reduced.  Additionally, the plan was also supposed to provide more than $102 million to help low-income customers with bill payment and energy efficiency programs, provide economic funding of communities within Ohio, and also set a goal to reduce CO2 emissions by at least 90% below 2005 levels, by 2045.
The PUCO approved the plan on March 31, but the  Federal Energy Regulatory Commission (FERC) stepped in wanting AEP and FirstEnergy to prove the PPAs won't disrupt the power market. They stated that despite Ohio's retail choice law, the companies' ratepayers were essentially "captive" customers because the PPAs would impose on them non-bypassable distribution charges.  These Agreements cannot go into effect until after FERC completes its review sometime this summer.  

ESupplier Information:

GDF Suez Energy Resources NA, Inc. has acquired Guttman Energy, Inc.'s  electricity supply customers.  This transaction took place in mid-February.  GDF Suez Energy Resources is the third-largest non-residential electricity provider in the U.S.  If you entered into an Agreement with Guttman Energy, all of your current contract agreement obligations will be honored by GDF Suez Energy Resources going forward.  Customers are expected to honor their supply contract and are subject to financial penalty for early termination of contracts.  In addition, Guttman Energy will continue to to own and operate the natural gas side of the business.  If you are a natural gas customer, this change will not impact those contracts.
F Electricity

The 2016-16 winter season (October through March) was 15% warmer than last winter, driven partly by a strong El Nino weather event.  The 2015-16 El Nino was one of the three strongest on record.  Warmer than normal temperatures are expected to continue through July for the East Coast, northern Great Plains and the Great Lakes area continuing the bearish tone to the wholesale electricity market.  This will in turn cause electricity demand to remain low.  Also contributing, are lower natural gas prices, record production in the Northeast, and U.S. storage at record setting levels.

We should begin to see prices on the upward climb in 2016 due to coal plant retirements and higher efficiency from natural gas powered plants, as well as capacity increases.  

Source:  Premier Power Solutions, LLC
GNatural Gas 

Source:  Energy Information Administration
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