- The Public Utilities Commission of Ohio last week approved an average clearing price in AEP Ohio's wholesale power auction of $48.29/MWh, Platts reports.
- The clearing price was more than $5/MWh below the next lowest clearing price in its previous two auctions, reflecting current market trends, analysts said.
- Declining wholesale power prices are putting stresses on Ohio utilities that own coal-fired and nuclear power plants.
The Public Utilities Commission of Ohio (PUCO) last week approved an average clearing price in AEP Ohio's wholesale power auction of $48.29/MWh, more than $5/MWh below the next lowest clearing price in the two previous auctions. How that will play into PUCO's ruling over AEP's PPA proposals remains to be seen, a Glenrock Associates analyst told Platts.
The declining prices in the wholesale auctions reflect the larger trend of lower power prices, particularly in markets where low cost natural gas-fired generation sets the price, such as the PJM Interconnection, which includes Ohio.
The auction prices will ultimately determine retail generation service rates for standard-service offer customers through May 2018. The results from the November auction, along with previous and future auctions, will be blended to create AEP Ohio’s price-to-compare for the delivery period of June 1, 2016 to May 31, 2018.
In Ohio’s deregulated electric market, consumers are free to switch electricity suppliers. Rates for those who choose not to switch are determined by the auction results.
In the November auction, six bidders captured 17 available tranches. PUCO is slated to identify the winners in about three weeks. National Economic Research Associates, the independent auction manager, said starting prices ranged from $70/MWh to $95/MWh, and the auction attracted 14 bidders and lasted 13 rounds.
Those low prices are a problem for companies such as American Electric Power, AEP Ohio’s parent company, and FirstEnergy, which are struggling to break even on coal-fired and nuclear plants.
AEP is seeking state approval for power purchase agreements for its roughly 800-MW ownership in Ohio Valley Electric Corp., operator of the Kyger Creek and Clifty Creek baseload coal plants totaling nearly 2,400 MW in Ohio and Indiana, respectively.