Shaker Heights’ electric aggregation start-up pushed back to June 2023 - cleveland.com

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SHAKER HEIGHTS, Ohio -- Citing “drastic market rate fluctuations,” City Council has opted to postpone the start of its new electric aggregation program until next June.

Council’s Sustainability Committee also had recommended pushing the date back from January. The move will keep about 8,000 customers with the current “default supplier,” the Cleveland Electric Illuminating Company (CEI), at its “standard service offer” rate.

“The current wholesale and retail electricity markets are experiencing significant volatility, with prices increasing substantially in a short period of time,” City Law Director William Ondrey Gruber and Sustainability Coordinator Michael Peters noted in an Oct. 24 memo to council.

Earlier this year, council approved the plan allowing the city to proceed with its own 100 percent renewably sourced electric aggregation program.

The city also gave the necessary six-month notice in June to its then-electric aggregator, the Northeast Ohio Public Energy Council (NOPEC), that it was leaving to launch the first municipal “all-green” initiative in Northeast Ohio.

From there, the city was supposed to remain with NOPEC through the end of 2022, with Gruber and Peters noting that their rates had already doubled to 12 cents per kilowatt hour (kWh).

“In an unexpected move, NOPEC announced on Aug. 24 that it would be returning 550,000 customers to the standard service offer (SSO) from CEI (among other distribution companies in the state), which was offering a rate of 5.9 cents per kWh.”

That rate included customers in Shaker Heights, the memo to council stated.

With that in mind, city officials on Monday (Oct. 24) recommended postponing the start of Shaker’s own aggregation program to June and leaving city customers on the CEI standard service offer until then.

“The rationale is to maximize cost savings,” Gruber and Peters said, noting that the current offer through CEI and its parent company, FirstEnergy, remains the lowest-cost supply due to long-term contracts entered into by the utility.”

That could all change in the spring, when some of those utility contracts expire.

Until then, the SSO is likely to remain significantly lower than the market prices through May 2023, the memo stated. “If the city was to start its program in January, it would increase costs for customers significantly compared to the SSO rate they will still be on in January.”

The other issue remains the city’s planned switch to 100 percent “green” energy, which could include the purchase of “renewable energy credits (RECs).”

“Although one of the goals of the city program is to create demand for new renewable energy generation in Ohio, (the city is) recognizing the obstacles to achieve this in the short term due to supply chain, state regulatory and grid operator issues,” Gruber and Peters noted.

As a result, “the decision was made to request bids that included both the supply of electricity and an offsetting amount of ‘RECs,’” the memo added. “This is viewed as a transitional strategy until Ohio-produced renewable power can be contracted, which also brings additional air quality and environmental justice benefits.”

The city sent out 11 requests for proposals from suppliers and received two responses -- from Dynegy and Energy Harbor, both of which were in the 8-cent per kWh range for October, with the SSO from CEI holding at 5.84 cents/kWh.

The requests for proposals asked for pricing from one year up to four years, with responses covering three options set by the Sustainability Committee and the city’s consultant, Aspen Energy.

With council signing off on Monday, the city administration now plans to “refresh” the pricing offers from both potential suppliers, negotiate terms and sign a contract between now and Nov. 23.

Between Dec. 1 and March 14, 2023, the city will purchase the actual electric supply and renewable energy credits, with officials noting that “the exact date depends upon the status of the electricity market.”

Notices are expected to be sent out to customers in March or April.

Until then, Vice Mayor Sean Malone emphasized the importance of communicating to the public that the decision to postpone the program resulted from “drastic rate fluctuations” in the current energy market.

“The important takeaway is that this is a unique energy market right now, one that we anticipate will turn in a favorable direction from what has been going up dramatically,” Malone added.

Shaker has operated its own municipal natural gas aggregation program since 2006.

Meanwhile, the city has set up a webpage for the electric aggregation program at https://www.shakeronline.com/827/ElectricAggregation-Program

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