AEP Ohio has recently announced a rate increase for customers who rely on the Standard Service Offer (SSO) for their electric generation supply. This change, effective from June 2023 through May 2024, is primarily due to increased generation supply prices resulting from recent competitive auctions.
This blog post aims to provide homeowners with essential insights to effectively navigate this rate increase.
Why Are Rates Increasing?
The crux of the rate hike lies in the increased costs for energy supply companies like AEP Ohio to procure energy. Energy supply auctions play a crucial role in determining electricity rates for consumers, especially in regions like Ohio where customers can choose their electricity provider. AEP Ohio procures electricity for its Standard Service Offer (SSO) customers through these competitive auctions. Suppliers bid to provide electricity at the lowest possible price for a set period, influencing the SSO rates. This process ensures market-driven pricing for electricity, aligning costs closely with current market conditions.
Recent auctions held in November 2022 and March 2023 saw a significant uptick in generation supply costs due to factors like global demand, supply chain disruptions, and geopolitical tensions, including the war in Ukraine. These increased procurement costs must be passed on to consumers, leading to a projected 28% hike in the monthly bills of SSO customers from June 2023 to May 2024. A typical residential customer using 1,000 kilowatt-hours monthly will see their bill rise approximately 28%, from an average of $155 to about $198.
Who Will and Won't Be Affected?
Customers on the SSO plan will experience this rate increase. Those who are part of a municipal aggregation program, enrolled in the Percentage of Income Payment Plan (PIPP), or who have individually chosen a different generation supplier will not experience the same rate increase.
Mitigation and Assistance
AEP Ohio has offered ways for their customers to manage this transition.
Here are some avenues for relief and savings:
- Average Monthly Payment Plan (AMP): This plan evens out payments across the year, avoiding seasonal spikes.
- Extended Payment Arrangements: For those behind on payments, AEP Ohio offers flexible arrangements.
- Time-of-Use Rates: For eligible customers, adjusting power use to off-peak times can lead to savings.
Why going solar may be the best solution for you:
You can reduce energy bills
Solar panels convert sunlight into electricity that can be used to power your home, reducing the amount of energy you need to purchase from your utility provider. By generating your own electricity, you can significantly decrease your reliance on the grid and, consequently, lower your monthly energy bills. With the impending 28% increase in electricity rates for SSO customers, the savings from solar power become even more substantial.
Independence from future rate increases
Solar panels provide a degree of protection against future rate increases. Once installed, the cost of generating solar power remains relatively constant over time, primarily limited to maintenance costs. This stability contrasts with the volatility of energy prices in the broader market, influenced by factors such as global demand, supply chain issues, and geopolitical events.
Net Metering Benefits
Many utility companies, including AEP Ohio, offer net metering programs. Net metering allows residential customers who generate their own electricity from solar power to feed electricity they do not use back into the grid. This can further offset the cost of electricity drawn from the utility, especially during periods of low household consumption. Customers receive credits for the excess energy produced, providing additional savings and a quicker return on investment.
Incentives and Rebates
Ohioans are encouraged to invest in solar energy through various federal, state, and local incentives, including tax credits, rebates, and financing programs. These incentives can significantly reduce the upfront cost of solar panel installation and improve your return on investment.
When it’s happening
This rate adjustment is set to commence in June 2023 and will remain in place until May 2024.
Who to contact
For a detailed understanding of how this might affect your bill and to explore all available options, AEP Ohio encourages customers to reach out by phone at 800-672-2231, through their website, or using their social media channels:
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Get it right with Yellowlite
While rate increases are challenging, being informed and proactive can help mitigate their impact. By exploring energy-saving strategies like solar and taking advantage of available assistance, homeowners can better navigate this upcoming change.
Stay informed, explore your options, and remember, small changes can lead to significant savings on your energy bill.
If you have any additional questions about this change, contact one of our pro solar experts here at Yellowlite.