Shelby electric rates projected to stay stable this year
SHELBY- With electric rates rising all around the area, Director of Utilities John Ensman reported during the Utilities and Streets Committee meeting that the projected rates for Shelby electric should remain stable through the year.
Ensman explained there have been reports published stating electric rates will increase in areas throughout the state.
“If the forecast stays true to the design, the projected rates for Shelby electric customers would remain stable through the year,” Ensman said.
This all goes back to July 2019 when the price for energy within the AEP Partial Full Requirement Agreement was hedged, Ensman reported.
“We hedged at the right time,” Ensman stated.
Due to this lower rates were negotiated for additional years.
“We did hedge. The contract between 20202022, we provided a 10.1 percent reduction, a one-time reduction. Beginning of this year 2023-2030, we provided a 9.1 percent one time reduction, one time. It gives us a flat rate,” Ensman said.
In the report provided by Ensman it explained AEP supplies Shelby with energy above the AMP contracts.
The influence on the cost of power involves different factors.
Ensman went over went some of those factors that included transmission and capacity charges. Ensman explained the charges vary per year and the rates for transmission and capacity are established at auction.
According to a report from Ensman, transmission is the AEP territory that is based on the highest one hour load for system demand between November-october. Capacity is in the PJM territory and it is based on the five highest one hour loads from Juneseptember.
“We are still waiting for transmission costs for the year 2024. Right now, the transmission costs for 2024 will be based off December 23, 2022. Transmission is based off November through October. Capacity is the summer months of Juneseptember. So, December 23 still has the peak for the year,” Ensman said.
Ensman continued and explained hedging was done at the right time.
“When we hedged, it was perfect timing. It really worked in our favor,” Ensman said.
“It didn’t happen by accident. We put a lot of thought into this, we put a lot of thought into peak power and a lot of money and investment into power rates and all of that,” Utilities and Streets Committee Chairman Nathan Martin replied.