Cincinnati utility customers have been receiving letters asking if they want to opt out of the city's electrical aggregation program. Some people are confused.
The director of the city's Office of Environment Sustainability says that's understandable. Ollie Kroner says with aggregation, basically, the city is buying electricity at a fixed rate from a company, Dynegy.
Under the new deal, for the first six months, participants will pay $0.1044 per kilowatts used in one hour. That's down from the current $0.1073 per kWh. It's unclear what the rate will be after those six months, but Kroner says the city is trying to "lock in a fixed rate in six months."
"We, alongside the rest of the world, are waiting to see what happens in Iran and what the markets will do in the near term."
Kroner says if a rate changes once within 12 months, it is considered variable. He says since all previous rates were fixed, that's what's leading to the confusion.
“Any household can go to the market and select their own provider. If you’re really a student of the market and you feel confident in your decision-making you can do that. You can go out and find more competitive pricing,” he says. “But I can tell you that all studies have shown, generally speaking, the people who do that end up paying more for their energy.”
Kroner says over the last five years, participants have paid about 13% less for their electricity.
He says historically, the program has secured a rate for a year.
“As it came time to lock in rates this cycle, we were ready to click go, and then news broke of our strike in Iran. Markets went haywire,” he says. “The timing was very difficult. We’ve done everything we can to keep prices low but that means that instead of locking in a rate for 12 months that would have been much higher, we negotiated a six-month term. … We expect to beat the market.”
The letters went out in the last month, but Kroner says customers can opt in or out of aggregation at any time.
“However, many of the programs that you may opt into don’t have the same flexibility. Many of them have fees for cancellation. That’s really where we see people getting stung,” Kroner says. “They see a competitive rate for some period of time, but when that period of time expires, it’s no longer competitive and they can’t escape without paying a penalty.”
He says some companies will have hidden costs and undisclosed fees.
Read more:
