Results of auction set electricity cost higher
Auction results disclosed on Friday likely will lead to higher electricity bills for consumers a couple of years down the road and a boost in revenue for power-plant owners such as American Electric Power.
The price changes will take effect in mid-2018 and translate to an increase of roughly $2 per month per household.
The annual auction sets the “capacity” price that power-plant owners charge to buyers. The process is overseen by Pennsylvania-based PJM, a company that manages the flow of electricity in a multistate area that includes Ohio.
AEP is among the companies that successfully argued this year for PJM to overhaul its auction process in a way that puts a premium on traditional power plants that are the most reliable. Analysts expected that the change would contribute to higher prices, which it has.
“Reliability of the electric grid in Ohio moved in the right direction today,” said the Public Utilities Commission of Ohio in a statement, supporting the changes made by PJM.
AEP was more cautious, with a spokeswoman saying in an email that it is too early to know the auction’s effects.
The bidding is held three years before the effective date so that power-plant owners, regulators and others have time to adjust to any changes.