Results from the latest wholesale power auction in Ohio showed prices continuing to fall as Duke Energy Ohio's competitive bidding process Monday cleared at an average price of $48.34/MWh, according to the Ohio Public Utilities Commission, which accepted the results of the descending clock auction in a 5-0 vote Wednesday.
The average clearing price in the latest auction was $1.52 below Duke's previous auction, on November 18, which cleared at an average of $49.86/MWh.
AEP Ohio's last auction, November 3, cleared at an average of $48.29/MWh, which at the time continued a trend of persistent softness in the market.
AEP is a subsidiary of Columbus, Ohio-based American Electric Power, one of the nation's largest electric utilities.
CRA International, Duke's independent auction manager, submitted a report to the commission that said there were five winning bidders in the March 14 auction. Those winning bidders will not be identified for three weeks.
CRA said the auction, for 17 tranches, lasted 20 rounds, with no sealed-bid round. The starting price ranged from $80/MWh to $110/MWh.
Each tranche represented 1%, or about 52,000 MWh, of the Duke Energy subsidiary's energy and capacity obligations to serve standard service offer, or non-shopping, customers. Deliveries will take place between June 1 of this year and May 31, 2018.
Thirteen bidders, who neither CRA nor the commission identified, registered for the auction. This week's auction, along with prior and future Duke auctions, will be combined to determine rates through May 2018.
Duke spokeswoman Sally Thelen said in an email the results were "in line with our expectations going into the auction," adding that Duke was not surprised that only five suppliers won out in the end, "as this auction only targeted 17 tranches over one two-year delivery period."
Power prices in Ohio have trended lower for most of the past year. In Duke's May 14, 2015 auction, prices cleared at $58.79/MWh for a one-year product, $57.60/MWh for a two-year product and $59.17/MWh for a three-year product, through May 2018. That auction targeted 100 tranches over three delivery periods ranging from 12 to 36 months.
Generation represents about 60% of a typical residential customer's monthly power bill. The remaining 40% covers costs to maintain and improve the power grid, and other administrative costs of providing power to customers.
The cost of electricity is directly passed on to customers, Thelen noted, and Duke Energy Ohio does not make any money on supplying the power.
As of December 31, Duke Energy Ohio had 703,216 retail electric customers in Ohio. Of that total, roughly half, or 363,168, switched to a competitive supplier, the company said.
Duke, under its current electric security plan, plans to hold one more auction this year, in November. It also plans a final auction in March 2017.
