SIDNEY — Crude oil prices have peaked at their highest since 2014 at $77 per barrel, a 2.6% increase, while natural gas rose 5.7%, and energy rose roughly 3.9.
“This coming winter could well be one of the longest and coldest that we’ve seen in years,” says Janice Stillman, editor of The 2022 Old Farmer’s Almanac.
This winter, that publication forecasts the nation should prepare for a “Season of Shivers,” with “bone-chilling, below average temperatures across most of the United States.” It predicts the Ohio Valley will experience an “extreme “wintry mix” of “lots of snow” and “super cold” temperatures.
The city of Sidney took measures well in advance to secure lower rates for the next several years, by entering into agreements with energy providers.
“There is a clause in the ORC that was changed in the mid-2000s that allows aggregation, but it requires approval by voters,” Kari Egbert, Sidney’s City clerk, explained.
“We have been working with Affordable Gas and Electric since around early 2015. Our contract expired April 2021 and we were working with city’s Aggregation Consultant, Affordable Gas and Electric, and they suggested we act sooner better than later because they anticipated a continuing rise in prices,” said Egbert.
Mark Cundiff, Sidney’s City manager, recalls, “there was an article in the Dayton Daily News about how it was being forecasted that natural gas prices were going to go up significantly this winter. And even though the cost we locked into at the recommendation of our Natural Gas and Electric Aggregation consultant, Affordable Gas & Electric (AGE) was slightly higher than our current rate, it appears that it was a very good decision in light of the DDN article. I believe that the graph you selected for this story also shows that it was a very good decision to lock into that price.”
“There will be a notice going out around Oct. 18 asking participants if they want to opt out of the aggregation or to opt into the renewable energy program. If residents want to stay in the program they do not need to act, but they will if they want the renewable program. Overall, it’s completely voluntary for people in the community, but it appears it will save customers money to stay in it,” said Egbert.
For those participating in the Electric Aggregation, Dynegy Energy will continue to offer their $0.0488/kWh rate until the end of November, but in December, the city’s supplier will switch to Energy Harbor at a rate of $0.0499/kWh until December 2024. For those wanting the renewable energy option, the rate is slightly higher at $0.0556/kWh.
The city’s Natural Gas Aggregation supplier is Volunteer Energy Services, and its rate of $0.429/Ccf is locked in until May 2023.
As prices may continue to escalate beyond that window, the selected time frames for the contracts may come into question. According to Mayor Mike Barhorst in an email, “One of the interesting things about the state law that permits community aggregation is that natural gas contracts can only be two years in length. Electric contracts can be for three years. As a result, the natural gas rate changes with greater frequency than the electric rate.”
“It was a combination of good timing and knowing what we are doing now as a country that let us take a long-term position on our recommendation,” said Jordan Haarmann, vice president of Procurement at Affordable Gas and Electric, LLC (Mount Vernon, Illinois) explained. “The crude oil prices have a little bit to do with energy rates, but what we actually watch are the natural gas rates because natural gas is being used to also generate electricity around the nation.”
There are 20 communities that the city is grouped with. Shelby County: Sidney, Russia, Fort Loramie, Botkins, Anna, Lockington; Logan County: Bellefontaine, Belle Center, Quicy and DeGraff; Champaign County: Urbana; Darke: Greenville, Ansonia, Bradford; Miami County: West Milton, Covington, Newberry Township; Mercer: Coldwater, Fort Recovery; and Fayette County: Jeffersonville.
“Our recommendations to our communities are also based on government policies being mandated around the U.S. centered around green energy initiatives, which are focused on cleaner, renewable energy sources and eliminating things like coal and natural gas from being the main fuels used to generate electricity. The city’s renewable opt-in rate is based on renewable energy certificates purchased from Texas wind farms.”
Certificates mean a company has established a wind farm (or other renewable energy-generating business) and they are selling off the raw power. But there is also a value assigned to the renewable component of that energy produced. That value becomes the renewable energy certificates that communities can purchase. Right now the most abundant source of renewable energy certificates are national wind farms based in Texas.
“With record level U.S. natural gas exports, it is a supply and demand issue. Right now we are producing at the same levels we have the past couple of years. As a result of winter storm Norry, the natural gas storage levels have been trending below the five year average throughout the summer and going into this winter. When you couple that with record levels of liquefied natural gas (LNG) exports, the expected cold winter could put a further strain on supply at a time where demand will be at its highest.”
To help offset this shortage, now and into the future, other forms of renewable energy sources will need to be built and added into the energy grid.
“Solar and wind farms have to be built out as new infrastructure, so green energy will come at higher costs than the current sources we have generating electricity. As those current sources continue to be shut off, the price of energy will continue to increase because we have less overall supply in the market.”
The rise in crude oil prices over the past year has also accompanied a steady climb in gas prices at the pump. Nevertheless, Ohio’s rates remain below the national average.