OCC Says Dayton Power & Light Market Price Tariff Inconsistent with Stipulation

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January 3, 2011

Dayton Power & Light's proposal to charge certain governmental aggregation customers returning to bundled service the higher of a market-based rate and the Standard Service Offer rate is contrary to DP&L's authorized electric security plan, the Ohio Consumers' Counsel said in comments to the Public Utilities Commission of Ohio (10-826-EL-ATA).

A stipulation approved by PUCO without modification provides that, "In 2011 and 2012, governmental aggregation customers who elect not to pay the RSS [Rate Stabilization Surcharge] will return to DP&L at a market-based rate.  DP&L will develop and file for approval of a market-based rate calculated consistent with Section 4928.20(J), revised code, by July 1, 2010."

DP&L filed tariffs for a market-based rate comprised of an energy charge, a capacity charge, transmission charges, a 20% risk premium, a program administration charge, and additional riders.

However, in its tariffs to implement generation charges for returning government aggregation customers who bypass the Rate Stabilization Charge, DP&L proposed that such returning customers, "shall pay the greater of the market-based bill charges (described below) or the otherwise applicable Standard Offer rates (including Generation, Transmission, PJM RPM and all associated riders)."

OCC argued that such "greater of" pricing is contrary to the plain language of the stipulation, which provides only for a market-based rate.  Furthermore, OCC argued that the proposed tariff violates R.C. 4928.20(J) which states that returning customers, "shall pay the market price of power."

Furthermore, OCC contended that DP&L failed to justify the 20% risk premium included in the market price, and the costs included under the administration charge.

OCC reported that DP&L has indicated through discovery, "that DP&L included another approximately 40% profit margin in the calculation of its Program Administration Charge."

"This double-dip profit-taking constitutes an excessive and unreasonable charge, which is contrary to the state policy of providing electric service at a reasonable retail rate, as set forth in R.C. 4928.02(A)," OCC said.

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