PUCO to Consider AEP Ohio Rate Proposal for Customers Returning from Competitive Supply

June 30, 2011
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The Public Utilities Commission of Ohio has established a procedural schedule to address the proposal of Columbus Southern Power and Ohio Power to establish new market-based rate schedules for customers returning to utility-provided generation service after having elected competitive supply and opting to bypass the POLR charge (Case 11-0531-EL-ATA).

The proposal was first reported in Matters (see 2/8).

Motions to intervene and comments are due by July 22, and PUCO set a shortened discovery timeline, with the aim of implementing the new rate mechanism by the end of 2011.

As originally proposed, each utility would institute two market rate schedules for such returning customers, with the applicability depending on customer size.

Schedule MB-1 (Market Based Service-Small) would apply to customers under 200 kW. The rate under MB-1 would equal the sum of the following: a simple swap reflecting AEP Dayton hub on-peak and off-peak prices, a basis adjustment, a marginal loss adjustment (to exclude costs already recovered in transmission rates), a congestion adjustment (to exclude costs already recovered in transmission rates), a load following/shaping adjustment, a retail administration charge, an alternative energy requirement charge, losses, capacity, and a "transaction risk adder" to reflect the, "cost associated with market risk."

The filed tariffs did not provide the individual charges for each component. While some are obviously dependent on the market, the tariffs did not list or define how other charges, such as the retail administration charge and transaction risk adder, will be defined. Total market rates would posted online ahead of every month.

Customers at or above 200 kW returning to AEP Ohio supply after avoiding POLR charges would be served under Schedule MB-2 (Market Based Service-Large), and would pay a charge equal to a capacity price (as set forth in the PJM tariff adjusted for a demand loss factor) plus an hourly energy charge reflecting the System Energy Price component of the AEP Load Zone real-time LMP, plus a program administration charge of $25 per month.

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