Ohio Adopts Delayed Start for AEP Ohio Default Service Auctions; Sets Blending Mechanism
November 13, 2013 Email This Story Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
The Public Utilities Commission of Ohio has adopted a schedule delaying the start of a transition to fully auction-sourced default service at AEP Ohio, but which leaves unchanged the time at which 100% of default service will be auction-based.
Specifically, the Commission issued an order adopting a schedule and retail rate setting mechanism for the AEP Ohio auctions, which will procure a portion (and eventually all of) Standard Service Offer supplies.
Originally, AEP Ohio's electric security plan contemplated the initial auction, for 10 percent of default service, being held sometime in 2013, but the case's extended review prevented that from happening.
Now, PUCO has ordered that the first 10 percent energy auction shall be conducted in February 2014, with delivery to commence April 1, 2014.
Furthermore, the first 25 percent energy auction shall be conducted in May 2014, and the subsequent 25 percent energy auction should occur in September 2014, with delivery to commence on November 1, 2014 (rather than June 1, 2014).
Finally, the remaining 40 percent energy auction should occur in November 2014, with delivery commencing on January 1, 2015 (thus retaining a January 1, 2015 start for 100% auction-based SSO).
The product term for all four auctions shall be until May 31, 2015, consistent with the ESP II Order.
PUCO also set a process for blending the SSO auction rates with tariffed generation rates, rejecting AEP Ohio's proposal to freeze base generation rates.
Instead, "AEP Ohio's current, frozen base generation rates should be adjusted to account for the results of the slice-of-system energy only auctions. Further, as the winners of the energy only auctions will receive capacity from AEP Ohio, winning auction bidders should pay for capacity at the rate of $188.88/MW-day, in accordance with the ESP II case and the Case No. 10-2929-EL-UNC (Capacity Case)."
"For the first 10 percent energy auction, AEP Ohio should blend its SSO rate to reflect 90 percent base generation rates, 10 percent energy auction results, and 10 percent capacity priced in accordance with the state compensation mechanism. For the 60 percent energy auction, the SSO rates should reflect 40 percent base generation rates, 60 percent energy auction results, and 60 percent capacity priced in accordance with the state compensation mechanism. For the final five months of the ESP II, the SSO rate should reflect 100 percent energy auction results and 100 percent capacity priced at the state compensation mechanism. In addition we note that the SSO rate should also contain AEP Ohio's FAC, which is discussed below," PUCO said.
With respect to the FAC (Fuel Adjustment Clause), PUCO accepted AEP Ohio's proposal to unbundle the FAC into fixed/non-energy and variable/energy rate components.
Under a blending process, the total SSO rates paid by non-shopping customers will include three basic rate components during the transition period: base (non-fuel) generation rates, the Fixed Cost Rider (representing fixed FAC charges), and the Auction Phase-In Rider (with the Auction Phase-In Rider reflecting a blend of auction energy prices, auction costs, and the energy-based FAC charges).
The Commission denied requests from load interests to hold separate SSO auctions for the Ohio Power and Columbus Southern Power rate zones. PUCO also denied requests to set a reserve price for the auction, such as the current fuel charge.
While adopting an auction schedule and rate setting process, PUCO in a separate order addressed potential rate impacts (and mitigation) from the AEP Ohio auctions, click here for related story today.