AEP Ohio Seeks to Rely on More Market-Reflective Rates for Default Service for 2015-18
December 23, 2013 Email This Story Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • email@example.com
AEP Ohio has filed for approval of an electric security plan that would rely on more market reflective rates versus the process used at the other Ohio electric distribution companies.
AEP Ohio's proposed electric security plan would cover the period June 1, 2015 to May 31, 2018.
As noted in our related story today, AEP Ohio is proposing a purchase of receivables program as part of the electric security plan.
Under the newly filed plan, AEP Ohio is seeking to procure default service for this period entirely through descending clock, slice-of-system full requirements auctions, with a mix of contracts lasting 12 and 24 months. Unlike other Ohio EDCs, AEP Ohio is not seeking to include any 36-month contracts in the default service portfolio.
For the initial two years of the plan, AEP Ohio proposes to procure approximately two-thirds of default service supply on a 12-month term basis and to procure the remainder on a 24-month term basis. For the final year (June 1, 2017 to May 31, 2018), default service would be served entirely on 12-month contracts.
In advance of the start of the supply period on June 1 of each year, AEP Ohio would hold two auctions, one in September and another in March.
AEP Ohio's proposed procurement schedule and term lengths are as follows:
Auction Product Term Delivery % of
Date Length Start SSO Load
Sep. 2014 12 June 1, 2015 33
Sep. 2014 24 June 1, 2015 17
Mar. 2015 12 June 1, 2015 33
Mar. 2015 24 June 1, 2015 17
Sep. 2015 12 June 1, 2016 33
Mar. 2016 12 June 1, 2016 33
Sep. 2016 12 June 1, 2017 50
Mar. 2017 12 June 1, 2017 50
The full requirements product would include energy, capacity, ancillary services, and market-based transmission services, but would not include compliance with the alternative energy portfolio standards.
The bypassable supply rate would include a Generation Energy (GENE) rider, a Generation Capacity (GENC) rider, an Auction Cost Reconciliation Rider (ACRR), and the Alternative Energy Rider (AER).
The Auction Cost Reconciliation Rider will reconcile what was billed to SSO customers versus what was paid to auction winners for the procurement of power. In addition, the ACRR will include all costs associated with the competitive bid process such as auction manager fees, incremental auction costs and the costs of any Contingency Plan.
Unique rates would be determined for each of the following classes: Residential; General Service - demand-metered secondary, primary, and subtransmission/transmission voltages; General Service non-demand metered secondary; and lighting.
AEP Ohio is proposing to institute a nonbypassable transmission rate, called the Basic Transmission Cost Rider (BTCR), which would recover certain non-market-based transmission costs, with AEP Ohio assuming responsibility for such costs for both default service customers and competitive supply customers. The Basic Transmission Cost Rider will recover Network Integration Transmission Service (NITS), Transmission Enhancement charges, Reactive Supply and Voltage Control, Transmission Owner Scheduling, System Control and Dispatch Service and Point-to-Point Revenues.
AEP Ohio is proposing to eliminate Schedule IRP-D (IRP-D), Supplement No. 18, Schedule Standby Service (SBS), and its Standard Time of Use tariffs (for generation).
IRP-D, an interruptible tariff, is being eliminated, "because the market can provide comparable offerings," AEP Ohio said
Schedule Supplement No. 18 is being eliminated because the tariff provided a discount on demand charges for certain church and school service customers, "and it is no longer applicable for AEP Ohio as a wires company utilizing a competitive bid auction process to obtain generation service to offer a demand-based discount."
"The standard TOU tariffs are legacy rates from a cost of service model for a vertically-integrated utility that is no longer applicable under the current market construct and can be more appropriately obtained in the market from CRES providers," AEP Ohio said.
AEP Ohio proposed a nonbypassable Power Purchase Agreement (PPA) Rider to recover costs or allocate credits associated with its sale of entitlements from its retained share of Ohio Valley Electric Corporation (OVEC), with all entitlements (including energy, capacity, ancillaries, etc.) sold into the PJM market and not used in the SSO auction or to serve SSO load. AEP Ohio said that the PPA Rider would help stabilize rates in a manner not impacting the competitive market.
AEP Ohio reported that as of the end of October 2013, approximately 42% of AEP Ohio's retail load was taking service under the SSO and 58% was taking service from a CRES provider.
Retail suppliers were serving 30% of residential load, 80% of commercial load, and 64% of industrial load.
There are currently 37 CRES providers registered and 32 CRES providers actively serving customers in AEP Ohio's service territory. In addition to customers being served individually by CRES providers, 93 communities have active aggregation programs.