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Matters

PUC Staff Oppose Relieving Retail Suppliers of Certain PJM Charges

September 21, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Staff of the Public Utilities Commission of Ohio oppose relieving retail suppliers of responsibility for certain PJM charges at the FirstEnergy Ohio distribution companies and recovering such charges in nonbypassable rates applicable to all customers

As first reported by EnergyChoiceMatters.com, the FirstEnergy Ohio utilities had proposed in their electric security plan expanding the PJM charges included under nonbypassable in the Non-Market-Based Rider (Rider NMB), which reflects various RTO/transmission charges not allocated on a market basis. For all charges covered under Rider NMB, the utilities assume the obligation for such charges for all distribution customers, and accordingly recover such costs via a nonbypassable surcharge.

Staff expressed concern with the utilities' proposal and believes it may be more appropriate for some of these costs to continue to be the responsibility of retail providers and the SSO suppliers

Specifically, Staff is concerned with including the following costs/credits in Rider NMB:

• PJM Billing Line Items 1218/2218 – Planning Period Congestion Uplift

• PJM Billing Line Items 1260/2260 – Emergency Energy

• PJM Billing Line Items 1375/2375 – Balancing Operating Reserves

• PJM Billing Line Items1376/2376 – Balancing Operating Reserves for Load Response

• PJM Billing Line Items 1378/2378 – Reactive Services

"Except for PJM billing line item 1218 ... it is Staff’s understanding that these items are currently charged by PJM Interconnection, LLC (PJM) to Load Serving Entities (LSEs) based on the deviation between their load schedules and actual load. Under the Companies’ proposal, LSEs would no longer be charged even though they may be responsible for creating the deviations," Staff said

"Staff believes that since PJM allocated these costs based on the LSEs’ deviations, the LSEs are in the best position to control these costs, and these costs should continue to be billed to the LSEs and not directly to the Companies from PJM," Staff said

"For PJM billing line item 1218 ... these charges are associated with allocations to LSE’s for revenue deficient Auction Revenue Rights (ARR) or Financial Transmission Rights (FTR) remaining at the end of the planning period. Similar to the other line items, it appears LSEs would be in the best position to continue managing these costs since they hold the ARRs and FTRs. Therefore, line item 1218 should also not be part of Rider NMB," Staff said

"[S]hifting these costs into the non-bypassable Rider NMB could result in certain customers being charged twice for these costs, if the costs are already included in the customer’s CRES supplier’s charges and also included in the Companies’ non-bypassable Rider NMB," Staff said.

Staff also expressed concern with a stipulation filed by the FirstEnergy utilities and certain industrial customers that would allow certain industrial customers, on a pilot basis, to opt-out of Rider NMB, with responsibility for their non-market based PJM costs instead assigned to, and collected by, the customer's load-serving entity, rather than the distribution company ((click here for background)

"Staff is concerned about the possible impacts to other non-participating ratepayers if the Pilot Program is approved. It is Staff’s understanding that there are a number of customers that represent a significant portion of the Companies’ peak load that would be eligible for the program. Also, the Companies have indicated that they have not performed any studies to estimate potential impacts to non-participating customers. Another concern is that the Pilot Program is limited to a certain set of customers associated with Ohio Energy Group and Industrial Energy Users-Ohio, Nucor Steel Marion, Inc., and Material Sciences Corporation. As a result of these concerns, Staff does not recommend approval of the Pilot Program as proposed," Staff said

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