Energy Choice
                            

Matters

AEP Ohio PPA Settlement Agreement Includes Proposal For Bypassable Adder to Default Service Rates

December 15, 2015

Email This Story
Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A non-unanimous settlement concerning AEP Ohio's proposal to enter long-term PPAs with affiliated generation, whose output would be sold into the wholesale market (not used for SSO) with costs/benefit allocated on a nonbypassable basis, includes a proposal for a bypassable adder to be added to Standard Service Offer (SSO) rates

The settlement, if approved, would not enact the SSO bypassable adder itself. Rather, AEP Ohio commits to propose, and settling parties agree to support (or not oppose) the bypassable default service adder in a proposed extension of AEP Ohio's electric security plan to be filed separately as a condition of the settlement agreement

Specifically, AEP Ohio agrees to propose and advocate for a pilot program that establishes a bypassable Competition Incentive Rider (CIR) as an addition to the SSO non-shopping rate above the auction price with the purpose of incenting shopping, "and recognizing that there may be costs associated with providing retail electric service that are not reflected in SSO bypassable rates."

The total collected from the Competition Incentive Rider will then be refunded to all distribution customers through a new rider established in the 2016 ESP amendment case. The mechanism therefore appears similar to the Maryland SOS administrative adjustment

AEP Ohio and settling parties would meet to determine the Competition Incentive Rider charge to include based on a mills per KWh. This would be included in the 2016 ESP amendment case. If the signatory parties cannot agree on an appropriate charge, PUCO Staff would choose the final level for inclusion in AEP Ohio's ESP extension filing.

AEP Ohio would file and support approval of a pilot rider to credit the amount collected from the CIR bypassable pilot rider in the 2016 ESP amendment. The rider would provide a credit for all distribution customers using the same rate design associated with the PPA Rider.

The charge from the CIR would take effect concurrent with the implementation of the SSO credit rider upon final Order of the ESP extension proceeding.

Unless otherwise amended by the Commission, the CIR pilot adder would be in effect through the term of the affiliated PPA recovery period under the settlement (eight years) or until new distribution base rates are put into effect. AEP Ohio will provide an analysis as part of its next distribution rate case to show all of the actual costs required to provide SSO generation service that are included in the company's cost of service study.

As intimated above, the settlement would require AEP Ohio to file for approval of an extension of its current ESP program through May 31, 2024. Such application shall include, "[a] proposal to extend the competitive bidding process for SSO procurement, including the schedule, auction products and related matters."

Currently, one-third of default service is procured on 12, 24, and 36-month contracts, respectively, and presumably, the above language would continue this mix by referencing a continuation of, "the schedule, [and] auction products."

Also concerning the SSO auctions, AEP Ohio agrees under the settlement to form a working group in conjunction with Staff and other interested parties to discuss a pilot program for future descending clock default supply auctions where, after the auction is completed but before the market-clearing price is announced, energy efficiency providers would be able to competitively bid to supply energy efficiency projects.

See Related Story Today: AEP Ohio PPA Settlement Includes Customer Referral Program, Supplier Consolidated Billing Pilots

The stipulated PPA agreement would require AEP Ohio to enter into an eight-year power purchase agreement (ending May 31, 2024) for the capacity, energy and ancillary service output of AEP's 2,671 megawatt (MW) ownership share of nine generating units and AEP Ohio's 423 MW contractual share of Ohio Valley Electric Corporation (OVEC) generation. The nine generating units include Cardinal Unit 1 in Brilliant (Jefferson County); Conesville Units 4, 5 & 6 in Conesville (Coshocton County); Stuart Units 1-4 in Aberdeen (Brown County); and Zimmer Unit 1 in Moscow (Clermont County).

Products procured through the PPAs would be sold into wholesale markets (not used for default service), with costs/benefits allocated on a nonbypassable basis

The settlement was signed by PUCO Staff, AEP Ohio, Direct Energy, and IGS Energy, among others. Signing retail suppliers did not necessarily agree to support all aspects of the stipulation

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Account Coordinator
• NEW! -- Director of Commercial Structuring -- Retail Supplier -- Houston
• NEW! -- Customer Account Manager -- Retail Supplier
• NEW! -- Vice President and Regional General Manager -- Retail Supplier
• NEW! -- Program Director - $225K/yr -- Texas
• NEW! -- Staff Accountant, Commissions Analysis -- Retail Supplier -- Houston
• NEW! -- Direct Business Development Manager -- Retail Supplier
• NEW! -- Compliance Manager -- Retail Supplier
• NEW! -- Supplier Services Manager