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FirstEnergy Ohio EDCs Seek To Maintain Nonbypassable Rate Stability Rider By Removing Association With PPA (Salvaging ESP Preserves Retail Market Enhancements)

May 3, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The FirstEnergy Ohio utilities have petitioned the Public Utility Commission of Ohio to modify their recently adopted Retail Rate Stability Rider (RRS) such that the rider is no longer based on PPAs between the utilities and affiliate FirstEnergy Solutions

Such modification is designed to move the rider wholly within PUCO's jurisdiction, after FERC said it would review the PPA under the Edgar standard.

The EDCs said that modified RRS rider would provide the rate stabilization benefits previously approved by PUCO, but without reliance on the PPA or any other contractual arrangement or other involvement of FES.

Specifically, rather than basing credits or costs to customers under Rider RRS under the PPA, the rider calculation would reflect the following changes: 1) actual costs will be replaced with the costs which are already evidence in the case's record and relied upon by the Commission in the electric security plan case; 2) actual generation output will be replaced with the generation output which is already evidence in the record and relied upon by the Commission in the case; and 3) actual capacity (MWs) cleared in the PJM capacity market will be replaced with the capacity (MWs) projected to clear, which is already evidence in the record and relied upon by the Commission in the case. Proxy revenues for ancillary services and environmental attributes will be based on information in the record and relied upon by the Commission.

The EDCs said that the new RRS proposal was not designed to transfer regulated revenues to competitive operations (including FES).

As revenues under the RRS rider will now accrue to the EDCs when the rider is not providing a credit to customers, the EDCs said that such revenue may be used to carry out the other commitments otherwise included in the electric security plan, such as modernizing distribution infrastructure

As before, the RRS rider will be nonbypassable, and we see nothing in the EDCs' application that would distort Standard Service Offer pricing as a result of the RRS rider, thus the RRS rider continues to appear to be competitively neutral from a retail market perspective.

Additionally, modification of the RRS rider preserve the overall electric security plan which, while subject to rehearing, adopted numerous retail market enhancements including a directive that the FirstEnergy EDCs file a proposal to unbundle from distribution rates the costs that the FirstEnergy EDCs incur to support Standard Service Offer (SSO) service and to reflect those costs in the SSO price

The FirstEnergy EDCs have sought rehearing of this directive, stating that such order went beyond an agreement with IGS Energy that only required the development of what was to be essentially a bypassable retail adder (called a retail competition incentive mechanism) to serve as a proxy, which was not to reflect the specific unbundling of various cost components.

Click here for our prior story on retail market enhancements required under the electric security plan

Among other things, the FirstEnergy EDCs in an ESP side-agreement with IGS Energy agreed to make a filing to implement a customer referral program

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