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PUCO Addresses Bypassable/Nonbypassable Treatment of Transmission Charges In Adopting 2013 Rates for DP&L

August 29, 2016

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

The Public Utilities Commission of Ohio has adjudicated default service rate treatment at Dayton Power & Light in light of DP&L withdrawal of its current electric security plan (ESP II), which resulted from an Ohio Supreme Court decision

A June 20, 2016 decision by the Supreme Court of Ohio reversed PUCO's approval of ESP II due to its inclusion of a nonbypassable service stability rider (SSR) at DP&L.

PUCO found that ESP II should be modified to remove the (SSR), but agreed that such modification gave DP&L the right to withdraw the ESP II, which DP&L did. With no currently approved ESP, DP&L proposed to return to ESP I, with certain modifications to the rates thereunder to reflect the realities of actions undertaken pursuant to ESP II.

PUCO's order keeps the current bypassable generation rates at DP&L relatively unchanged.

Notably, PUCO accepted DP&L's proposal to maintain the current auction-based Standard Service Offer rates despite the withdrawal of the ESP.

However, there will no longer be the bypassable Competitive Bid True-Up Rider (G30) which was approved under ESP II. This charge had been about 5 mills/kWh. DP&L said that at the end of the period in which the ESP II auction-based rates are in place, the Standard Offer Generation rates will be trued-up to the actual auction supply costs

Additionally, in returning to 2013 rates, DP&L had proposed to re-instate the Environmental Investment Rider (EIR), a bypassable charge that was equal to about 1¢/kWh for residential customers.

PUCO, however, ruled that the EIR should be set to zero. PUCO noted that the rider was originally approved to cover environmental compliance costs associated with utility-owned generation that was used to provide public utility service, but with 100% of SSO now sourced through competitive auctions, such utility-owned generation is not currently being used to provide public utility service to non-shopping customers under the standard service offer.

The Commission also maintained the current treatment of transmission charges at DP&L, with DP&L assuming responsibility of certain non-market-based transmission costs on behalf of all delivery customers (relieving retail suppliers from such costs), with recovery via nonbypassable charge. Certain industrial customers had objected to nonbypassable treatment of such transmission charges

"[T]he Commission finds the elimination of the transmission cost recovery riders, TCRR-B [bypassable] and TCRR-N [nonbypassable], would unduly disrupt both the competitive bidding process supplying the SSO and individual customer contracts with suppliers of competitive retail electric service (CRES Providers). The wholesale suppliers for SSO customers rely upon DP&L to acquire certain transmission services under the TCRR-N and may not have included the costs of these transmission services in their bids to serve SSO customers. Thus, elimination of the TCRR-N may severely disrupt existing contracts for wholesale suppliers and discourage future participation in the competitive bidding process. Preservation of the integrity of the competitive bidding process is of the highest priority for the Commission. Likewise, CRES Providers also rely upon DP&L to procure certain transmission services under the TCRR-N and could be forced to terminate or renegotiate their contracts with their customers if the TCRR-N were eliminated. Further, if a mechanism like the TCRR-N is eliminated in this case and then restored in DP&L's next SSO, contracts between CRES Providers and individual customers could be further disrupted by the subsequent regulatory change," PUCO said.

However, "the Commission understands that a number of mercantile customers could benefit by shopping for all transmission services," PUCO said

The Commission therefore "encourages" such customers to work with Staff to determine whether a filing under R.C. 4905.31 could enable these customers to receive an exemption from the TCRR-N and to shop for transmission services.

In adopting ESP I rates, PUCO authorized DP&L to charge a nonbypassable rate stabilization charge (RSC). While this nominally reflects costs associated with DP&L continuing obligation to serve as POLR, given that bypassable supply rates are entirely auction-based, it does not reflect any change to the current shopping environment.

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