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Settlement Would Establish New Bypassable Adder To Utility Default Service Rates

January 31, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A stipulation among several parties in Dayton Power & Light's proposed electric security plan proceeding would establish a new bypassable adder to SSO rates

The stipulation was signed by DP&L, the Retail Energy Supply Association, IGS Energy, the City of Dayton, the Ohio Hospital Association, and certain discrete community agencies, environmental groups, and large customers.

The ESP would establish parameters for SSO for the period January, 1, 2017 through December 31, 2023

Under the stipulation, DP&L would establish a new component to the Standard Service Offer as an addition to the SSO non-shopping rate-in order, "to recognize costs DP&L incurs to provide default service to customers, or costs otherwise avoided by default service, that are not reflected in SSO bypassable rates."

The component added to the SSO rate would be $0.0033 per kilowatt-hour for all default service customers

The total collected from this component would first be applied to the Unbilled Fuel deferral (amortized over 3 years) and remaining amounts collected will then be refunded to all customers via a nonbypassable Regulatory Compliance Rider (RCR).

The new SSO adder would remain at $0.0033 per kilowatt hour but may change pending resolution of DP&L's current distribution rate case pending before the Commission in Case No. 15-1830-EL-AIR and any determinations by the Commission in that proceeding that different allocation of costs should be added for inclusion to the SSO rate.

Regarding the procurement of SSO supplies, DP&L would implement its proposed competitive auction mechanism for SSO supplies, except that DP&L is dropping its original proposal to require winning full requirements bidders to supply Renewable Energy Credits (RECs) to meet the renewable energy requirements contained in ORC §4928.64. Instead, consistent with the current process, DP&L will procure RECs to meet the requirements in ORC 4928.64 and recover those costs on a bypassable basis. However, although these REC costs will be separately identified in supporting schedules, these amounts will be included as a component of the Standard Offer Rate instead of a separate Alternative Energy Rider (AER) Tariff. "This maintains the simplicity of one Tariff for bypassable charges that allows for an easy price-to-compare," DP&L said

As previously reported, under the original proposal that is untouched by the stipulation, DP&L would rely exclusively on descending clock, slice-of-system, full requirements (excluding renewable compliance) auctions to procure 100% of SSO supplies.

Generally, apart from a five-month transition period at the start of the SSO, one-third of the SSO portfolio would be served under 12-month contracts, one-third under 24 month contracts, and one-third under 36-month contracts. However, at the end of the SSO term, varying contract term lengths would be used to align with the December 31, 2023 end date, including 43 month contracts (as well as 31 month, 19 month, and 7-month contracts).

Two SSO auctions (in February and May) would be conducted for procurement in the first period, June 1, 2017 to May 31, 2018. One auction would be held per year thereafter, held during the February prior to the June 1 start of delivery for that year.

Click here for the specific SSO contract term lengths, number of tranches, and procurement dates

The stipulation includes DP&L's proposals to add a cash working capital rate to SSO rates, and to transition to an all-energy rate design for SSO rates, for all tariff classes.

Firm NITS and non-market based ancillary services will continue to be recovered via a nonbypassable charge, except a pilot program would allow a limited number of customers to opt-out of the nonbypassable treatment of such costs (discussed in our related story today, click here).

Other Provisions:

Contingent on FERC approval, DP&L agrees to transfer its generation assets and non-debt liabilities to AES Ohio Generation, LLC, an affiliated subsidiary of DPL Inc., within 180 days following final Commission approval of the stipulation

DP&L (or the affiliate to whom the generation assets are transferred) will commit to commence a sale process to sell to a third party its ownership in the Conesville, Miami Fort, and Zimmer generating stations

DP&L agrees to continue pursuing options to discharge its Ohio Valley Electric Corporation (OVEC) obligations. In the interim, OVEC products will be sold into the PJM markets with costs/benefits treated on a nonbypassable basis.

The stipulation would require DP&L and/or its affiliates to procure and/or develop a total of at least 300 megawatts (MWs) nameplate capacity of wind and or solar energy projects in Ohio as follows:

During the ESP term, DP&L affiliates will have the right, based on commercially reasonable terms, to own up to 50% of such projects on an aggregate net basis (up to 150 MWs) based on installed capacity. Ownership details will be established for each project individually.

DP&L would be the buyer of a long-term power purchase agreement (i.e., 15 years or longer) for each project, including all capacity, energy, ancillaries and renewable energy credits produced by the project. Capacity, energy and ancillary services for all projects would be liquidated into the PJM markets with resulting revenues being credited to retail customers. Renewable energy credits not reserved for compliance would be liquidated into the markets with resulting revenues being credited to retail customers. A nonbypassable charge would recover costs/allocate benefits.

The stipulation would require DP&L to file a comprehensive Distribution Infrastructure Modernization Plan within three months of completion of the Commission's grid modernization initiative or February 1, 2018. Such plan would include proposal for advanced metering and implementation of the availability of validation, estimation and editing data

See Related Story Today: DP&L Would Institute Pilots For Supplier Consolidated Billing; Billing of Non-Commodity Costs on Utility Bill Under Stipulation

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