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Ohio Utilities, OCC Propose Allocation Of Seamless Move Implementation Costs To Retail Suppliers

One Utility Proposes Charging Customer's Supplier For Seamless Move Even If Customer Does Not Stay With Supplier Upon Move

March 12, 2018

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

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Ohio's electric utilities and the Ohio Consumers' Counsel filed separate comments at PUCO arguing that retail electric suppliers should be allocated the costs of implementing seamless moves.

As first reported by EnergyChoiceMatters.com, PUCO recently ordered the filing of seamless move implementation plans

EDCs and OCC generally said that as only about 1-2% of customers would be eligible for seamless moves in a given year, implementation costs should be allocated to retail suppliers

Regarding implementation costs, Dayton Power & Light said in comments that a fee per seamless move should be developed and included on each competitive retail electric service (CRES) provider's monthly invoice from DP&L, based on the number of seamless moves that are completed. The initial development of the rate would be based on the actual costs of implementation divided by some amortization period and the estimated numbers of seamless moves for each year. DP&L would continue charging the per seamless move fee until the implementation costs were recovered in full.

AEP Ohio said that, "The fair and reasonable approach to cost recovery of a seamless move program would be to bill the suppliers who benefit directly from the program. If a supplier currently has a contract with a customer, it would greatly benefit the supplier to keep this customer; therefore, the supplier should incur the costs associated with the seamless move."

However, AEP Ohio further said that, "in light of the relatively high cost of implementing the program compared to the small number of customers that will utilize the service each year, and recognizing that the Commission has determined that seamless move should be a statewide mandate, the Company proposes a two-tiered recovery mechanism for the system costs. The Company proposes to defer the cost of the system upgrade as a regulatory asset at the weighted average cost of capital (WACC). Any per-transaction fee payments, described below, made by suppliers will be credited to the total regulatory asset balance. The remaining balance, which will be collected through base rates in the Company’s next base case, will be based on the balance of the regulatory asset at that time."

Notably, AEP Ohio proposes to bill each supplier for each eligible seamless move, regardless of whether the customer or supplier chooses to continue with the existing contract between them.

"AEP Ohio will be required to complete the same process -- to the benefit of CRES providers -- and incur the same costs any time a customer is eligible for a seamless move, even if the customer’s CRES contract is not transferred to the customer’s new address at the option of either the customer or supplier (assuming the contract between the CRES provider and customer provided either party that option)," AEP Ohio said

AEP Ohio’s updated estimate of implementation costs for seamless moves is approximately $1.8 million. AEP Ohio’s historical experience with customers that will be able to take advantage of the seamless move each year is estimated to be 6,930 a year, less than one-half percent of total customers. The estimated cost per contract, assuming each eligible customer uses seamless move once per year, would be $47.84 using these assumptions

The OCC said that, "PUCO should require the Marketers, who are the advocates for seamless moves, to pay the costs for implementing seamless move. Marketers currently have the ability and flexibility to include or exclude the costs associated with implementing seamless move within the price charged for their service."

"[T]he allocation of costs to implement the seamless move should be 100% to the Marketers (who requested seamless move). Making customers pay would be an anticompetitive subsidy that is prohibited by state law," OCC said

The FirstEnergy Ohio EDCs said that they were not opposed to being allocated seamless move implementation costs if they were able to fully recover such costs, but were also open to allocating costs to retail suppliers as well

"Provided that the implementation of this Commission directive is similar to the efforts in Pennsylvania and Maryland and provides benefits to the Companies’ customers, then the Companies would not oppose being allocated the costs incurred so long as they receive full and timely recovery of all costs, including a return on and of any capital investment. The Companies are also open to an allocation of those costs to CRES Suppliers, especially if any costs are incurred for the sole benefit or convenience of CRES Suppliers, so long as appropriate provisions are put in place to ensure full and timely recovery of all costs," the FirstEnergy EDCs said

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