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RESA/IGS Seek Rider To Reflect Unbundling Of Rates At Duke Energy Ohio, New Bypassable Rider

Seeks Other Retail Market Enhancements

Expresses Concern Over "Retro-active" Audit Of POR Program And "Authorized" Receivables, Nebulous Definition Of "Non-Commodity"

June 26, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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In testimony on a series of Duke Energy Ohio cases before the Public Utilities Commission of Ohio, including a distribution rate case, IGS Energy and the Retail Energy Supply Association proposed a mechanism to unbundle certain default service-related costs from distribution rates, and proposed other retail market enhancements

A witness for IGS/RESA recommended that the Commission establish a credit rider for all customers allowing them to avoid distribution costs that support the Standard Service Offer (SSO) administrative and processing costs. IGS/RESA's witness also recommended that the Commission create an avoidable rider that collects these costs directly from non-shopping customers. The net impact will leave Duke Energy Ohio revenue neutral

Generally, IGS/RESA's witness said that such SSO-related costs included in distribution rates include:

• Call center infrastructure and employees to maintain appropriate customer service and customer complaints for SSO customers

• Printing and postage to communicate with SSO customers

• Accounting infrastructure and employees to establish and maintain records and data sufficient to verify compliance with any Commission rules for SSO customers

• IT employees, infrastructure, and software

• Administrative and general salaries and infrastructure to comply with the regulatory rule requirements for the SSO service and oversee minimum standards for service quality, safety and reliability;

• Outside and inside legal, regulatory, and compliance personnel to comply with the regulatory rule requirements for the SSO

• Office space for employees to provide these services;

• The regulatory assessments for the PUCO and the OCC that are based on SSO generation revenue, but are recovered through distribution rates;

• Taxes Other than Income Taxes such as labor taxes and excise taxes associated with other costs to support SSO service.

IGS/RESA's witness proposed the amount for the new bypassable rider for SSO customers as follows:

Residential       $ 0.005747 
Commercial        $ 0.001556 
Street Lighting   $ 0.003097 
OPA               $(0.000366) 
Industrial        $ 0.002047

The amounts were derived from costs in Duke Energy Ohio accounts that are included in the FERC categories Customer Accounts Expense, Customer Service and Information Expense, Sales Expense, Administrative and General Expenses and Taxes Other Than Income Taxes.

IGS/RESA's witness developed an allocation of costs to SSO versus distribution customers based on revenue and customer count

Other Issues

Witnesses for IGS/RESA also testified that if the Commission authorizes Duke to file a separate application to update its billing system (the CIS), then the Commission should direct Duke to incorporate into its system design the capability to allow CRES suppliers to provide supplier consolidated billing and non-commodity billing

"[T]he Commission should also require Duke to evaluate the costs and benefits of transferring all billing responsibilities to CRES providers and default service auction winners, and compare these costs and benefits to those expected from an enhanced CIS," a witness for IGS/RESA said

Regarding the billing of non-commodity services by retail suppliers, the witness for IGS/RESA said that the current structure allows Duke to bill for non-commodity services while prohibiting CRES suppliers from doing so. Without change, the billing system, "will continue to unreasonably prohibit CRES suppliers from including non-electric charges on the utility bill, while simultaneously and preferentially permitting Duke affiliates to utilize the utility bill to place non-electric charges on the utility bill," the witness for IGS/RESA said

A witness for IGS/RESA also sought an "enroll by wallet" function, enhanced access to interval data, and ZigBee meter access

The witness for IGS/RESA said that PUCO should clarify that the AMI interval data access functionality, once built, will eliminate the current fees charged for customer historical usage information.

Concerning enroll by wallet, the witness for IGS/RESA testified as follows:

Q: Please explain Enroll From My Wallet.

A: Enroll From My Wallet is an option to replace the current onerous letter of authorization (LOA) process with a more streamlined and digital approach. The current process requires a customer to sign an LOA with a supplier in order to authorize release of an account number or release of historical usage data. The supplier must then scan and upload that document to Duke who then must verify it prior to releasing customer data. The Enroll From My Wallet option eliminates the middle step by allowing the customer to provide additional verifying information that Duke already collects. The supplier then provides the additional verifying information to Duke whose system matches the data and provides that customer’s information. This does not remove the requirement that a supplier still obtain and keep a record of an LOA for each customer. However, the process to obtain an account number for enrollment or historical usage information is streamlined by removing the delay of passing back and forth a paper.

Q: Has the process always required the supplier to scan and upload a pdf of the LOA?

A: No. Duke’s supplier portal used to allow access by simply checking that an LOA existed. Duke would then have the ability to audit a supplier to ensure they were holding the LOA.

Q: Are you proposing we go back to the check the box method?

A: Not fully. I am proposing the check box be replaced by some identifiable information similar to what has been proposed in Case No. 16-1852-EL-SSO and which AEP Ohio has as an option on its website. In essence, I am looking to remove the manual upload and wait one-by-one process we currently have.

As previously reported, a non-unanimous stipulation in the proceeding would not institute a discount to Duke Energy Ohio's purchase of receivables program (as originally sought by PUCO Staff), but would allow an audit of the POR [aka PAR] program to ensure Duke Energy Ohio is only purchasing "authorized" receivables. While the non-unanimous stipulation makes reference to only "authorized" receivables, an earlier Staff recommendation that led to the audit referred to the prohibition on including non-commodity receivables in POR.

The witness for IGS/RESA expressed concerns with the audit provision

The witness for IGS/RESA testified, "This [the audit] appears to be a recommendation from the Rate Case Staff Report, but it is unclear what Staff was proposing or what will be audited. Suppliers will be asked to turn over products and potentially detailed accounting of what goes into their product offerings but for what purpose is unclear. Nor should they be required to provide more than just a price to a company which in some circles is our competitor. The PUCO does not regulate our prices or how our revenues fund other products and services. Ultimately, it is questionable what Staff is looking for when they say a non-commodity would not be, in some way shape or form, part of the revenue a supplier receives to fund their businesses. That said we have yet to even establish what non-commodity truly means. The September 27, 2017 Finding and Order in Case No. 15-1507-EL-EDI may provide guidance but should certainly not be used for a retroactive audit. If there are to be guidelines of the PAR program those should be prospective and in a manner which does not have this Commission regulating the pricing and revenue streams of a supplier. The Commission has no legal authority to dictate how a supplier uses revenue to purchase value added products they may offer to customers. This Commission should define non-commodity and Staff should be clear in what they intend to audit. If it is solely what was already determined through the PAR contract then this section of the settlement should indicate that and not be the overly broad language from the staff report."

The witness for IGS/RESA testified, "The Commission should provide forward-looking guidance on the PAR program regarding a clear definition of what is non-commodity so not to inhibit new product offerings. This will allow suppliers to continue to develop new product offerings in a manner which is PAR compliant or choose not use the PAR program. In any scenario, we are moving toward products which are far more than just a fixed price generation option and the ability to bill for these products should not be prohibited. There is a difference between a purchase of a receivable for generation and stifling emerging products in the market. The question of non-commodity and what it is needs to be resolved before suppliers are pushed out of the market due to a retro-active audit."

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