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PUC Endorses Time Of Use Rates For Default Service, Sees Service As "Benchmark" For Dynamic Retail Offerings

PUC Envisions Utilities Actively Marketing Default Service TOU, Rebates For Enabling Tech (Smart Thermostats)

PUC: "May Be Advisable" For Utilities To Offer Behind-The-Meter Services Under Certain Circumstances

August 30, 2018

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

The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com

As part of a "roadmap" of its PowerForward grid modernization investigation, the Public Utilities Commission of Ohio has generally endorsed Time of Use rates for electricity default service (Standard Service Offer, SSO)

The roadmap does not make any final decisions and is not binding on the Commission

"The Commission believes that the benefits associated with competitively bid SSO rates can be expanded through the implementation of SSO time-of-use rates that utilize advanced meter data. TOU rates should be designed or modified to incent customers to reduce consumption during peak periods and to engage customers in making informed decisions about their energy usage, regardless of whether customers are shopping for their electric supply or on the SSO rate," the roadmap states

"For instance, as referenced earlier, as the deployment of EV charging infrastructure grows, TOU rates should incent off-peak charging for customers with an EV. In addition, TOU rates may provide a benchmark for more dynamic products and services in the retail market as they develop," the roadmap states

"The Commission encourages, in parallel with advanced meter deployment, that each EDU propose or amend an existing TOU rate design for SSO customers, which may include: real time pricing, block and index pricing, TOU pricing, variable peak pricing, critical peak pricing, and/ or critical peak rebates. Further, the on-peak/ off-peak ratio should be sufficient to provide a response from participating customers and the peak period duration and frequency should reasonably allow for participation from customers on the rate. The proposal may also include a rebate program for enabling technologies (e.g. smart thermostats) which can be paired with TOU rates offered through the SSO or through CRES provider offerings that utilize time-based pricing," the roadmap states

"The Commission envisions that each EDU proposal would include plans for marketing and education of the TOU rate design to customers, along with options for informing customers of available TOU offerings through the PUCO’s Energy Choice Ohio website," the roadmap states

Turning to the broader issue of grid modernization, the roadmap envisions utilities creating a uniform platform to allow the offering of various products and services by third parties, stating "In order to realize the policy objectives for PowerForward, the Commission believes that each EDU should work towards developing a cyber-physical platform consisting of uniform core components, so that the foundation for customer engagement and market participation in providing innovative products and services is set in the state. The goal of a uniform platform is to enable a variety of market opportunities, regardless of service territory, and to create efficiencies that can be passed along to customers either through the proliferation of a more diverse set of retail market offerings or through cost savings associated with the different types of products and services. Further, utilities should explore whether they can share among themselves some of the investments of the cyber-physical platform, as doing so will promote certain PowerForward principles and objectives."

The roadmap states, "It is further noted that, given the restructured retail electricity market in Ohio, standardized access to customer energy usage data (CEUD) for CRES providers and other third parties should be viewed as a fundamental and core component of the platform, along with the deployment of advanced customer metering."

The roadmap states, "Arguably, the pursuit of an enhanced customer experience through innovation is more likely to succeed in the competitive marketplace than in a regulated environment. Assuming utility deployment of foundational assets through an architectural construct that provides access to non-utilities, innovative products and services can then be introduced. The introduction of non-regulated capital investment would mitigate the need for economic regulation and recovery, and more equitably allocate costs to those consumers who find net value in the product or service offered. If barriers to market entry are minimized, ample incentive should exist to attract non-EDU participants into the market."

"Therefore, for behind the meter grid modernization customer applications, it is recommended that the current retail marketplace structure should prevail. Assigning the opportunity for behind the meter customer applications to competitive forces, whether CRES providers, third-party technology or other trusted customer advisors, is consistent with traditional behind the meter limitations on regulatory jurisdiction. These competitors could include EDU affiliates with appropriate corporate separation safeguards to eliminate the possibility of competitive advantage," the roadmap states

However, the roadmap envisions that a role for utility provisions of behind-the-meter solutions may be necessary if the market does not develop solutions for certain customers, stating, "Markets will develop where opportunities exist. However, without the safety net of regulated recovery mechanisms to reduce investment risk, markets will develop at different paces dictated by the scope of opportunity for return on investment and economic margin. It is possible that social policy may dictate a faster pace, a jump start, or assisted development in what would otherwise be an underserved customer segment. In these circumstances, where market development is slower than the pace desired by implementation of a desired social policy, it may be advisable to permit EDU market participation behind the meter for a limited period, with as minimal a scale possible to advance that social policy."

"There should be two such social policy justifications that would allow an EDU to participate in providing behind the meter customer applications: (i) in circumstances where there is social inequity in the deployment of customer applications; and (ii) in circumstances where the application is deemed crucial to advance the state, but the marketplace has not developed to allow for that application to be deployed competitively to customers—a necessity and timing nexus must exist for this second justification. Further, the Commission would provide due consideration, in very limited circumstances, to a request by an EDU to deploy for residential customers only, a behind the meter application of minimal invasion and cost that is deemed essential for residential customers to realize the benefits of grid architecture investments," the roadmap states

"The Commission believes this backstop should exist to promote the PowerForward principle Enhance the Experience for All. The state has already seen an example of how market forces may delay the extension of essential technology to all Ohioans in the context of broadband services. The Commission hopes to provide a backstop to avoid this situation in the electricity context. If such a social policy justification is triggered, the Commission encourages EDUs to partner with CRES providers or other third parties that could serve to both deploy the application efficiently and reduce the public cost burden of deployment," the roadmap states

Concerning applications in front of the meter, the roadmap states, "As the Commission has expressed a principle of Do No Harm and a grid objective of maintaining a Strong Grid, the Commission believes that EDUs should maintain their role regarding access to the distribution system for applications in front of the meter. Whether access is intended to implement a distribution system improvement or a customer-specific application, the EDU owns and must be the caretaker of the distribution system in order to advance the PowerForward principles and objectives."

"It is possible that an intended customer-specific application could occur in front of the meter that is either divorced from, or co-mingled with system betterment. For a purely customer intended application without system betterment, the customer should be able to choose the entity who provides that application. EDUs should endeavor to provide reasonable access to a CRES provider or other third party that is installing such a customer application, and can require that certain system requirements be met upon installation as our EDUs are ultimately responsible for system reliability," the roadmap states

Concerning customer data and settlement, the roadmap states, "For shopping customers, the implementation of grid modernization technologies should remove barriers between the wholesale and retail markets. The deployment of AMI, including smart and advanced meters enables the provision of the type and granularity of data needed to align retail charges with the wholesale market costs for generation. However, there are also barriers associated with the settlement of the data by the load serving entity and the current methods, or lack thereof, for accessing the data by market participants."

"Going forward, CEUD should be made available in a way that allows for the monetization of changes in an individual customer’s energy and usage, including the potential to provide services through the installation of DERs as market opportunities continue to develop. In the short term, the Commission believes that the EDUs should calculate and settle the following values on an individual basis for all customers with smart meters: total hourly energy obligation (THEO), peak load contribution (PLC) and network service peak load (NSPL)," the roadmap states

The roadmap envisions a workgroup to address the following:

• Allow customers to obtain real-time, or near real-time, access to CEUD through the connection of qualified home area network (HAN) devices to the customer’s smart meter.

• Prescribe a uniform methodology across the EDUs for third parties to obtain CEUD. This should include a method for CRES providers to obtain the THEO, PLC and NSPL values referenced above.

The roadmap would institute a variety of additional work groups and collaboratives to address the issues covered under the roadmap

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