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PUCO Directs Duke To File "Detailed" Cost Of Service Study, Regarding Default Service Or CRES Subsidization, In Next Rate Case

PUCO Directs Duke To Accommodate Supplier Consolidated Billing In CIS Upgrade Plan

Audit Of POR Program Approved

PUCO Approves Stipulation Governing Default Service At Duke Energy Ohio

Stipulation Had Been Called "Bad Deal" For Retail Suppliers

December 19, 2018

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

Update:

PUCO adopted the stipulation described below and in our prior story without modification, but its written order did include certain directives of note to the retail market that go beyond the stipulation

Regarding unbundling, PUCO denied proposed unbundling riders from retail suppliers, but did direct that Duke include in its next rate case a "detailed" cost of service study to determine whether SSO rates (or retail supplier rates) are subsidized through base rates

PUCO stated, "At this time, the Commission will not adopt IGS and RESA's request to unbundle SSO specific costs from distribution rates. As we have expressed, separating SSO-specific costs from distribution rates would likewise necessitate separating any costs specifically related to the customer choice program. In re Ohio Power Co., Case No. 16- 1852-EL-SSO {AEP Ohio SSO Case), Opinion and Order (Apr. 25, 2018) ... Thus, as we determined in the AEP Ohio SSO Case, we direct Duke to include in its next rate case application a detailed cost of service study to determine whether, and to what extent, the SSO default service and/or CRES competitive offers are subsidized through base rates. The Commission will decide at that point whether, and to what extent, the costs of the investigation should be recovered from Duke, CRES providers, or customers. Along those lines, we additionally find that IGS and RESA's proposal to create two riders in order to unbundle SSO costs should not be adopted. As we have previously expressed, separating SSO-specific costs from distribution rates would likewise necessitate separating any costs related specifically to the customer choice program. Until both costs are determined and evaluated, the Commission cannot evaluate whether it is appropriate to reallocate costs."

While the timing of Duke's next rate case is not known, the stipulation resolved a current rate case, and various rate-related terms of the stipulation extend through 2025.

Notably, while PUCO has previously directed similar efforts to analyze SSO versus distribution rates and costs at other utilities, there have been disputes concerning the scope and rigor of such reviews, and, to date, there has been no adoption of a non-zero rider that would move any additional costs currently recovered in distribution rates to SSO rates

PUCO said that a customer information system (CIS) upgrade plan to be developed by Duke should include supplier consolidated billing

"[T]he Commission is persuaded that there are benefits associated with supplier consolidated billing and Duke's CIS plan should accommodate that service. Finally, as the Company's CIS plan is to be filed in a separate proceeding and be subject to a hearing, we determine that is the proper forum in which to explore these issues fully," PUCO said

PUCO will not require Duke to accommodate the billing of non-commodity services by retail suppliers in the CIS plan

PUCO adopted the POR audit provision as filed. RESA had expressed concern that the scope of the audit is vague and would permit Duke to require CRES suppliers to open up their books and be subject to unnecessary and unfair examination.

However, PUCO said that, " The audit is beneficial to customers and ensures ratepayers are only paying for appropriate expenses. We emphasize that the audit is independent and do not find that the provision will be overly burdensome to suppliers."

Regarding supplier fees (switching, usage, etc.), PUCO maintained the current fees (discussed below), as PUCO said that RESA has not presented sufficient evidence that circumstances have changed since the fees were last altered in 2011 in order to justify discontinuing the fees.

PUCO affirmed Duke's ability to offer Time of Use supply rates.

"We affirm our previous ruling that EDUs should offer time-differentiated rates until the market develops to the point that a reasonable number of CRES providers are offering the service. Staff averred that it was unaware of any CRES provider that offered TOU rates that reflect PJM wholesale electricity prices in Duke's territory (Staff Ex. 1 at 21). Until the market develops further, the Commission will not restrict Duke from offering TOU rates. Now that smart meters are fully deployed in Duke's territory, we will not hinder ratepayers being able to realize all possible benefits of the meters. While Duke is not restricted from offering time-differentiated rates, neither is IGS or other CRES providers. Further, to promote maximum customer benefits through potential competitive alternative offers, Duke is instructed to make interval data available, in a manner consistent with any relevant Commission order, at the earliest practical opportunity to CRES providers and other applicable third parties," PUCO said

PUCO will also allow Duke to proceed with a battery storage project as proposed as a pilot

PUCO approved nonbypassable Rider PSR to recover costs/credits from all customers related to the sale of OVEC products into the wholesale market.

The issue of recovering Duke's net metering costs via Rider SCR (typically used for SSO reconciliation, and bypassable except for a 10% circuit breaker threshold) was contested in the case.

Of net metering cost recovery, PUCO said, "we clarify that whether the mechanism for recovering net metering costs is bypassable or non-bypassable is an issue for the Net Metering Rules Case, and Duke should conform its mechanism to the ultimate outcome of that case, when the final rules take effect." The SSO procurement and rate provisions were adopted without modification, see our prior story for details

Earlier:

The Public Utilities Commission of Ohio (PUCO) said that it adopted a settlement agreement resolving a number of cases governing default service and other matters in Duke Energy Ohio's electric service territory.

A final written order was not immediately available. Discussion during PUCO's meeting and a PUCO news release did not indicate that PUCO modified the non-unanimous stipulation filed by parties

This is a breaking news story. A full analysis will follow once PUCO releases a written order

As first reported by EnergyChoiceMatters.com (see story here), the non-unanimous stipulation filed in the proceeding does 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 resulted in the compromise of an audit contained in the settlement, had referred to the prohibition on including non-commodity receivables in POR.

The as-filed stipulation continues a competitive bidding process to obtain Duke Energy Ohio SSO supplies, with a heavy reliance on 36-month contracts. For further details concerning the structure of default service, bypassable rate components, and procurement schedules and contract lengths under the stipulation as-filed, see our prior story here

The as-filed stipulation does include certain changes to Duke's supplier tariff and CRES portal as detailed in our prior story here

The Retail Energy Supply Association had previously said in a brief that, "The Stipulation is a bad deal for suppliers, a bad deal for shopping customers, and a bad deal for competitive markets generally."

RESA's characterization was based on the fact that the stipulation: (1) does not adopt proposed unbundling riders proposed by retail suppliers; (2) maintains the current $5 switching fee and $32 historical usage data fee in Duke's tariff; and (3) does not require various proposed retail market enhancements (such as enroll by wallet, see details here)

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