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Ohio PUC Staff Reiterate That No "Need" Exists For Proposed Utility-Supported Solar, Oppose AEP Ohio's Sought Finding

March 7, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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In a post-hearing brief, Staff of the Public Utilities Commission of Ohio (PUCO) reiterated that there is no "need" for at least 900 megawatts (MWs) of renewable generation resources as sought by AEP Ohio.

As previously reported, AEP Ohio had sought a finding of such a need as part of a long-term forecast. Such forecast proceeding has been consolidated with an application by AEP Ohio for approval of renewable energy purchase agreements totaling 400 MW of nameplate capacity solar energy (see details on the application here)

Statute allows utilities to develop generation, with cost recovery via nonbypassable surcharge, upon showing of a "need" for such generation. At issue in the case is whether AEP Ohio's sought finding is consistent with the statutory term "need."

AEP Ohio noted that the statute does not define "need" except to clarify that the utility must show need through its, "resource planning projections."

AEP Ohio argues that statute calls for a broad definition of need, and that need does not mean solely unmet demand AEP Ohio said, "Regarding state policies, record evidence in this case demonstrates that developing at least 900 MW of renewable energy projects in Ohio will ensure the availability of adequate, reliable, safe, efficient, non-discriminatory, and reasonably priced retail electric service (R.C. 4928.02(A)); give customers the options they choose (R.C. 4928.02(B)); ensure 'diversity of electric supplies and suppliers' (R.C. 4928.02(C)); protect consumers from 'market power' (R.C. 4928.02(I)); incentivize 'technologies that can adapt successfully to potential environmental mandates' (R.C. 4928.02(J)); and facilitate Ohio’s 'effectiveness in the global economy' (R.C. 4928.02(N))."

Among other things, AEP Ohio said that the need determination must take into account customer demand for renewables, and the economic benefits from the proposed generation

"In short, the evidence presented by AEP Ohio and supporting intervenors demonstrates that there is a resource planning need for developing economical renewable resources in the Company’s service territory that the market is not meeting, and that developing those resources would meaningfully further the Ohio energy policies codified in R.C. 4928.02," AEP Ohio said in a brief

However, PUCO Staff said in a brief that, "A review of the record in this case shows that there is a sufficient supply of energy, capacity, and renewable energy credits (RECs) to meet anticipated demands across the planning period without the addition of the 900 MW of renewable generating facilities. There is, therefore, no 'need', in a traditional forecasting sense, for the addition of the generating facilities that Ohio Power Company (AEP or the Company) proposes."

"It is clear ... that the determination of 'need' in R.C. 4928.143 (B)(2)(c) is to be based on resource planning projections submitted by the utility, and resource planning projections are submitted to this Commission under R.C. 4935.04," Staff said

"In Staff’s view, the provisions of R.C. 4928.143 (C) are intended only as an ultimate back stop. 'Need' in this context would only arise in the context of an abject failure of the PJM structure which currently offers assurance of sufficient capacity, energy, and wholesale reliability. While it is, thankfully, difficult to imagine a supply deficit scenario, with today’s relatively mature PJM structures in place, when R.C. 4928.143(C) would be needed, it would have been much easier to have such concerns when the section was enacted. The provision is a last resort, to be used in extremis. Thankfully we are not there today and hopefully never will be," Staff said

"Had the General Assembly wished the Commission to examine the 'need' question under the much more broad scope of R.C. Chapter 4928 there would have been no need to refer to resource planning projections," Staff said

Staff stressed that, "This case is not a referendum on the wisdom of constructing renewable generating resources. Rather it is the first step of a process to determine if all ratepayers should bear the cost burden of new resources. The General Assembly has determined that the Commission can only consider forcing ratepayers to bear this burden if the facilities are needed to maintain electric service. No matter how wonderful the idea of adding 900 MW of renewable generation may be, forcing all ratepayers to pay the bill can only be considered if those facilities are needed and the record here shows they are not."

Staff said that, "Although the Staff concluded that there has been no showing of 'need' under Ohio law, this should not be taken to mean that the Staff is opposed to the construction of renewable generation in Ohio. Far from it. Staff’s position is merely that there is a specific statutory showing that must be made before a utility initiative like this, essentially ratepayer funding for generation construction and operation, can be considered and no such showing has been made. Staff would applaud an initiative by a competitive affiliate of AEP (or any other non-EDU) to build these units."

Direct Energy and IGS Energy each filed separate briefs generally arguing that there is no need for utility-developed renewable generation. Direct Energy also argued that the General Assembly did not intend to permit utilities to recover the costs of renewable resources through a Section (B)(2)(c) nonbypassable surcharge

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