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Introduced Ohio Nuclear Subsidy Bill Still Retains Language Reducing Renewable Compliance Obligation For Utilities Only

Leaves Retail Suppliers With Unrecoverable Renewable Energy Compliance Costs

Bill Lowers Bypassable Default Service Rate

April 13, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The introduced version of an Ohio bill (HB 6) to provide subsidies to nuclear and other qualifying resources still includes language that lowers the renewable energy compliance obligation for electric distribution utilities (EDUs) only, while apparently not providing for a similar reduction in the renewable energy obligations of retail electric suppliers

The bill apparently favors the EDUs by reducing their renewable energy compliance obligation as the result of customers (and their load) who pay the nuclear subsidy. However, retail suppliers' renewable compliance obligations are apparently not reduced, although their customers (as distribution service customers) will also pay the nuclear subsidy.

Although the bill's sponsors generally said that the bill would eliminate the renewable energy mandates, language in the bill apparently only does so for the electric distribution utilities, and there is no apparent language to remove the renewable energy mandate for retail suppliers. While House Speaker Larry Householder said that, under the bill, "we did away with," the RPS mandate, he did not specifically state that the mandates would be eliminated for all LSEs.

The bill would create a clean air program fund to provide subsidies to nuclear and other eligible resources.

The bill provides that, "Each retail electric customer of an electric distribution utility in this state shall pay a per-account monthly charge, which shall be billed and collected by each electric distribution utility and remitted to the state treasurer for deposit into the Ohio clean air program fund[.]"

Customers paying such clean air (nuclear) charge, "shall be exempt from paying costs associated with the requirements under sections 4928.64 [renewable energy requirements] and 4928.66 of the Revised Code [efficiency, peak demand reductions]," the bill states

Notably, 4928.64 requires retail suppliers to meet various renewable energy requirements (e.g. RPS)

Note that the bill's language is broad, and exempts customers from "costs associated with" the renewable energy requirements under 4928.64. Ostensibly, any cost incurred by a retail supplier to comply with the renewable energy requirements under 4928.64 could no longer be collected from customers (even if presented in a bundled/all-in retail supply rate), and customers would be exempt from such retail supplier RPS compliance costs. In contrast, the bill does not use language exempting customers from only "a charge established by PUCO" under 4928.64 or "costs associated with EDU compliance" with 4928.64, or even a "line item charge" related to 4928.64, so it is apparent that retail suppliers may no longer charge customers, in any manner, for renewable energy compliance under the bill.

The exemption from paying costs associated with 4928.64 and 4928.66 shall apply to customers paying the clean air charge, except that all customers required to pay the clean air monthly charge shall continue to pay the following costs associated with the requirements under sections 4928.64 and 4928.66 of the Revised Code: (1) Costs prudently incurred for contractual obligations that existed prior to the effective date of the bill by an electric distribution utility in reliance on the requirements under sections 4928.64 and 4928.66 of the Revised Code, and (2) Costs prudently incurred by an electric distribution utility associated with programs approved by the public utilities commission under section 4928.64 or 4928.66 of the Revised Code that are modified or eliminated as a result of ...B... [sic] of the 133rd general assembly, including any costs to discontinue those programs.

As customers paying the clean air (nuclear) charge are generally exempt from paying renewable compliance costs under section 4928.64, the introduced version of the bill reduces, for an electric distribution utility only, the baseline (and therefore obligation) used to establish an EDU's renewable energy compliance obligation.

Specifically, in an amendment to R.C. 4928.644, the bill provides that, "For an electric distribution utility, neither baseline [under 4928.643 for compliance with the renewable energy resource requirements] shall include the load and usage of a customer who is subject to the monthly charge established under section 3706.47 of the Revised Code [the clean air/nuclear charge] unless or until the customer opts to pay the charge associated with compliance with section 4928.64 of the Revised Code." [emphasis added]

However, the bill does not provide for any adjustment to the baseline for an "electric services company" (a term that includes retail suppliers). An electric services company is required to comply with the renewable energy standard.

In other words, while the electric distribution utility's renewable energy baseline (and therefore obligations) would no longer include load which pays the clean air charge (who are now exempt from the RPS charge), there is no similar provision that would reduce a retail supplier's renewable energy baseline and attendant RPS obligations, and retail supplier customers who pay the clean air charge (to the EDU) would not be required to pay RPS compliance costs incurred under 4928.64 to the retail supplier

This apparently will leave retail suppliers with unrecovered costs

The bill will also reduce the default service rate for non-shopping customers since the EDUs will no longer be charging the current bypassable renewable energy charge

According to PUCO data, the current bypassable alternative energy rider (AER) at each EDU (and which is part of the total default service rate) is as follows (these costs would generally be removed from the default service rate under the bill, except for costs related to current contracts as noted above):

Current Bypassable AER* Charge ($/kWh)

Dayton Power & Light**          $0.0001354
Duke Energy Ohio                $0.0007430
Ohio Power (AEP)***             $0.0015599
Ohio Edison (FE)                $0.0006270
Toledo Edison (FE)              $0.0004830
The Illuminating Company (FE)   $0.0006210

* Name varies by utility, such as AER-R, etc.
** Embedded in total SSO rate at DP&L
*** Rate is for secondary voltage, varies
slightly for primary, transmission

The bill would also provide that the public utilities commission, "shall facilitate and encourage the establishment of retail purchased power agreements having a term of three years or more through which consumers commit to satisfy a portion of their electricity requirements from the output of a clean air resource."

For a customer agreeing to such a purchased power agreement, "the commission may exempt such purchasing consumer from all of the following, provided the customer agrees to forgo the benefits from compliance with the programs established in sections 3706.42 [nuclear charge], 4928.64 [renewable charge], and 4928.66 [EE charge] of the Revised Code."

The bill also provides that in the event that the federal energy regulatory commission authorizes a program by which Ohio may take action to satisfy any portion of the capacity resource obligation associated with the organized wholesale market that functions to meet the capacity, energy services, and ancillary services needs of consumers in the state of Ohio (e.g. capacity market carve-out), the public utilities commission shall promptly review the program and submit a report of its findings to the general assembly.

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