PUC Staff "Believes" Utility Should Offer Time Of Use Default Service Rate Option

June 3, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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Staff of the Public Utilities Commission of Ohio said that Staff "believes" that AEP Ohio should continue to offer a Time of Use (TOU) generation rate option to default service customers, but recommended AEP Ohio make an updated TOU rate design filing prior to the Commission making a final decision

PUCO previously directed that AEP Ohio shall continue to offer a TOU generation rate option to default service customers until sufficient competitive offers from competitive retail electric service (CRES) suppliers develop.

Staff reported on CRES offerings at AEP Ohio.

Staff noted that, under a prior stipulation, AEP Ohio was required to modify its wholesale settlement process to calculate the total hourly energy obligation (THEO) and peak load contribution (PLC), only for those customers previously enrolled on the utility TOU and DLC [direct load control] rates on an individual basis, instead of using a generic load profile.

Staff reported that, as of March 27, 2019, there was one CRES provider offering a TOU rate in the pilot/transition plan area [under a smart grid pilot]. Further, of the 1,420 customers enrolled in the pilot TOU programs, less than one percent were taking services from the participating CRES provider.

Staff noted that, with the CRES limitation of only being able to market to those customers who participated in the utility's pilot program, and the resulting one CRES provider who participated in the pilot/TOU transition plan, "staff believes it is difficult to evaluate the competitiveness of the CRES market for TOU rates."

"Further, it has become evident to staff that without updating the wholesale settlement process to calculate individual THEO and PLC values for all customers with AMI meters, instead of just those customers who participated in the pilot, it is unlikely that CRES providers will be able to develop TOU products and services for the mass market," Staff said

"Staff anticipates that these issues will be resolved, in part, by the tasks currently assigned to the Data and Modern Grid Workgroup. Staff also encourages the Company to include a proposal to update its settlement processes for all customers with AMI meters in any future gridSMART application before the Commission," Staff said

"Given the current lack of TOU offerings by CRES providers, staff believes that the Company should maintain a TOU rate in accordance with the commitments detailed above [concerning the prior stipulations]," Staff said

"However, staff recommends that the Company file an amended application to incorporate the recommended changes below before the Commission makes a decision on the matter," Staff said

AEP Ohio had proposed the following TOU generation rate option to the extent it is required to offer one. The utility's proposed Residential and General Service 1 TOU rates will be an optional, bypassable offering presented under the GENC rider. This optional rate will only be available to those customers who have AMI meters. For this rate, the on-peak period is defined as 6:00 AM to 10:00 PM weekdays, including holidays, and excluding weekends. The proposed RS TOU and GS1 TOU are calculated on average of 2016 load shapes for the CSP and OPCo rate zones for RS and GS1 customer classes. This average is multiplied by the non-TOU GENC rate for Residential and GS1 customer classes. This average is multiplied by the non-TOU GENC rate for Residential and GS1 customers, and then divided by the number of hours falling in the On-Peak period. Any under or over recovered capacity costs would be trued-up in the Actual Cost Recovery Rider, similar to other rates offered in the GENC rider.

Staff recommended that the duration of the on-peak period be significantly reduced from the proposed 16-hour (6:00 AM to 10:00 PM) weekday window, so that customers can more reasonably engage in the offering. AEP Ohio designed the on-peak period to align with the on-peak delivery period used for Capacity Performance within the PJM market.

"However, the load reductions produced by customers participating in this TOU rate will not be bid into the wholesale market or dispatched as a Capacity Performance resource; therefore, there is no need to design the tariff to meet the eligibility requirements associated with Capacity Performance. Instead, the Company should propose an on-peak period that aligns with the seasonal (summer and winter) peak demand periods for the distribution system and that is consistent with the duration of the on-peak periods developed through the gridSMART pilot program offerings, i.e., six hours or less," Staff said

"Using a shorter on-peak period and the same proposed calculation method will result in a higher on-peak to off-peak ratio, which may improve the incentive to reduce consumption during the on-peak period," Staff said

Staff also recommends that the input data used to calculate the proposed rates be updated to reflect more current data inputs, i.e., most recent annual load profiles for the RS (Residential Service) and GS1 (General Service – Not Demand Metered) customer classes and the current GENC (Generation Capacity Rider) rates.

Docket 17-1234-EL-ATA

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