PUC: All Customers Benefit From Availability Of Default Service, Certain Costs Of Default Service Are Unavoidable, Appropriately Included In Distribution Rates

Affirms Denial Of Unbundling Proposal

July 18, 2019

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

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In denying a rehearing request from IGS Energy in a Duke Energy Ohio electric security plan and rate case, the Public Utilities Commission of Ohio affirmed that, "all customers benefit from Duke’s ability to provide the SSO [standard service offer]," and the recovery of certain administrative and similar costs related to the provision of SSO are appropriately recovered via distribution rates

IGS Energy had been seeking the unbundling of certain costs related to the provision of the SSO from delivery rates. IGS had argued that Duke recovers, through distribution rates, incremental overhead and administrative costs associated with the SSO.

PUCO denied IGS Energy's unbundling proposal in a prior order, and denied IGS's rehearing request on the matter

On rehearing, PUCO reiterated that, "while there may be differential cost implications associated with the provision of competitive electric commodity service when compared to that of regulated default service, these differentials do not, on their face, constitute discriminatory treatment nor an unlawful subsidy."

PUCO further said that, "Pursuant to R.C. 4928.141, all EDUs are required to offer an SSO that is available for all customers as the default service. Further, as described in R.C. 4928.14, customers will default to the SSO if a CRES supplier fails to provide service. Duke is thus statutorily required to be able to provide service to all customers in its service territory and the expenses are unavoidable, regardless of how many customers choose to shop. Accordingly, all customers benefit from Duke’s ability to provide the SSO."

Mirroring its conclusions from several other recent cases at other EDCs addressing unbundling, PUCO said that, "expenses that IGS attributes solely to the SSO, such as Duke’s call center, include costs that are exclusively related to the customer choice program and promoting competition. Thus, IGS’s contention that allowing such recovery is discriminatory is without merit. As the expenses are non-discriminatory, assist all customers, and promote the customer choice program, we find that allowing this recovery is consistent with the state policy espoused in R.C. 4928.02(H) to ensure the availability of unbundled and comparable electric service."

PUCO said that IGS had not proven that a bypassable rider that it had proposed to implement unbundling (with revenues returned to customers via nonbypassable credit) encapsulates costs directly attributed to either the SSO or the customer choice program.

PUCO noted that, in its original order, the Commission directed Duke to conduct a cost-of-service study analyzing the extent to which expenses are allocated specifically towards the SSO and specifically towards customer choice programs before it files its next rate case.

However, as noted by EnergyChoiceMatters.com in its exclusive analysis of PUCO's original order, 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 also denied rehearing of its decision not to modify the current $5 switching fee and $32 historical usage data fee applicable to retail suppliers under Duke's tariff. PUCO on rehearing reiterated that IGS and the Retail Energy Supply Association, "did not present sufficient evidence to demonstrate how the fees became unreasonable after they were determined to be lawful in In re Duke Energy Ohio, Inc., Case No. 11-3549-EL-SSO, et al., Opinion and Order (Nov. 22, 2011) at 39-40."

"The testimony presented by IGS and RESA did not offer any change in circumstances that would justify altering our previous decision," PUCO said

PUCO also denied rehearing of its decision to not require Duke to provide non-commodity billing for CRES (retail) providers.

"We determined that the purchase of receivables program and Duke’s status as a distributor of both electric and gas significantly restricted Duke’s ability to provide non-commodity billing to CRES providers. However, we also found that the issue will be explored again after Duke files its application for a customer information system plan," PUCO said

Case 17-1263-EL-SSO et al.

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