AEP CEO "Continues Focus" On Grid Mod. Bill That Includes "Redefinition" Of Ohio Energy Policy, Would Allow Utilities To Offer Value-Added Services (Energy Management/Control, DR, Shared Solar, More)

Ohio-Based Retail Supplier Says Passage Of As-Filed Bill Would Cause Supplier To "Reconsider" Future Investment In Ohio

October 24, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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During an earnings call yesterday, AEP CEO Nick Akins said that, in Ohio, AEP is, "continuing our focus on HB 247 with hearings progressing well."

As first reported by EnergyChoiceMatters.com, HB 247 would allow utilities to offer various smart energy and value-added services

Akins previously called HB 247 a "redefinition" of Ohio energy policy, which would allow utilities to provide "emerging technologies" to customers

Specifically, the bill, as introduced, would allow utilities, under an electric security plan, to provide, "customer-focused energy services or products" and "smart grid technology" to customers

"Customer-focused energy services or products" is defined as including, but is not limited to, the following:

(a) Services related to energy reliability and resiliency

(b) Curtailment and individual customer and aggregated demand response activities

(c) Energy efficiency or reduction

(d) Energy storage or battery functions

(e) Energy management

(f) Energy monitoring and control technologies

(g) Lighting controls and other smart controls

(h) Warranty and repair services

(i) Electric vehicle charging stations

(j) Microgrids

(k) Community solar energy facilities

(l) Energy-related physical security and cybersecurity

"Customer-focused energy services or products" also includes the installation, financing, leasing, or management of technology, data, and devices related to such services or products and the installation and management of smart grid technology to facilitate such services, the bill says

The bill would provide that the utility may not include incremental costs directly related to customer-focused energy services or products in base distribution rates, but shall instead recover such incremental costs of such services through charges to customers who elect to subscribe to those services.

The bill would strike current statutory language requiring that "a product or service other than retail electric service" or a "nonelectric product or service" must be offered through a utility affiliate.

"This bill is important in regards to further grid modernization, technology deployment, and behind-the-meter customer investment opportunities to improve the customer experience," Akins said yesterday during a third quarter earnings call

"There is no doubt our business is changing at the distribution level in regards to technology, grid modernization, distributed generation, and further grid and customer-related optimization [and] efficiency opportunities. HB 247 modifies Ohio's electric retail service to allow the company to include these provisions in electric security plans filed with the PUCO. This allows us to provide that continued obligation for our customers to improve the customer experience and be able to provide universal access to the benefits of a clean energy economy," Akins said

At a hearing this week, retail suppliers provided testimony against the bill

Testimony from NRG Energy Inc. said that, "HB 247 will also cause irreparable harm to competitive markets and the private companies who have invested their own shareholders’ dollars to offer to Ohio consumers the very 'customer focused energy service and products' envisioned in HB 247."

"HB 247 puts competitive companies at a distinct disadvantage and will drive development by private companies out of the market. If companies, like NRG, are driven out of the market, consumers will no longer have options or the ability to shop for what they want. They will only have the one option of what the utility offers," NRG said

In separately provided testimony, IGS Energy said, "IGS has concerns regarding several components of HB 247. Passage of the Bill without serious modification would shake our confidence in the regulatory and legislative landscape in this state and cause IGS to reconsider future investment in Ohio."

"Despite assertions by the proponents of this bill, HB 247 does not simply permit the utilities to compete on 'a level playing field.' Utilities can already offer competitive services through their competitive affiliates like everyone else. Instead, the real purpose of the bill is to allow the utilities to require its captive customers to subsidize the cost of competitive services through distribution rates. Thus, the bill would tilt the playing field against the competitive market and increase customers’ electric bills," IGS said

IGS said that, "the bill permits utilities to amend their corporate separation plan to permit the offering of such products and services. Under this option, utilities are prohibited from collecting the incremental direct costs associated with such optional offerings in their base distribution rates (Lines 828-832). That means the utilities are permitted to recover indirect costs through distribution rates. Moreover, the bill strikes from current law the prohibition against extending a competitive advantage or preference to a portion of the business offering non-electric services, in this case customer-focused energy services or products (Lines 798-799). It should be very concerning that HB 247 is removing customer safeguards."

IGS further said, "whatever safeguards the bill contains regarding the provision of competitive services, the bill permits utilities to completely disregard these very protections to the extent that a customer-focused energy service or product has been authorized by the Commission as part of an electric security plan ('ESP') or another section of Ohio law (Lines 880-884). To the extent that customer-focused energy services are approved in an ESP, the utilities could recover direct and indirect costs from all customers. Indeed, the bill specifically provides that these services are eligible for distribution service cost recovery under R.C. 4928.143(B)(2)(h)."

In separately filed testimony, Direct Energy said that, "House Bill 247 is a distraction from maintaining the electric grid and its impact on Ohio’s economy. In 2018, Ohio customers of our regulated utilities experienced 7.6 million customer-outages and customers suffered through 22 million hours without electricity. We don’t need our utilities busy fixing a furnace or installing lights – we need them focused on the grid. House Bill 247 has many great grid related functions. This legislation needs to focus only on those items and remove all other unnecessary distractions."

Direct Energy further warned, "In addition, the current approach prohibits the utility from accessing and using customers’ information and data without permission to sell these products. House Bill 247 removes those protections too – the utility could mine its own customers to sell them products without ever asking permission and undercut the efforts of other companies who do not have captive customers and that same data."

Industrial Energy Users of Ohio and the Office of the Ohio Consumers’ Counsel each provided testimony opposing the bill as filed.

Apart from addressing its concerns noted above, NRG also urged lawmakers to amend HB 247 to include a provision instituting Supplier Consolidated Billing

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