AES Says Subsidiary Dayton Power & Light Expects To Withdraw From PUCO-Modified Electric Security Plan

ESP Subject To Withdrawal Included Supplier Consolidated Billing Pilot, Default Service Parameters

November 22, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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In providing an update on regulatory developments at Dayton Power & Light, after the Public Utilities Commission of Ohio struck a Distribution Modernization Rider (DMR) from DP&L's electric security plan (ESP), DP&L's parent, the AES Corporation announced that, "DP&L expects to withdraw its current Electric Security Plan (ESP 3), and file new rates consistent with its most recent Standard Service Offer approved by the PUCO in 2016 and based on DP&L’s first ESP (ESP 1)."

DP&L's ability to withdraw the ESP had been noted yesterday by EnergyChoiceMatters.com (see story here)

Of note is that the ESP, as reflected in a March 2017 stipulation and modified in several responses by PUCO, contains various provisions related to default service pricing and procurement, and retail market enhancements

Specifically, the ESP approved by PUCO, for which AES has stated an expectation that DP&L would withdraw, included the following provisions:

1. The March 14, 2017 amended ESP stipulation included a pilot for competitive retail electric supplier "Supplier Consolidated Billing" (SCB).

2. The March 14, 2017 amended ESP stipulation included a schedule through December 2023 for the procurement amounts and term lengths of various contracts for Standard Service Offer (SSO) generation supplies under auctions. The SSO schedule and product contract lengths can be seen here

3. Under the March 14, 2017 amended ESP stipulation, DP&L transitioned to an "all-energy" rate design for the recovery of Standard Service Offer (SSO, aka Standard Offer or SOR) costs, eliminating use of a demand (kW) charge for certain customer classes for the Standard Offer.

4. Under the March 14, 2017 amended ESP stipulation, DP&L added a cash working capital component to the Standard Service Offer (SSO) rate derived from the resulting auction clearing prices.

EnergyChoiceMatters.com has reached out to DP&L concerning the impact any withdrawal of the ESP would have on the provisions above. Due to the technical nature of the provisions, DP&L could not provide a substantive response by publication time, but EnergyChoiceMatters will provide an update when information is available.

Concerning the ESP more broadly, Gustavo Pimenta, AES Executive Vice President and CFO said in a statement that, "We are disappointed with the PUCO’s decision, but we expect DP&L to continue to work with Commission Staff in order to reach a constructive outcome that will allow DP&L to invest in grid modernization, while at the same time continuing to have the lowest residential rates of any investor-owned utility in Ohio. While this decision will have a significant impact on DP&L, it will not affect AES’ 2019 guidance and expectations through 2022."

Vince Parisi, DP&L President and CEO, said in a statement that, "DP&L is disappointed with this decision because it negatively impacts our ability to move forward with investments in the distribution system that allow us to meet customer needs. DP&L customers deserve safe, reliable service and today’s order challenges our capacity to continue meeting those expectations. We will work with the PUCO to resolve their concerns to reach a constructive outcome that will allow DP&L to meet our customers’ expectations."

"The Company will continue to evaluate the ESP order to determine the full impact that today’s decision has on our ability to continue with this vital, long-term customer-focused modernization," DP&L said in a statement

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