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PUC Directs Staff To Propose New SOS Product With Capacity Flow-Through Provision, Expressing Concern SOS Customers Would Otherwise Miss Locking-In Favorable Prices On Long-Term Basis
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The Public Utilities Commission of Ohio approved a modification to the Standard Service Offer (SSO) procurement at Duke Energy Ohio, but further ordered that PUCO Staff propose a new SSO product with capacity flow-through provision that would enable the utility to lock-in favorable rates for a longer period as it would have normally done absent capacity market uncertainty at PJM
As previously reported, due to delays in the PJM capacity auction stemming from FERC consideration of market design and rules, the base residual auction capacity price in PJM beyond May 31, 2022 has not yet been set
Under Duke's previously scheduled SSO procurement to be conducted in February 2020, Duke was originally set to procure (among other products) 17% of the requirements for the three-year period June 2020 to May 2023, under a three-year contract
Due to the lack of a capacity price beyond May 31, 2022, PUCO approved replacing the 36-month contract with a 24-month contract in the upcoming February 2020 procurement
However, PUCO directed Staff to file a proposal for a modified product which contains capacity flow-through provisions, as PUCO expressed concerns that, with the lack of a 36-month contract, SSO customers are losing the benefit of the current favorable electricity prices that would have otherwise been locked-in for three years under the original procurement schedule
PUCO said that, "Considering FERC’s recent directives, it is evident that PJM’s rates for 2022-2023 delivery
year will be unknown when Duke conducts the auction in February 2020. We affirm that
such uncertainty could have significant effects on the auction process, including limiting
participation and altering bidding strategies. Therefore, the Commission determines that it
is reasonable to adjust the auction schedule to provide greater certainty for the market.
Instead of a 36-month product, Duke should offer a 24-month product covering the period
of June 2020 to May 2022. Thereafter, the remaining product, for the period of June 2022 to
May 2023, will be adjusted appropriately once a final PJM rate is established."
"In a final
matter, the Commission notes that the uncertainty caused by FERC’s order is precluding the
use of a three-year auction product to lock in historically low energy prices. Therefore, the
Commission directs Staff to file a proposal for a modified product which contains capacity
flow-through provisions. Staff’s proposal should be filed within 30 days of this order," PUCO said
Case 17-1263-EL-SSO
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Approves Adjustment To Utility's Default Service Procurement Due To Uncertainty In PJM Capacity Price
February 13, 2020
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Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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