Update: PUC Directs Staff To Propose Capacity Flow-Through Default Service Product At Second Utility

February 14, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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The Public Utilities Commission of Ohio approved a modification to the Standard Service Offer (SSO) procurement at Dayton Power & Light, 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 first reported by EnergyChoiceMatters.com yesterday, PUCO on Feb. 13 also directed Staff to propose such a product at Duke Energy Ohio

With respect to Dayton Power & Light, DP&L, as previously reported, sought approval from PUCO to replace a 36-month contract it would otherwise procure in an upcoming March 2020 Standard Service Offer auction with a 24-month product due to the lack of a base residual auction capacity price in PJM beyond May 31, 2022.

"Consistent with years past, DP&L’s CBP auction typically includes 12, 24, and 36-month products. These recent events between the FERC and PJM, however, have caused complications for EDUs when conducting their SSO competitive bid auctions. Specifically, the 36-month product extends through May 31, 2023, and as of now, there is still no certainty on the applicable capacity rate for the 2022/2023 delivery year. Therefore, including a 36-month product in DP&L’s competitive bid will inevitably increase the amount of inherited risk for all parties involved and may cause prices to be unusually high for the final 12 months. In the interest of maintaining beneficial and stable rates for its customers, DP&L proposes to eliminate the 36-month product and only offer the 12 and 24-month products in its upcoming March 2020 auction in order to alleviate the uncertainty brought about by the December FERC order," DP&L had said

PUCO granted the requested relief to DP&L for the March 2020 auction. PUCO directed that the remaining product, for the period of June 1, 2022, to May 31, 2023, will be adjusted appropriately once a final PJM rate is established

Additionally, as it did at Duke, PUCO directed that, "because the uncertainty caused by FERC’s orders is precluding the use of three-year auction product to lock in historically low energy prices, the Commission directs Staff to file a proposal for a modified product that contains capacity flow-through provisions within 30 days of this order."

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