PUC Seeks Comment On Gentailer's Proposal To Adopt Long-Term Capacity-Only Product For Default Service Load

May 15, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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An attorney examiner with the Public Utilities Commission of Ohio has invited reply comments concerning proposed changes to Ohio default service procurements due to the lack of a PJM capacity price beyond May 31, 2022, including a proposal from Energy Harbor LLC (the former FirstEnergy Solutions) to adopt a capacity-only long-term hedge product for Standard Service Offer load

Energy Harbor's proposal for a long-term capacity product in the default service portfolio had been exclusively first reported by EnergyChoiceMatters.com

As previously reported, Staff proposed that, starting with the 2022/23 delivery year, the SSO auction products should be modified such that the capacity obligation is priced at $0/MW-day and SSO suppliers are made whole for all PJM RPM capacity costs incurred through a "pass-through" charge to customers. See more details here

Energy Harbor said in prior comments to PUCO that, "Energy Harbor recommends that the Commission approve Staff’s proposal of an energy-only product but substitute a capacity-only hedge product for the pass-through charge."

Energy Harbor proposed a separate capacity-only product with a term of five years, at each utility. See more details on Energy Harbor's proposal here

The attorney examiner invited reply and sur-reply comments to stakeholder comments on the Staff proposal.

In particular, the attorney examiner said that, with respect to the Energy Harbor proposal, the Commission believes that additional information is necessary to fully consider the proposal and sought comment on the following questions:

a. Could an auction for two products – Energy-Only and Full Requirements - be held simultaneously or in parallel with the option for the Commission to reject one of the resulting prices?

b. How long would it take to implement parallel auctions? Would it affect the current fall auction schedule?

c. Are there any issues with the design, structure, or competitive outcomes of such an auction?

d. If the hedged capacity product is locked in for multiple delivery years, possibly 4 or 5 years in the future, what is the expected effect on the price bids?

e. Given generation capacity conditions in the PJM footprint, what is the expected impact on bid prices for a locked-in product relative to capacity prices established through the BRA process as modified by the expanded MOPR?

f. Would it make sense to stagger and ladder these products as is done in Ohio’s SSO auction today and how much load should be locked in at a time?

g. Would supplier credit worthiness become more of an issue with a longer-term capacity product and if so, what incremental credit requirements should be considered?

h. What have other states in the PJM footprint done to establish or modify a competitive bidding process for retail default generation supply in view of the current limitations and uncertainties regarding the BRA process?

Case 16-776-EL-UNC et al.

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