PUC Staff Recommend Rejection Of Amounts Proposed By Utility Related To Unbundling Of Supply-Related Costs In Delivery Rates

November 19, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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In a report on an AEP Ohio rate case filing, Staff of the Public Utilities Commission of Ohio have recommended rejection of the amounts proposed by AEP Ohio for a new bypassable rider (and related nonbypassable credit mechanism) that would reflect the further unbundling of certain supply-related costs from distribution rates.

Specifically, as first reported by EnergyChoiceMatters.com, AEP Ohio in the case identified a portion of uncollectible costs and PUCO and OCC assessment fees to be assigned strictly to non-shopping customers, as well as certain choice-related costs to be assigned strictly to shopping customers. In addition, the company reviewed certain functions, such as its call center, accounting operations, and billing system that are, "clearly necessary to support both shopping and non-shopping customers."

As previously reported, PUCO in a prior order had authorized the creation of a bypassable "Retail Reconciliation Rider" and a nonbypassable "SSO Credit Rider".

As conceived by parties to a stipulation (later modified by PUCO) in an electric security plan proceeding, the bypassable Retail Reconciliation Rider was meant to reflect supply costs recovered in delivery rates, such as bad debt expense and the Commission and OCC assessments. As conceived by parties to the stipulation, a nonbypassable SSO Credit Rider was to flow amounts collected under the bypassable Retail Reconciliation Rider to all distribution customers (less amounts used to fund a discount on AEP Ohio receivables paid to the utility by suppliers using a supplier consolidated billing pilot)

PUCO authorized the Retail Reconciliation Rider and SSO Credit Rider on a placeholder basis only, directing AEP Ohio to file tariffs with a $0 value for each rider. PUCO said that any amount for each rider would be determined in AEP Ohio's next rate case, which is the instant case. PUCO directed AEP Ohio to study the costs in delivery rates related to SSO service, as well as costs in delivery rates that support customer choice

As first reported by EnergyChoiceMatters.com, the proposed tariff filed by AEP Ohio in the rate case (both an initial tariff and then later clean and redlined versions) did not include any change to the current $0 "placeholder" value for the bypassable "Retail Reconciliation Rider" and nonbypassable "SSO Credit Rider".

However, a later cost analysis filed by AEP Ohio did include a calculation for the amount of a Retail Reconciliation Rider and SSO Credit Rider; though, again, such amounts have not been proposed to be placed into the tariff.

Specifically, the cost analysis shows a bypassable Retail Reconciliation Rider Rate of $0.0003120 per kWh

The nonbypassable SSO Credit Rider Rate would be $(0.0000808)/kWh

In addressing AEP Ohio's filing, PUCO Staff noted, "The Company has identified two quantifiable SSO costs of the PUCO/OCC assessment and the uncollectible expense of SSO customers. The Company has identified two quantifiable CRES costs of provider support labor costs and IT costs."

Staff stated, "Staff recommends rejection of both riders. The Company did not examine all cost causation factors. Without looking at all factors, Staff cannot determine if or how cost should be allocated between shopping and non-shopping customers. Staff cannot recommend a charge that is not just and reasonable."

"In addition, Staff maintains that SSO is a default service, available to all customers and required by electric distribution companies to provide," Staff said

Turning to another issue, Staff noted that AEP Ohio is proposing a delayed payment charge on all residential accounts not paid as of the due date. The charge is one and one-half percent (1.5%) of the total amount billed due within 15 days after the mailing of the bill.

Discussing the proposed delayed payment charge, Staff said, "They will not apply to third party charges or CRES charges."

"Staff recommends that the delayed payment charge be applied after 21 days of the mailing due date. In addition, Staff recommends that the delayed payment charge not apply to PIPP customers or to any competitive retail electric service or non-jurisdictional optional service," Staff said

Case No. 20-586-EL-ATA

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