Archive

Daily Email

Events

 

 

 

About/Contact

Search

Default Service Utility Proposes Changes To Recover, From Non-shopping Customers, Costs Of Oversupply Of RECs, While Managing Rate Impacts

November 30, 2020

Email This Story
Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com

Ohio Power Company d/b/a AEP Ohio filed at the Public Utilities Commission of Ohio to modify its Alternative Energy Rider (AER) and Auction Cost Recovery Rider (ACRR) to recover, on a bypassable basis, an oversupply of RECs, in light of the wind-down of the state's renewable energy mandate, while also managing AER rate impacts for non-shopping customers.

AEP Ohio explained that, in order to develop a long-term plan for compliance with the alternative energy portfolio standard in R.C. 4928.64, AEP Ohio previously entered into three renewable energy purchase agreements (REPAs), which the Commission has found to be prudent and permitted cost recovery for years

"Increased levels of shopping since initial implementation of the AEP Ohio REPAs and the recent enactment of HB 6 have caused and will cause the Company to possess extra RECs beyond ongoing compliance levels and accrue a significant REC inventory over time. Prior to enactment of HB 6, the renewable standard was perpetual (no expiration or ramp-down date) and the ultimate recovery of the REC inventory costs was not a concern," AEP Ohio said

"In initially passing R.C. 4928.641 in 2014 as part of SB 310, the General Assembly provided for ongoing bypassable recovery of the costs of AEP Ohio’s REPAs. In amending that statute as part of HB 6 in 2019, the General Assembly again recognized the unique position of AEP Ohio’s REPAs and provided for continued bypassable cost recovery through 2032 even in light of the planned ramp down and expiration of the renewable mandate. This statute and its legislative history show that full recovery of AEP Ohio’s REPAs from its non-shopping customers has always been intended by the General Assembly and the Company is attempting to continue achieving that goal within the parameters set forth in the statute and an evolving set of factual conditions," AEP Ohio said

"In light of the planned expiration of the renewable standard after 2026 and the 2032 deadline for cost recovery under HB 6, AEP Ohio needs to take additional action to achieve timely and full recovery of net costs associated with the REPAs through the bypassable AER. As further described below, the Company proposes to implement future AER rate adjustments designed to recover the existing REC inventory while also managing AER rate impacts for non-shopping customers," AEP Ohio said

"Historical AER rates have shown volatility each quarter based on dynamic shopping levels (relatively static costs recovered from a changing set of customers), market prices (the REC price is a residual calculation that is driven by the revenues yielded from liquidating the capacity and energy associated with the REPAs) and reconciliation of current costs to prior quarterly cost projections (driven in part by seasonality of load). This year, for example, the quarterly AER rates ranged from $1.86/MWh to $3.90/MWh. In this context, the Company would like to implement recovery of the REC inventory amortization and costs in a manner that also helps make AER rates more stable and predictable," AEP Ohio said

"More specifically, the Company proposes to implement a going-forward AER rate of $4.40/MWh, prior to any voltage adjustments, along with an enhanced methodology for calculating future AER rate changes: (a) the AER will introduce a levelized amortization of the REC inventory between 2021 and the end of 2026 of approximately $1.17/MWh, (b) the AER will reflect a levelized amortization of the 2021 through 2026 estimated costs of the REPAs netted against the revenues yielded from liquidation of the capacity and energy associated with the REPAs’ output as well as any excess RECs that are sold into the market, (c) recovery of the first two categories would be limited to a rate cap of $5.00/MWh, prior to any voltage adjustments, absent Commission approval to implement a rate above $5.00/MWh (with any overage being booked as a regulatory asset), and (d) recovery of the REC inventory costs can be temporarily suspended by the Company, in whole or in part, by reducing a quarterly rate adjustment by up to approximately $1.17/MWh (i.e., reducing the rate down to approximately $3.24/MWh)," AEP Ohio said

"After 2026, the Company proposes to collect the then-current annual costs of the REPAs similar to the current AER Calculations but does recommend and [sic] annual adjustment to the rate. All other aspects of the AER remain unchanged, including but not limited to the reconciliation and associated over/under regulatory asset/liability accounting. The rate cap in part (c) above will help mitigate additional rate impacts on non-shopping customers and the downward rate flexibility in part (d) above will help the Company balance recovery of the REC inventory costs with a stabilized level of non-shopping load," AEP Ohio said

"Under the enhanced approach, the Company would no longer provide for a quarterly true-up in the AER rate. Instead, the Company will manage the total balance of the estimated REC Inventory and costs annually and adjust the rate only if necessary ... The rates mentioned above reflect recovery of the total AER costs from total non-shopping kWh and do not represent the cap for the voltage-adjusted rates," AEP Ohio said

Case No. 20-1745-EL-RDR

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
NEW! -- Sr. Power Analyst -- Houston
NEW! -- Supply Analyst -- Retail Supplier -- DFW
NEW! -- Lead Data Analyst -- Retail Supplier
NEW! -- Senior Energy Pricing Analyst
NEW! -- Senior Energy Advisor
NEW! -- Financial Analyst -- Retail Supplier -- DFW
NEW! -- Sr. Energy Intelligence Analyst
NEW! -- Channel Partner Sales Manager -- Retail Supplier
NEW! -- Sr. Billing Analyst -- Retail Supplier
Director of Regulatory Affairs -- Retail Supplier -- Houston

Email This Story

HOME

Copyright 2010-20 Energy Choice Matters.  If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.

 

Archive

Daily Email

Events

 

 

 

About/Contact

Search