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PUC Approves Rate Case Settlement Under Which Default Service Adder Will Be Set At Zero

PUC Approves Utility Plan To Work With Consumer Advocate On Displaying, On Shopping Customers' Bills, Price Comparison; Calculation Of Savings Available Under Default Service

PUC Approves Provision Of Shadow Billing Shopping/Default Service Data To Consumer Advocate

November 18, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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The Public Utilities Commission of Ohio approved, without modification, a contested stipulation in an AEP Ohio rate case proceeding which addresses, among other things, default service adders and shadow billing

Under the approved stipulation, AEP Ohio will continue to set the bypassable Retail Reconciliation Rider (RRR) and nonbypassable SSO Credit Rider (SSOCR) at zero (which is their current level)

As conceived by parties to a prior 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 previously authorized the Retail Reconciliation Rider and SSO Credit Rider on a placeholder basis only, with amounts to be determined in a future proceeding. PUCO had 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, AEP Ohio did provide certain cost data for the riders, but Staff had recommended that both riders be set at $0, and the stipulation reflected this recommendation

Retail suppliers opposed this provision of the stipulation, arguing that default service supply-related costs are embedded in delivery rates, and should be placed into the bypassable Retail Reconciliation Rider

PUCO, however, found that retail suppliers had not supported their position with cost data

"Upon review of the parties’ respective positions and the evidence of record, the Commission finds that the Stipulation’s proposal to continue the RRR and SSOCR in their current form as placeholder riders, based on the Staff Report’s recommendation, is a reasonable resolution of this issue and does not violate any important regulatory principle or practice. We find that this provision of the Stipulation is supported in the record by the testimony of AEP Ohio witness Roush, Staff witness Smith, and OCC witness Willis. (Co. Ex. 4 at 3-4; Staff Ex. 3 at 6-11; OCC Ex. 1 at 9-10; Staff Ex. 1 at 31; Joint Ex. 1 at 9.) Additionally, we note that the Commission has previously rejected the contention that it is counter to state policy to maintain the RRR and SSOCR as placeholder riders set at zero," PUCO said

"[W]e are not persuaded by the arguments of IGS and Direct Energy that AEP Ohio has not complied with the Opinion and Order in the ESP 4 Case, which required the Company to provide, in these rate case proceedings, an analysis of its distribution costs to identify any known, quantifiable costs to support the SSO, as well as any known, quantifiable costs to promote competition or maintain the choice program. ESP 4 Case at 214-215. [AEP Ohio witness] Mr. Roush testified that, consistent with the Commission’s directive in the ESP 4 Case, AEP Ohio conducted a quantitative and qualitative analysis of the Company’s costs associated with the provision of the SSO that are included in the distribution cost of service, as well as the costs related to shopping that are included in the distribution cost of service. However, according to Mr. Roush, Staff and a number of the intervenors expressed differing views regarding the potential quantification and allocation of costs between SSO and shopping customers and, therefore, disputed AEP Ohio’s analysis. (Co. Ex. 4 at 3-4.) The Staff Report and the testimony of Staff witness Smith also confirm that AEP Ohio conducted the analysis, although Staff noted a lack of granular cost of service information in the Company’s internal systems that precludes an accurate and verifiable accounting (Staff Ex. 3 at 6, 10; Staff Ex. 1 at 31)," PUCO said

"AEP Ohio’s lack of granular data sufficient to permit a more thorough analysis does not constitute a failure to comply with any directive in the ESP 4 Case," PUCO said

"As to the arguments raised by IGS and Direct Energy in these proceedings, the Commission finds that there is no basis upon which to conclude that AEP Ohio’s distribution rates include known, quantifiable costs that should be allocated to the RRR. In support of their position, IGS and Direct Energy point to the testimony of their witness, Mr. Lacey, who advised that $64.4 million in SSO-related costs should be reapportioned and collected through the RRR (IGS/Direct Ex. 2 at 10). We find, however, that Mr. Lacey’s recommendation should not be adopted, as the witness did not comply with the Commission’s directive in the ESP 4 Case, which required an analysis of known, quantifiable costs that are collected from customers through distribution rates and that are clearly incurred by AEP Ohio to support the SSO, as well as costs reflected in distribution rates that are distinctly ascribed to the customer choice program.11 ESP 4 Case, Opinion and Order (Apr. 25, 2018) at 214-215. Despite this directive, Mr. Lacey opined, from a purported business and policy perspective, that it does not 'make sense to reduce the allocation of costs to [the] SSO because costs are incurred to run the choice program' (IGS/Direct Ex. 2 at 44). Mr. Lacey, therefore, admitted that he made no attempt to factor choice program costs into his recommendation as to the RRR and SSOCR. In the absence of a complete analysis that fully encapsulates costs clearly and directly attributed to the SSO and to the customer choice program, there is no record support for the respective claims of IGS and Direct Energy that the Stipulation runs afoul of R.C. 4928.02(H), R.C. 4928.03, R.C. 4928.17, any other statutory provision, or any important regulatory principle or practice," PUCO said

"Finally, the Commission notes that, because the Stipulation maintains the RRR and the SSOCR as placeholder riders, nothing precludes IGS or Direct Energy from asserting in a future case that the riders should be populated, provided that a proper cost analysis has been conducted as contemplated by the Commission in the ESP 4 Case. ESP 4 Case at 214-215," PUCO said

"Alternatively, if IGS or Direct Energy believes that AEP Ohio’s distribution rates under the Stipulation are unjust or unreasonable, R.C. 4905.26 permits the filing of a complaint for adjudication by the Commission," PUCO said

Shadow Billing & Info On Shopping Customer Bills

The adopted stipulation provides that AEP Ohio will perform aggregate "shadow billing" calculations for residential customers (comparing SSO costs versus competitive supply) and will make such calculations promptly available to the Ohio Consumers’ Counsel and PUCO Staff annually or at OCC’s or Staff’s request. AEP Ohio agreed under the settlement that the aggregate shadow billing information that is to be provided is not confidential.

Specifically, AEP Ohio will provide, on a monthly basis, an aggregate dollar amount of shopping customers who saved money versus being on default Standard Service Offer and an aggregate dollar amount of shopping customers who potentially did not save versus being on default Standard Service Offer, and a total of these two figures (along with a running cumulative total over time)

With respect to supply rate information on shopping customers' bills, a term of the adopted stipulation provides that AEP Ohio and OCC, "will work to develop a proposal that amends the Company’s application in Case No. 20-1408-EL-UNC to display on customers’ bills additional computations that reflect potential consumer savings or losses as compared to the Company’s SSO."

As exclusively first reported by, in Case No. 20-1408-EL-UNC, AEP Ohio has proposed a modified bill format that would list the shadow-billed total supply cost that a shopping customer would have paid, had the customer been on the Standard Service Offer, on the first page on a utility consolidated bill for residential customers. The proposal remains pending before PUC

Retail suppliers opposed the provisions of the stipulation related to shadow billing and AEP Ohio's commitment to work with OCC on billing format and language. PUCO dismissed these concerns

"The Commission finds that no valid reason has been presented to justify elimination of the shadow-billing provisions from the Stipulation," PUCO said

"The Commission reiterates, however, that customers may choose an energy provider for various reasons. Price is only one attribute of any offer available in the competitive market; there may be other features of the offer that are of value to customers," PUCO said

"As for the commitment of AEP Ohio and OCC to work on a proposal to submit for comment and review in the pending bill format case, the Commission finds this aspect of the Stipulation to be of no adverse consequence to the opposing parties or the retail market. The intervenors in that case will be afforded an opportunity for input and comment on the amended application [in the separate proceeding addressing bill format language/format changes]. The Commission will, at that point, fully consider the amended application and the comments before any decision is reached in that case. We, therefore, decline to eliminate either of the shadow-billing provisions from the Stipulation. Our decision should not be construed as a predetermination regarding the relevancy of the shadow-billing report in any future proceeding or as to the outcome in the bill format case," PUCO said

"Again, to be clear, the Commission reaches no conclusion today on whether any information derived from AEP Ohio’s computations should be displayed on customer bills and our decision in these proceedings should not be construed as a predetermination of the outcome in the bill format case. We merely find that the commitments in the Stipulation are not unlawful or unreasonable. The Commission will thoroughly review the amended application in Case No. 20-1408-EL-UNC following an opportunity for input and comment on the shadow-billing proposal offered by AEP Ohio in that case," PUCO said

Other Issues

Retail suppliers had opposed the continued assessment of non-cost-based fees to retail providers ($5 switching fee to switches to retail suppliers but not returns to SSO, annual registration fees, interval data fees, etc.) contained in the tariffs included as part of the stipulation

PUCO rejected these concerns

"IGS and Direct Energy have not established that AEP Ohio’s switching and other CRES-related fees are unreasonable or unlawful. Neither AEP Ohio’s application nor the Stipulation proposes to change any of these supplier fees – all of which were previously approved by the Commission. Consistent with our prior decisions rejecting similar arguments raised by IGS, we again note that, although AEP Ohio bears the burden of proof in these proceedings, IGS and Direct Energy must nonetheless support their objections with evidence. Once again, however, IGS and Direct Energy have argued that the electric distribution utility has not shown that its supplier fees are cost based and justified under the ratemaking statutory scheme. Because AEP Ohio is not seeking to modify its Commission-approved supplier fees, and given that unmodified tariffs are not generally the subject of review in a rate case, we do not agree with the contention that the Company was required to offer a cost basis for these fees at this time. We likewise do not agree that the switching fee is discriminatory, counter to state policy, or otherwise unreasonable. As Staff witness Smith testified, a switch in service from the SSO to a CRES provider is not comparable in process or cost to a switch in service from a CRES provider to the SSO (Staff Ex. 3 at 13)," PUCO said

The approved stipulation continues the Basic Transmission Cost Recovery Rider (BTCR) Pilot that allows large industrial customers to avoid this otherwise nonbypassable charge for non-market-based PJM transmission charges, and be billed for such charges directly (through their LSE) by PJM for such charges

Additionally, the adopted stipulation increases total participation allotment in the BTCR Pilot for the industrial groups OEG, IEU and OMAEG to 15 slots each. The BTCR Pilot participation cap would be increased to 800 MW for 2022, 900 MW for 2023, and 1,000 MW for 2024.

PUCO rejected retail supplier concerns concerning the BTCR Pilot and its expansion

Case 20-586-EL-ATA

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