Utility Seeks To Hold Multiple Default Service Auctions Per Year, Return To Longer-Term Products, To Provide, "Greater Protection Against Market Volatility And More Stable Generation Prices"

August 12, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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Dayton Power & Light (AES Ohio) has sought approval at the Public Utilities Commission of Ohio for various changes to its procurement schedule and product term lengths for Standard Service Offer (SSO) supply contracts to, "provide customers with greater protection against market volatility and more stable generation prices over time."

While adding in longer-term products marks a return for DP&L to auction products that had been used prior to various delays in the PJM base residual capacity auction, splitting the procurement across multiple auctions per year has generally not been a feature of DP&L's prior SSO procurements. Generally, DP&L has procured SSO contracts, with terms of up to 36 months in length, in a single procurement event per delivery year (except in certain cases such as start of a new ESP term, etc).

Specifically, DP&L requests to hold auctions in November 2022 and March 2023 to procure SSO supply for the 2023/2024 delivery year

DP&L seeks to procure 35 tranches of 12-month contracts in the November 2022 auction, and 25 tranches of 12-month contracts plus 40 tranches of 24-month contracts in the March 2023 auction, with all products having a delivery start date of June 1, 2023.

DP&L stated, "Since Ohio electric distribution utilities began procuring their SSO supply through a competitive bid process, AES Ohio has held a single annual auction each spring. AES Ohio formerly procured varied-length products at those auctions, which resulted in blended SSO rates that were not dependent a single auction result. In recent years, that process broke down due to delays in the timing of the Base Residual Auction held by PJM Interconnection, LLC, which forced AES Ohio to limit its annual offerings."

"Earlier this year, customers felt the brunt of that breakdown. AES Ohio was required to procure 100% of SSO supply for the 2022/2023 delivery year at this year’s auction, leaving customers exposed to a sudden and dramatic increase in global energy prices, causing the Standard Offer Rate for AES Ohio customers to increase from 4.508 cents per kilowatt-hour to 10.91 cents per kilowatt-hour," DP&L stated

"By holding multiple auctions per year and offering varied-length products as proposed in this Application, AES Ohio’s customers will enjoy a blended Standard Offer Rate with more laddering than offered in the past. This enhanced process will provide customers with greater protection against market volatility and more stable generation prices over time," DP&L stated

Case No. 17-957-EL-UNC

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