Wholesale Supplier Proposes "Stricter Switching Rules," "Particularly" (Not Exclusively) For Large C&I Customers & Opt-out Aggregations

January 30, 2023

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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In comments filed in a proceeding determining whether the Northeast Ohio Public Energy Council should have its governmental aggregator certificate maintained and renewed, Vitol Inc. proposed, "implementing stricter switching rules, particularly for large commercial and industrial customers and municipal aggregators, to mitigate price increases in future [SSO] auctions resulting from high migration risk premiums[.]"

In its comments, Vitol did not propose any specific, "stricter switching rules". While, as noted below, Vitol proposed implementation of standby charges, Vitol specifically listed standby charges as a separate bullet point from the "stricter switching rules", indicating Vitol does not consider standby charges to be, per se, a switching rule, and that it has additional measures in mind when listing stricter switching rules as being necessary

Vitol proposed implementation of standby charges on retail suppliers, and/or subjecting returned load to market-based rates other than the fixed SSO, arguing authorization for such designs exists in statute, but they have not been used in over 10 years.

While Vitol's concerns are mostly with "en masse" returns or load to default service (including large amounts of C&I load actively individually), and while some its comments were specifically directed at municipal aggregations and standby service provisions permitted under Section 4928.20(J) of the Revised Ohio Code, Vitol did not propose any specific provisions limiting or otherwise delineating the universe or type(s) of customers that should be subject to any of its proposed switching restrictions or similar measures, and, as noted in quotes throughout this story, Vitol at times encompassed the switching of "all" customers as a concern

"The legislature clearly intended for SSO suppliers to be compensated for those risks and obligations through either (1) an incremental charge for standing by ready to serve the full load of the EDUs service territory at the SSO rate; or (2) an ability to pass through the market-cost of serving the load of customers that switch back. Neither SSO suppliers nor SSO customers who never shopped for CRES [competitive retail] service should be compelled to fund a free option for CRES customers to switchback," Vitol said

Furthermore, Vitol said, "in addition to implementing standby service prospectively, the Commission should consider any available retroactive remedies to rectify the costs borne by SSO load suppliers in this delivery year."

Vitol said that newly proposed minimum stay rules are not sufficient, and said that further action is needed

Vitol said, "The two main shortcomings that have contributed to the current crisis in the SSO program are: 1) grouping all SSO customers (industrial, commercial, and residential) into a single-priced supply group, which leads to inequitable cross-subsidization between smaller customers with lower switching likelihood and larger customers with a higher switching likelihood, and 2) overly generous switching accommodations for all electricity customers (and their contracted suppliers), which creates an unreasonable 'free option' for customers to move in and out of SSO service at the expense of the SSO program’s stability." (emphasis added)

Vitol proposed bifurcating the SSO auction product into separate customer classes for future auctions to limit cross-subsidization issues due to the higher migration/switching risk premium associated with customer classes that pose the highest migration risks

Various other parties filed comments on NOPEC's certification, largely reiterating previously reported positions with respect to the proceeding.

Case No. 00-2317-EL-GAG

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