FirstEnergy Ohio Utilities File 8-Year Default Service Plan, Would Remove 36-Month Contracts From SSO Portfolio
Includes Changes To Recovery Of UFE, NITS, Based On Customer Class
EDCs Propose To Adopt Volumetric Cap On SSO Suppliers' Exposure To Load Migration Back To SSO Service (Mitigates SSO Risk)
FirstEnergy Ohio EDCs Preparing Amendments To Their Corporate Separation Plan
April 5, 2023 Email This Story Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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The FirstEnergy Ohio electric distribution utilities have proposed a new electric security plan (ESP V) which would govern the procurement and pricing of the standard service offer for the period June 1, 2024 through May 31, 2032
A full copy of the FirstEnergy Ohio utilities' filing and testimony was not immediately available.
The FirstEnergy Ohio EDCs said that, "ESP V proposes continuing to provide generation supply to non-shopping
customers through a CBP [competitive bid plan] generally similar to the Companies’ current approach in ESP
The FirstEnergy Ohio EDCs said that the CBP would include, "a staggered or laddered
schedule of procurements and a mix of products designed to smooth out generation prices."
Notably, the FirstEnergy Ohio EDCs propose to
eliminate 36-month contracts from the SSO supply portfolio.
Additionally, the FirstEnergy Ohio EDCs propose to, "establish a volumetric cap on
suppliers’ exposure to load migration back to SSO service."
As described by a witness in the ESP application, "Under this proposal, each tranche is set to an initial
'benchmark' level. That initial benchmark level would equal the Peak Load Contribution
('PLC') per tranche as of the first day of the delivery period (June 1 of the planning year).
For two-year contracts, this initial benchmark would be subject to an annual scaling update
based on PJM Interconnection, L.L.C.’s ('PJM') PLC target value for the zone at the start
of the new planning year. SSO suppliers’ volumetric exposure would be limited to a maximum of 20 MW above the benchmark for the tranche. The SSO suppliers will be
responsible for supplying up to the benchmark plus 20 MW, and their responsibility will
be evaluated each business day by comparing daily PLC per tranche with the benchmark.
Through this mechanism, the volumetric risk cap would adjust supplier obligations. As a
result, suppliers are insulated from market risk for the portion of the SSO obligation above
the cap. The volumetric limits would be handled physically, rather than financially, and
the load in excess of exposure limits will be supplied by the Companies at real-time market
The FE EDCs would physically
serve excess load migration at real-time market prices.
As described by a witness in the ESP application, "The costs
due to the volumetric cap would be included in the applicable SSO retail rate."
Another witness stated, "The costs of procuring power
associated with the excess load migration will be reconciled through Rider GCR [the standard bypassable SSO energy rate]."
The FirstEnergy Ohio EDCs also propose to, "use a capacity proxy price
to help manage the risk of potential disruptions in the wholesale capacity auctions," for situations where there is no Base
Residual Auction (BRA) price available at the time of an auction
The FirstEnergy EDCs said that their ESP plan includes proposed changes to the EDCs’ Supplier Tariffs.
In testimony, the FirstEnergy EDCs said the supplier tariff changes are (all characterizations are from the FE EDC witness):
1. Edits to implement the revised allocation of UFE [see below], to which I previously
2. Updates to supplier registration requirements;
3. Updates related to the deployment of AMI;
4. Changes to credit requirements to add surety bonds as an option and to
remove the reference to 'other mutually agreeable security or
5. Clarification of events of supplier breach and the process that will be
6. Addition of a provision providing consent for settlement, resettlement, or
7. Updates to modernize processes, such as removing requirements to send
communications by fax, submit forms in duplicate and triplicate, and
provide data on CDs; and
8. Consistency, grammatical, and formatting edits.
The FirstEnergy EDCs said that they propose rate design changes, "to help customers better manage their electric bills,
including proposed modifications to their transmission cost recovery," as well as a change in UFE recovery
Presently, NITS and other non-market-based FERC/RTO charges are paid
by the Companies and recovered through Rider NMB for all shopping and non-shopping
customers, except for customers participating in the Companies’ Rider NMB Pilot, which
was approved in ESP IV.
In ESP V, the FirstEnergy EDCs propose to change the allocation of unaccounted
for energy (UFE) and include UFE charges or credits in Rider NMB. The FirstEnergy EDCs
also propose to eliminate the Rider NMB Pilot, and to modify the Rider NMB rate design
by adding a second rate, NMB 2, applicable to commercial and industrial customers who
have interval or advanced meters.
NMB 2 will be charged to customers based upon their
Network Service Peak Loads (NSPL). The current Rider NMB charges, renamed NMB
1, will remain unchanged, except for the inclusion of UFE, and apply to residential and
lighting customers along with commercial and industrial customers who do not have
interval or advanced meters.
The new Rider NMB 1 and NMB 2 rates would be effective
as of April 1, 2025.
"These changes will allow customers to better control their individual
Rider NMB charges by managing their individual NSPL, consistent with the current Rider
NMB Pilot," the FirstEnergy EDCs said
The FirstEnergy EDCs said, "In addition to CBP enhancements, the Companies’
proposals include important measures to mitigate bill impacts, including cost caps, delayed
cost recovery, and a phase-down of credits to demand response participating customers to
balance rate impacts to participating and non-participating customers."
ESP V includes various distribution-related charges. It was not immediately clear if the stated mitigation, cost caps, and delayed
cost recovery relate to distribution costs, or if any apply to SSO costs, other than the EDCs saying such mitigation measures are, "[i]n addition to CBP enhancements."
As part of the ESP filing package, EDCs must note compliance with various state policies
In a section addressing corporate separation, the FirstEnergy EDCs said, "Pursuant to O.A.C. 4901:1-35-03(B)(3) and (C)(4), the Companies state
that their corporate separation plan is publicly available as filed in Case No. 09-462-EL-UNC and approved in Case No. 10-388-EL-SSO. The Companies have obtained no
waivers related to their approved corporate separation plan."
Notably, the FirstEnergy EDCs said, "The Companies are preparing
amendments to their corporate separation plan to incorporate the recommendations of the
Commission’s auditor in the audit report filed on September 13, 2021 in Case No. 17-974-EL-UNC"
The FirstEnergy EDCs said in a news release that the ESP includes, "funding to deploy energy storage supporting the distribution system."