PUC Examiner Directs Utilities To Show Cause Why EDCs Should Not Be Assessed A Forfeiture For Alleged Delay In Responding To Data Requests Concerning Pilot Allowing Customers To Bypass EDC Non-Market-Based Transmission Charges

Data Requests Relate To PUC Consideration Of Pilot Program, Which Will Inform Whether Program Allowing Customers To Elect To Pay Non-Market-Based Transmission Charges Through Retail Supplier, Rather Than EDC, Will Continue

April 7, 2023

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Reporting by Paul Ring • ring@energychoicematters.com

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A Public Utilities Commission of Ohio attorney examiner has directed Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company (collectively, "FirstEnergy", the "FirstEnergy EDCs", or the "Companies") to show cause by April 17, 2023, "why they should not be assessed a forfeiture, pursuant to R.C. 4905.54," for their alleged failure to timely file data responses in a PUCO-directed audit of the EDCs' Non-Market-Based Services Rider (Rider NMB).

Rider NMB recovers non-market-based costs, fees or charges imposed on or charged to the EDCs by FERC, the State of Ohio, a regional transmission organization, independent transmission operator, transmission owner, or similar organization approved by FERC or the PUCO, and any other non-market-based charges impacting both CRES [retail] and SSO Suppliers where such charges and credits generally fall into the following non-market-based related categories (i) PJM charges and credits for service including, but not limited to, procuring transmission services, transmission enhancement, uplift charges, generation deactivation, and out-of-market bilateral settlements; and (ii) Midwest Independent Transmission System Operator, Inc. (MISO) Transmission Expansion Plan (MTEP) charges assessed under Schedule 26 of the MISO Tariff, whether assessed directly by MISO, PJM or American Transmission Systems, Incorporated. The current list of the PJM-related non-market-based costs, fees or charges is included in the Company’s Electric Generation Supplier Coordination Tariff and the Company’s Master Supply Agreement with SSO Suppliers and is subject to Rider NMB.

Rider NMB is generally nonbypassable, and retail suppliers are not assigned any costs included in Rider NMB as listed above, for those customers who pay Rider NMB

However, a pilot program allows certain large customers to opt-out of Rider NMB, and to pay the relevant non-market-based transmission charges either through their retail supplier (meaning the retail supplier is allocated such charges from PJM), or directly themselves.

Specifically, PUCO has approved an NMB opt-out pilot program, "which will allow customers served under the program to be billed directly by PJM or their competitive retail electric service provider and to no longer be subject to the Rider NMB rates."

In describing the program, the attorney examiner said that, "Participation in the NMB Pilot Program provides these customers an opportunity to control their transmission-related costs by controlling their Network Service Peak Load."

When approving the Rider NMB Pilot Program, PUCO directed the EDCs and Staff to review the actual results of the Rider NMB Pilot Program and report their findings to the Commission. The Commission directed that the review include, at a minimum: whether there is an aggregate savings in transmission costs for all of the Companies' customers, whether and how much in transmission costs are being shifted to customers not participating in the pilot program, whether the benefits of the pilot program outweigh any costs, and whether Rider NMB results in an overall cost savings to customers.

As described by the attorney examiner, on March 31, 2023, PUCO Staff filed a motion for a second extension of time for the Rider NMB audit to be completed, noting that Staff's consultant has indicated that it will require additional time to complete the audit report, given the complex nature of the case and what the attorney examiner termed "delayed" responses to certain data requests. Staff proposes that the final audit report be due on July 17, 2023.

Specifically, PUCO Staff in a motion stated, "Due to complex issues in this case, data requests have taken longer than expected to be responded to. [Staff's consultant] is still missing certain information that they need to proceed. [Staff's consultant] and Ohio Edison Company, The Cleveland Electric Illuminating Company, and Toledo Edison Company (collectively, FirstEnergy or the Companies) are working together to resolve any issues with these data requests. Therefore, [Staff's consultant] needs additional time to file the audit report in this proceeding."

The attorney examiner found that the current April 10, 2023 deadline for the Rider NMB audit report should be vacated, with a new deadline to be set by subsequent entry.

"However, it is concerning that Staff’s extension request appears to be necessary due to FirstEnergy’s delay in responding to [consultant's data requests," the attorney examiner alleged

The attorney examiner further alleged, "the Companies were previously instructed by the Commission to provide any and all documents or information requested by the auditor and were prohibited from refusing or delaying the provision of such information, even in the event FirstEnergy believed the information to be confidential. Finding and Order (June 15, 2022) at ¶ 15."

"Therefore, the attorney examiner finds that the Companies should be directed to show cause by April 17, 2023, demonstrating why they should not be assessed a forfeiture pursuant to R.C. 4905.54, for their delayed responses to the auditor’s data requests," the attorney examiner directed

"As part of that show cause response, FirstEnergy should provide a list of the data requests that remain unanswered, in whole or in part, the dates upon which those data requests were initially received by FirstEnergy, and an explanation as to when the Companies plan to respond to those outstanding data requests moving forward," the attorney examiner directed

Case 22-391-EL-RDR

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