PUC Seeks Comments On Staff Proposal To Modify Default Service Procurements, Product
July 26, 2023 Email This Story Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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The Public Utilities Commission of Ohio has sought stakeholder comment on a PUCO Staff proposal to modify the electricity standard service offer (SSO) procurements and auction product to include a proxy capacity price for years in which the actual PJM market capacity price has not yet been established, rather than having bidders bid an all-in rate that includes capacity in their unique bid prices
Staff noted that, under further delays to the PJM capacity auctions, the PJM capacity auction for the 2025/2026 delivery year has been delayed, "and PJM’s capacity market will not be back on tariff schedule until the 2029/2030 delivery year, at the earliest."
PUCO said, "Given this significant delay in PJM conducting its BRA, the Commission finds it necessary to revisit possible modifications to the EDUs’ SSO auction processes in order to mitigate uncertainty surrounding PJM’s capacity market."
PUCO sought comment on Staff's proposal below
Staff said that, given the repeated delays in PJM capacity auctions, "it has ... become apparent that further actions may be warranted to protect Ohio’s retail electricity consumers from the effects of prolonged delays to the capacity construct."
Staff is recommending that the Commission direct each of its regulated electric distribution utilities, in consultation with their independent auction administrators, to modify their SSO auction products such that capacity is priced at a proxy rate for years in which the actual price has not yet been established.
"This would allow, to the extent that SSO auction schedules and timing allow, a return to blending of auctions with one-, two-, and three-year durations, with the capacity component of the product being trued-up once the actual cost is known, prior to the start of the delivery year," Staff said
"This approach has been successfully implemented in other PJM jurisdictions, including Pennsylvania and New Jersey, with no obvious negative impacts on the auction clearing price or bidder interest," Staff said
"It is worth noting the PUCO initially declined to employ such an approach when delays to PJM’s capacity auction were first addressed. But Staff believes that a different conclusion may be justified given the existence of new information and different circumstances. The Commission could never have envisioned that capacity market delays would persist through at least the 2029/2030 delivery year, with an open-ended possibility for more delays should PJM stakeholders fail to produce a consensus or should FERC find PJM’s proposed capacity market enhancements to be unacceptable," Staff said
"The existing piecemeal approach of iteratively modifying each utility’s SSO auction schedule in response to prolonged and unpredictable FERC-imposed delays should be disposed of in favor of an auction structure that utilizes a proxy rate for capacity and restores some level of order to a process that for too long has suffered the effects of an unknown and uncertain PJM capacity market construct," Staff said