PUC Approves Default Service Plan Which Includes Changes To "Reduce Price Volatility"

PUC Rejects Further Changes To Default Service Auction Product Sought By Wholesale Supplier

PUC OKs Default Service Stipulation Which Maintains Bypassable Rate Components Originally Proposed For Removal

Approved Settlement Requires Study Of Retail Supplier Uncollectibles

Utility Will Provide Data To Retail Suppliers To Facilitate Participation In PJM Ancillary Services Market

Switching Fee Will Be Removed

August 9, 2023

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Public Utilities Commission of Ohio approved, without modification, a non-unanimous stipulation among major parties to the electric security plan proceeding (ESP 4) of Dayton Power & Light (AES Ohio) that, as stated by PUCO, includes changes to the default service competitive bid plan (CBP) in order to reduce price volatility

The stipulation establishes the term of ESP 4 at AES Ohio as three years. AES Ohio will maintain 100% competitive bidding for its Standard Service Offer (SSO) load during ESP 4.

PUCO cited the anticipated reduction in SSO volatility as one of the reasons that the non-unanimous stipulation, as a package, benefits ratepayers and the public interest.

The specific SSO auction changes cited by PUCO include holding two SSO auctions annually through the term of ESP 4. Recently, AES Ohio has conducted only a single SSO procurement per year, aside from some changes due to PJM scheduling

Additionally, under the approved settlement, AES Ohio will reinstate laddering to the SSO portfolio (i.e., each bidding session will include multiple years), "which will also lower the risk that auction prices will be set during a price spike," AES Ohio has said.

As previously reported, under the approved stipulation, AES Ohio will return to a mix of laddered 12, 24 and 36-month contracts for SSO. This had historically been a part of DP&L's SSO portfolio, but had been modified due to various delays in the PJM Base Residual Auction.

See more details on AES Ohio's proposed SSO procurement, approved as proposed, here. Further details and components concerning SSO are addressed further below.

PUCO remains concerned with SSO price volatility, but rejected certain additional proposals from Constellation

In issues not resolved by the settlement (reserved for litigation), Constellation had proposed dividing the SSO auction product in class-specific products, rather than using the current total slice-of-system approach (e.g. separate small customer and large customer or class procurements).

Constellation had also proposed, as summarized by PUCO, to establish upper and lower thresholds on SSO supplier tranches to mitigate the risk of customer migration and provide more certainty for SSO suppliers bidding on tranches. This proposal would limit the exposure of a single SSO supplier to a specific peak load contribution (PLC) increase and specific PLC decrease from a baseline load level, limiting migration risk

PUCO rejected both proposals in the ESP 4 proceeding.

PUCO said "The Commission continues to be concerned by the volatility in SSO prices, particularly the impact of increases in wholesale energy prices in 2022 on the SSO price experienced by customers (Staff Ex. 2 at 4). Moreover, the Commission very much appreciates the ideas for modifying the CBP proposed by the parties at the hearing in this proceeding. At this time and based upon the record of this proceeding, the Commission is not persuaded that the additional modifications to the CBP proposed by the parties are necessary or appropriate. Specifically, based upon the evidence in this case, we are not persuaded that separating the auctions into auctions for residential customers and non-residential customers will result in aggregate savings to consumers in this state (Staff Ex. 2 at 6-8). Further, we are not prepared, at this time, to adopt any mechanism that shifts migration risk from wholesale suppliers to consumers in this state (Staff Ex. 2 at 8-9)."

PUCO added that, "Nonetheless, in approving this ESP, the Commission will retain continuing jurisdiction to make modifications in the CBP in order to reduce price volatility and to ensure consistency between the EDUs’ CBPs. This continuing jurisdiction includes, but is not limited to, the proposed modifications to the auction product currently under review in In re the Proposed Modifications to the Elec. Distribution Utilities’ Std. Service Offer Procurement Auctions, Case No. 23-781-EL-UNC, Entry (July 26, 2023)."

See background on PUCO's separate proceeding examining default service changes

As previously reported, the adopted stipulation maintains a bypassable rate component of the standard service offer (SSO) that AES Ohio had originally proposed to make nonbypassable

Under the approved stipulation, AES Ohio will continue recovery of uncollectible expenses associated with bypassable standard service offer rates through a bypassable component of the SOR (Standard Offer Rate)

AES Ohio had originally proposed to remove uncollectible expenses from the SOR, with recovery instead through distribution rates, as proposed in a separate rate case. The adopted stipulation provides that the bypassable uncollectible expenses under the SOR will be refunded to all customers through a nonbypassable rider

The adopted settlement provides for a study on uncollectibles

Specifically, the stipulation provides that PUCO Staff will issue a Request for Proposal to review data associated with uncollectible expense recovery. Specifically, the consultant shall conduct a review of:

A. Customer account billing records for both SSO and CRES customers in which balances were written off during the 12 months prior to the signing of the Stipulation;

B. The Company’s (AES Ohio) collection and disconnection practices;

C. The process for applying partial payments; and

D. Any other records or information deemed appropriate.

Under the adopted stipulation, AES Ohio will continue its Standard Offer Rate (SOR) (Tariff Sheet No. G10) with its current rate design methodology, update process, and audit schedule

Generally, aside from the procurement schedule and term changes noted above, the SSO auction product during ESP 4 will mirror the current, mostly full requirements, product. As done currently, AES Ohio will continue to supply the Renewable Energy Credits required to cover its obligations under R.C. 4928.64 relating to the SSO load.

Concerning transmission charges, the adopted settlement provides, "AES Ohio will bill all non-residential customers taking service at primary voltage and above, and any non-residential customers taking service at secondary voltage that opt-in, for all TCRR demand charges on the basis of their Network Service Peak Load (NSPL). Billing based on NSPL shall be implemented starting June 2025. Secondary customers who opt-in to TCRR charges billed on the basis of their NSPL may not opt-out within two years of opting-in. This change in transmission billing shall not shift any transmission costs to residential customers. AES Ohio will continue its existing TCRR Opt-Out Pilot program until the NSPL billing change is effective, at which point the program will cease. Enrollment in the existing TCRR Opt-Out Pilot program shall be open to Signatory Parties (including their members, affiliate members, customers, or members’ customer) served at secondary voltage or primary voltage and above on an opt-in basis. Enrollment in the existing TCRR Opt-Out Pilot program shall be capped at 50 customers. For residential customers, billing for the TCRR shall continue to operate as it does now."

The adopted stipulation further provides that, "As part of the Grid Mod Implementation Update Group established in Case No. 18-1875-EL-GRD et al., AES Ohio agrees to discuss converting the results of its SSO competitive bid process into retail rates for SSO customers with on-peak and off-peak rates. With this group, AES Ohio agrees to discuss potential roadblocks or timing issues with deployment of such rates, including the time-of-use rate requirements in the Stipulation and Recommendation from that case, potential limitations of its current and planned billing systems, and deployment of smart meters. The Group will also discuss such issues as whether such an on-peak and off-peak pricing methodology for SSO customers should be on an opt-out basis."

In other matters, the adopted stipulation requires that, upon receiving all necessary customer consent, AES Ohio will provide, without additional cost, CRES providers [retail suppliers] and third-party aggregators available customer data to allow them to enroll residential accounts to participate in the PJM ancillary services market, including but not limited to the customer’s peak load contribution.

"As part of the first meeting of the Grid Mod Implementation Update Group established in Case No. 18-1875-EL-GRD et al. after approval of this Stipulation, AES Ohio will discuss what data may be available under this Section and when usable data will be available. Usable data sharing under this Section shall begin no more than one year from the date of such Grid Mod Implementation Update Group meeting, unless AES Ohio notifies the Grid Mod Implementation Update Group that more time is required to implement the program," the settlement provides

The stipulation authorizes AES Ohio to implement an optional Green Energy Alternative Tariff to offer agreements with mercantile customers to construct customer-sited renewable energy resources pursuant to R.C. 4928.47. Each agreement between AES Ohio and mercantile customers electing to take service under this tariff shall be submitted to the Commission for approval pursuant to R.C. 4928.47.

As originally proposed by AES Ohio, "Once interested customers are identified, AES Ohio will work with them to develop customer-sited renewable energy resources. Customers will commit to switching to this option upon commercial in-service dates of the renewable energy resource and will agree to other terms regarding length and pricing per a contract between the Company and mercantile customer."

The adopted stipulation provides that AES Ohio agrees to eliminate the switching fees in Tariff Sheet Nos. D34 and G9.

AES Ohio may request to re-implement switching fees in a future rate case or other proceeding.

As previously reported, AES Ohio under the stipulation withdrew most of its proposed demand response and other energy usage programs for residential customers, which were described in our prior story here

Withdrawn utility-offered programs include a residential remote load control program and a residential behavioral program

Instead, AES Ohio's ratepayer-funded offerings established in the ESP are limited to a low-income assistance program which shall include: (1) a weatherization and bill payment assistance program, and (2) a disadvantaged communities energy initiative (which will award certain selected communities with funding for utility bill payment assistance, reconnection fees, deposits to establish service due to an arrearage, and weatherization).

AES Ohio also withdrew its request for ratepayer cost recovery for most of its proposed electric vehicle (EV) programs, including proposals where AES Ohio would own EV charging equipment, and proposals for "managed charging" programs for both residential and commercial customers

AES Ohio will offer a Residential Off-Peak Incentive Program under which EV customers will be eligible to receive a recurring $0.05 per kWh incentive for charging during off-peak times. Customers may receive the incentive regardless of whether they are on the SSO or if they are shopping with a retail supplier

Case No. 22-0900-EL-SSO

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