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PUC Approves Settlement Setting Default Service Plan

Requires New Utility CIS To Accommodate Retail Supplier Consolidated Billing, Accelerated Switching

New Residential Smart Thermostat Demand Response Program, Open To Retail Suppliers, Will Be Funded

April 3, 2024

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Copyright 2010-23
Reporting by Paul Ring •

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The Public Utilities Commission of Ohio approved, without modification to any terms relating to the retail market, a non-unanimous stipulation establishing a new electric security plan (ESP V) at AEP Ohio, for a term of June 1, 2024 through May 31, 2028

With respect to the procurement of standard service offer supplies, AEP Ohio will generally continue its current auction approach as set forth in its original ESP application, with the additional use of a capacity proxy price for SSO auctions held at a time in which the PJM base residual capacity auction has not yet been held for the applicable delivery period.

See the initially proposed auction schedule with product term lengths here. Note that even prior to the order adopting the stipulation, this schedule was already modified to rely exclusively on 12-month contracts for the period June 1, 2024 to May 31, 2025, due to the absence of a forward capacity price and a capacity proxy price not yet being implemented

Starting with the June 1, 2025 delivery year, a mix of 12, 24 and 36-month contracts will be used for the SSO

In adopting the stipulation, PUCO denied all sought changes to SSO procurements proposed outside of the stipulation, such as customer class-specific supply products and auctions, or measures to reduce migration risk to SSO suppliers

PUCO also affirmed that it may order changes to the design of the SSO during the ESP term.

"[T]he argument that the SSO cannot be modified and/or finalized in a separate proceeding is inaccurate," PUCO said

"The Stipulation proactively acknowledges, as we have previously expressly stated, that the Commission will retain continuing jurisdiction to make modifications in the CBP [SSO competitive bid plan] to reduce price volatility and to ensure consistency between the EDUs’ CBPs, as this Commission sees fit," PUCO said

PUCO stressed that it remains concerned about risk premiums and volatility in SSO prices, but said that the adoption of the capacity proxy price (CPP), plus lower prices witnessed in recent SSO auctions, led PUCO to not adopt any further SSO changes as part of the AEP Ohio ESP

"With the significant reduction in auction clearing prices recently observed and the adoption of the CPP, the Commission is continuing to monitor and to gradually address the price volatility in SSO prices by implementing mitigation measures that are commensurate to the circumstances at hand. By introducing only a couple of refinements, the Commission can more efficiently react to price volatility ... at this time, the Commission is not persuaded that additional action is necessary or appropriate," PUCO said

"Our conclusion in this case is consistent with our determination just a few months ago in the AES Ohio ESP Case and further bolstered by the continually improving results observed by the Commission in SSO auction proceedings. Nothing in the record of this case convinces the Commission that the modifications to the SSO auction process, as advocated by OCC and Constellation, are necessary or appropriate. Specifically, based upon the evidence in this case, we are not persuaded that conducting the auctions by class or by 'natural breaking points' will result in aggregate savings to consumers in this state. Nor are we persuaded that the mechanism proposed by Constellation will not shift migration risk from wholesale suppliers to consumers in this state," PUCO said

"The Commission will continue to evaluate, within the infrastructure of Ohio’s applicable laws, whether aspects of the auction process are adversely impacting the long-term cost of service for customers and how to address price volatility. As such we find Constellation’s rationale for the process that must be followed to amend AEP Ohio’s auction process unconvincing. Furthermore, to the extent that the SSO auction processes of all or most of the state’s EDUs are impacted, it is more efficient, and the Commission would prefer to adopt any revisions necessary in a single proceeding as opposed to making such changes one EDU at a time to allow for due process for those impacted and consistency amongst the EDUs," PUCO said

PUCO also declined to modify the stipulation's provisions concerning the Basic Transmission Cost Rider pilot (BTCR Pilot), which allows customers to elect to be charged based on 1CP for the transmission costs, versus using monthly billed demand.

The adopted stipulation continues and expands AEP Ohio's current BTCR Pilot. Each year of the ESP, an additional 100 MW of space will be made available under the BTCR 1CP Pilot. Twenty percent of the increased participation cap per year (20 MW) will be set aside for customers with a monthly billing demand of 10 MW or less

Additionally, any AEP Ohio customer wishing to enroll in the BTCR 1CP Program that was not able to subscribe through the standard process can enter the program through a reasonable arrangement application. Reasonable arrangement customers on 1CP transmission billing do not count against the MW cap.

PUCO declined to modify the BTCR, which currently recovers costs for various transmission services with recovery on a nonbypassable basis

Calpine Retail Holdings had proposed that such transmission costs be assigned to the LSE (retail supplier or SSO), with costs bypassable. Most retail suppliers oppose this approach and favor the EDC assuming responsibility for the costs, with recovery from all customers

PUCO rejected Calpine's proposals regarding the BTCR

"The Commission finds Calpine’s request to modify the BTCR to be bypassable is a significant rate design change without sufficient record support regarding the impacts of such a major change," PUCO said

The adopted stipulation provides for cost recovery of a new CIS at AEP Ohio, and includes provisions concerning the capabilities of such CIS. While the stipulation addresses the capabilities of the CIS, the order approving the stipulation does not order implementation of various specific policies (such as SCB); rather, the adopted stipulation is only assuring that the CIS shall be able to accommodate such policies in the future, if adopted

See full details concerning the CIS, and its items related to retail energy and supplier functionality, in our prior story here. PUCO did not modify the stipulation's terms concerning the CIS

Under the adopted stipulation, AEP Ohio will implement a smart thermostat demand response program with an annual cap of $5,000,000 for the term of the ESP. The program will be open to retail suppliers

See full details on the smart thermostat demand response program in our prior story here. PUCO did not modify the stipulation's terms concerning the smart thermostat demand response program

Case 23-23-EL-SSO


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