Interstate Gas Supply Seeks Limit on AEP Ohio Discounted Capacity Allocated to Municipal Aggregations

Interstate Gas Supply has asked the Public Utilities Commission of Ohio to cap the amount of discounted capacity available to governmental aggregations which would otherwise be made available under a pending non-unanimous settlement regarding AEP Ohio's electric security plan.

Interstate Gas Supply does not have intervenor status in the case, but voiced its concerns in a December 9 letter to the PUCO commissioners.

For 2012, the stipulation would cap the amount of capacity provided to retail suppliers by AEP Ohio at the discounted RPM price at 21% of AEP Ohio retail sales, with any competitive sales above this cap charged the higher, cost-based capacity rate (see 9/7).

While this allocation was to have been done on a pro-rata allocation among the customer classes, because the existing migration level in the commercial class exceeds the initial pro-rata allocation, allocations originally intended for the residential and industrial classes are to be re-directed to the commercial class to maintain an overall cap of 21%. Furthermore, the pro-rata allocation would cease January 1, 2012.

"[T]o the extent government aggregations are being considered as residential participants, IGS suggests that such participation be limited to one-half of the applicable exemption cap each period (for instance, for the 2012 period, of the 21% residential customer group only 10.5% could include government aggregation, the remainder would be available only to direct customer relationships created with CRES [competitive retail electric service] suppliers)," Interstate Gas Supply said.

"Although government aggregation can assist in moving larger groups of customers in a shorter period of time, it does not provide the diversity of supply or offers that is available from CRES providers in total. The balance of the exemptions should remain available on a pro-rata basis through CRES providers outside of the government aggregation arena," IGS Energy continued.

This pro-rata arrangement is also necessary (apart from how governmental aggregations are treated), IGS Energy added, to ensure that the proposed discounted capacity caps do not have a, "disproportionately negative impact on residential customers," and in order to ensure the proper development of a competitive residential market.

Similar to arguments made by opponents of the stipulation during briefs last month, IGS Energy noted that if the pro-rata allocation of the discounted capacity cap ceases (and any room under the cap is available to all customer classes on a first come, first served basis), the cap will likely be fully subscribed by non-residential customers, depriving residential customers of an opportunity to shop.

"A solution to this issue would be to continue the pro-rata approach contemplated in the settlement agreement for the entire transition period," IGS noted.