FirstEnergy Solutions Says AEP Ohio Compliance Plan Inconsistent with Ohio Default Service Order

FirstEnergy Solutions has petitioned the Public Utilities Commission of Ohio to maintain then-current (as of the December 30, 2011 date of FES' motion) rates at AEP Ohio, or alternatively maintain the then-current cost of capacity, until such time as AEP Ohio has accepted the partial stipulation, as modified by PUCO, establishing an electricity security plan, or until another electricity security plan or market rate offer is approved.

No entry had been issued on FirstEnergy Solutions' request, and a similar request from Industrial Energy Users-Ohio, as of January 3.

FirstEnergy Solutions said that its requested relief was necessary because it argued that a compliance plan filed by AEP Ohio failed to carry out the terms of the Commission's December 14 order on the electric security plan in several respects, and because, "AEP Ohio has not provided sufficient and timely information regarding the current status of the RPM [capacity price] allotments and, as a result, suppliers and customers cannot fully understand the status of their charges as of January 1, 2012."

Among other things, FirstEnergy Solutions said that AEP Ohio's compliance plan includes a pro rata adjustment to the 21% allotment of discounted capacity that decreases the allotments of RPM-priced capacity provided to residential and industrial customers. FirstEnergy Solutions said that such action is inconsistent with PUCO's order which held, "We are modifying the Stipulation such that RPM-priced capacity allocation determined for each customer class is only available for customers in the particular customer class, no RPM-priced capacity can be allocated to a customer in another class."

"Therefore, industrial and residential customers should receive their full 21% allotment regardless of what happens with the commercial class," FirstEnergy Solutions said.

Additionally, FirstEnergy Solutions said that AEP Ohio's compliance filing, "eliminates mercantile customers from the protections provided to governmental aggregation customers."

However, the Commission's Order did not distinguish between classes of governmental aggregation customers, as is consistent with Ohio law. While mercantile customers cannot be defaulted to a governmental aggregation, they do have the right to opt-in, and therefore, their load should receive the same capacity price discounts afford to other government aggregation customers under PUCO's order, Industrial Energy Users-Ohio noted.

Furthermore, FirstEnergy Solutions said that AEP Ohio's compliance filing provides that only those communities which approved governmental aggregation programs in the November 2011 election are entitled to an allotment of RPM-priced capacity. FirstEnergy Solutions' argued that PUCO's order did not distinguish the November 2011 ballot communities from those communities that have already established governmental aggregation.

PUCO's specific language was, "[W]e find it necessary to modify the proposed Stipulation to adjust the RPM set-aside levels to accommodate the load of any community that approved a governmental aggregation program in the November 8, 2011, election to ensure that any customer located in a governmental aggregation community will qualify for the RPM set-Aside, so long as the community or its CRES provider completes the necessary process to take service in the AEP-Ohio service territory by December 31, 2012." While this language references the November 8 ballot as the reason for the change in the stipulation, it goes on to state that, "any customer located in a governmental aggregation community will qualify," not certain communities.

Finally, FirstEnergy Solutions said that AEP Ohio's compliance filing includes the load associated with governmental aggregation customers in the 21% allotment provided to residential customers. FirstEnergy Solutions claimed that the accommodation for discounted capacity to residential customers in aggregations should not count towards the 21% set-aside for other residential customers. While FirstEnergy Solutions cites language in the order that AEP Ohio shall, "adjust the RPM set-aside levels" as necessary to accommodate governmental aggregation load, nothing suggests that this means that the discounted capacity to aggregations does not count towards the 21% cap in each respective class (nor does FirstEnergy Solutions cite any specific language on this point). Rather, PUCO's language can be taken that, to the extent the aggregation's load exceeds 21%, the aggregation's full load shall be accommodated with discounted capacity, but nothing suggests that the aggregation load won't count towards the 21% limit.

Aside from these specific areas in which the AEP Ohio compliance filing is alleged to be inconsistent with the PUCO order, FirstEnergy Solutions and IEU-Ohio also argued that AEP Ohio's compliance plan lacked necessary detail to carry the force of law.

"AEP Ohio seeks to impose capacity charges that are approximately four times higher than current capacity charges while providing little to no information to CRES [competitive] providers," FirstEnergy Solutions said.

"Based on discussions with AEP Ohio representatives, AEP Ohio has taken the position that it cannot, at this time, provide FES with information regarding which of FES' customers have received an allotment or where those customers stand in the queue. But, at the same time, AEP Ohio intends to and is apparently capable of, charging those customers the increased rate as of Sunday (January 1, 2012). It will only further impede the competitive market in AEP Ohio's territory and cause increased confusion for customers who are (or are considering) shopping to keep CRES providers in the dark as to the status of their customers' related capacity charges. AEP Ohio's alleged inability to provide this information at this point is also inconsistent with its arguments at hearing that: (a) the queue had already formed starting in September 2011 and (b) that the competitive market would not be harmed because CRES providers could make contingent or mixed-rate offers," FirstEnergy Solutions said.

IEU-Ohio said that AEP Ohio must provide further detail on how the two-tiered capacity charge structure shall be applied, and must identify how a shopping customer's Peak Load Contribution (PLC) will be determined, given the role of the PLC in the PJM resource adequacy structure.

"This documentation must also identify the means by which this PLC specification will be synchronized with the overall resource adequacy obligation of AEP East and the means by which such obligation shall be allocated between shopping and non-shopping customers. The documentation must also identify how the resource adequacy obligation and the PLC will be modified as a result of the periodic changes made by PJM to the resource adequacy requirement and how the PLC will be modified to reflect change in a customer's load and usage characteristics," IEU-Ohio said