Ohio Approves Changes to Retail Market at Vectren Energy Delivery

The Public Utilities Commission of Ohio has accepted a stipulation regarding changes to the retail market under Vectren Energy Delivery's Standard Choice Offer (SCO) auction, including the possible introduction of a discount rate to purchased receivables.

As only reported by Matters, the stipulation had been signed by Vectren Energy Delivery of Ohio, Staff of the Public Utilities Commission of Ohio, the Ohio Marketers Group, DTE Energy Trading, Inc., and the Ohio Consumers' Counsel.

Vectren Energy Delivery currently purchases SCO and Choice Suppliers' accounts receivable without discount for those suppliers electing consolidated billing, contingent upon the continuation of Vectren Energy Delivery's ability to recover its uncollectible customer receivables in its Uncollectible Expense Rider.

In the event Vectren Energy Delivery's authority to recover its uncollectible expense through its Uncollectible Expense Rider is altered, PUCO has now granted Vectren Energy Delivery the authority to purchase accounts receivable of Choice and SCO suppliers electing consolidated billing at a discount reflecting the unrecovered portion of its customer accounts receivable, which excludes Percentage of Income Payment Plan (PIPP) customer accounts receivable, as of the effective date of any Commission alteration of said authority to use the Uncollectible Expense Rider.

In such a case, the SCO Retail Price Adjustment shall be adjusted to reflect the difference in the accounts receivable purchase discount allowed at the time the retail price adjustment was last accepted by the Commission and the revised accounts receivable purchase discount implemented by Vectren Energy Delivery.

Additionally, Vectren Energy Delivery's liquid propane (LP) plants and pipeline currently provide deliverability to address Vectren Energy Delivery's system peak supply requirements. Because Vectren Energy Delivery intends to retire its LP plants and pipeline in 2012, due to its desire to eliminate the risk to public safety of a potential incident related to such facilities, 50,000 Dth per day of pipeline capacity and/or delivered supply must be obtained to make up the shortfall created by the elimination of the LP plants' deliverability.

The adopted stipulation provides that Vectren Energy Delivery will obtain 50% of such replacement capacity/delivered supply, and that Choice and SCO suppliers will obtain the remaining 50%.

The approved stipulation further provides that the SCO Auction Contingency Plan shall be amended as follows:

a. In the event of the failure of the initial SCO auction, the requirement that a single SCO supplier may serve no more than one-third of the SCO load shall be eliminated for the back-up SCO auction.

b. In the event of the failure of the initial and back-up SCO auctions, and in lieu of reversion to Gas Cost Recovery (GCR) service, Vectren Energy Delivery will implement a utility-provided default sales service (DSS) as follows:

i. Vectren Energy Delivery will implement monthly DSS rider rates that, to the extent practical, reflect the monthly pricing approach embodied in the current SCO program and former SSO program, which is a price adjustment, determined annually for an annual period, added to the monthly NYMEX futures price.

ii. In addition to other costs, the DSS rider rate shall recover a return on Vectren Energy Delivery's actual average storage inventory balances at 10% per annum, which is consistent with the return provided on such storage balances under Vectren Energy Delivery's former GCR service pursuant to Rule 4901:1-14-05 OAC.

iii. In addition, variances between actual costs incurred by Vectren Energy Delivery to provide DSS and the costs recovered from customers for such service will also be recovered or passed back through the DSS rider rates.

iv. At the end of each annual period during which DSS is in effect, an audit(s) will be conducted of the pipeline capacity, delivered service, and gas supply bid procurement and bid selection processes, the accuracy of the computation of the DSS rider rates, and the accuracy of the application of the DSS rider rates to customer bills.

c. In the event the initial SCO auction is unsuccessful, the Exit Working Group will be convened prior to the 2013 SCO auction to determine the cause of the failure and consider revisions to the auction rules and contingency plan. Consideration will be given, but not limited to, the following:

i. An SSO Auction

ii. Full Exit

iii. Retain Utility-Provided DSS.

Finally, the adopted stipulation provides that the adjustment of the Exit Transition Cost (ETC) Rider to reflect the reconciliation of actual costs recoverable and actual costs incurred should be filed with the Commission annually in September to coincide with and include the annual supplier reconciliation, beginning with the September 2012 ETC filing. Currently, the ETC is filed quarterly, but since it is relatively stable, this is administratively burdensome.