Generation-Related Nonbypassable Costs at Dayton Power & Light Continue to Grow, PUCO Staff Concerned

Nonbypassable charges related to default service at Dayton Power & Light continue to grow, with PUCO Staff again raising concern with the increase.

DP&L is permitted to recover on a nonbypassable basis reconciliations of its default service generation costs that exceed 10%. Such costs previously exceeded 10% and DP&L previously implemented a nonbypassable reconciliation rider to recover such costs, with the rider (RR-N) set at $0.0003668/kWh

In an update to the nonbypassable reconciliation rider, DP&L has filed to increase Rider RR-N to $0.0018466 per kWh, due to an increase in the deferred default service cost balance.

While PUCO Staff agrees with the adjustment, Staff continued to express concern about the increasing level of nonbypassable costs related to default service, especially as certain of the costs (related to fuel) are dependent on DP&L forecasts (in contrast to other utilities where reconciliations solely reflect market-based auction costs and deferrals are mostly driven by migration)

"In previous filings, Staff had concerns with the forecast used to determine the threshold of the base amounts of the FUEL and CBT [auction] rider. The Company has worked with Staff to address these concerns by providing Staff with documentation on there forecasting methodology. However, many of these concerns in this audit still exist with regard to the FUEL rider. The variance between forecasted FUEL costs and actual FUEL costs for the September 2014 through November 2014 quarter has grown from 30% to 56%. As the variance continues to grow, more costs could be placed into a non-bypassable rider versus a bypassable rider. Staff believes that by including typical bypassable costs in the reconciliation rider, shopping customers and the market could potentially be impacted. Staff would encourage the Company to reassess their forecasting methodology to ensure costs are not being unnecessarily moved into a non-bypassable rider," Staff said in comments on DP&L's filing.

"Staff recommends that application RR-N be approved, but the Company should continue to strive for accurate FUEL costs forecasts so as not to unfairly burden shopping customers with non-bypassable charges," Staff said.