Ohio Staff Oppose Modified FirstEnergy EDCs' Rate Stability Rider; Recommend Distribution "Modernization" Rider Instead

Staff of the Public Utilities Commission of Ohio have filed testimony opposing the FirstEnergy Ohio utilities' modified Retail Rate Stability Rider (RRS), and have instead proposed that the FirstEnergy Ohio utilities be authorized to collect a new Distribution Modernization Rider

The FirstEnergy EDCs' proposed modification to the Retail Rate Stability Rider would remove any link to PPAs with affiliated generation, to avoid FERC jurisdictional concerns (click here for background on the revised proposal)

However, Staff testified that removing the link between the PPAs and the stability rider removes two key benefits on which the Commission relied in approving the original rider.

"The Commission’s Opinion and Order that was issued on March 31, 2016, clearly stated that two of the benefits of the PPA between the Companies and FES are resource diversity in the state and the positive impacts that these power stations have on the local economies. The purpose of granting Rider RRS, according to the Commission, was not simply to provide a financial hedge to all the Companies’ distribution customers but also to preserve resource diversity in the state and to protect the local economies from the negative impacts of power station closures. The Modified Rider RRS is no longer comprised of a PPA that is tied to specific power stations in the state and, accordingly, eliminates two important benefits that the Commission highlighted in its Opinion and Order referenced above," Staff said

Additionally, Staff noted that, "The Modified Rider RRS, though no longer comprised of a PPA between the Companies and FES, is at its core a generation rider. As a matter of fact, all of its credits and charges are explicit functions of 3,257 MWs of unspecified generation. Although not a legal conclusion, the Modified Rider RRS may potentially be construed as a transition charge, and may have potential implications with FERC’s authority over wholesale power markets."

Accordingly, Staff recommended rejection of the EDCs' proposed revisions to the stability rider

However, Staff proposed that the FirstEnergy EDCs be allowed to collect $131 million per year for three years under a new Distribution Modernization Rider

"The new Distribution Modernization Rider will further [state] policy by promoting modernization of the grid through the deployment of advanced technology and the continued promotion of competition by enabling competitive providers to offer innovative products and services to serve customers in Ohio," Staff said

"Customers would then be able to interact and transact with retail suppliers and third party providers of innovative products and services, such as energy efficiency and demand response products, green energy, distributed generation, and others," Staff said

Staff did not propose any specific measures that would be required to be undertaken under the Distribution Modernization Rider (such as territory-wide smart meter deployment), but said that modernization initiatives may begin with quick resolution of the EDCs' grid modernization plan in Case No. 16-0481-EL-UNC (which includes three options for territory-wide AMS deployment), but should not be limited to that case.