Consumers' Counsel Seeks Postponement Of Default Service Auction, Alleging Risk Of Higher Prices

The Office of the Ohio Consumers’ Counsel has petitioned the PUC of Ohio to postpone the January 10, 2023 standard service offer auction for the FirstEnergy electric distribution utilities, as OCC said that unresolved matters concerning the certification of the Northeast Ohio Public Energy Council (NOPEC) will lead to risk premiums in the upcoming auction

In the January auction, the FirstEnergy utilities are seeking a portion of SSO supplies (33 tranches) for a 12-month term of June 2023 through May 2024

As previously reported, PUCO earlier this year issued a show cause order to NOPEC requiring NOPEC to show why its governmental aggregation certificate should not be suspended due to NOPEC returning the majority of its load to default service prior to the expiration of the aggregation term

Since such time, NOPEC's governmental aggregation certificate was due for renewal, and NOPEC filed a renewal application. A PUCO Attorney Examiner suspended automatic approval of the certificate renewal application, due to the prior show cause order, as PUCO has not yet ruled on NOPEC's response to the order. The attorney examiner extended NOPEC’s existing certificate authority until the Commission issues an order regarding the renewal application.

OCC said, "The auction should be postponed until the PUCO has resolved pending issues with NOPEC’s beneficial return of residential customers to the FirstEnergy utilities’ standard service offer. If the FirstEnergy auction is held before resolving these issues, the auction results could reflect a risk premium in the form of higher electricity prices for consumers due to regulatory uncertainty regarding NOPEC’s load."

"Holding the auction as scheduled would place consumers at risk for paying higher standard service offer prices (and also being negatively impacted by a higher price to compare). That risk relates to the current regulatory uncertainty involving NOPEC’s load. The potential for this risk premium could be mitigated by postponing the auction to allow time for the PUCO to resolve the issues," OCC said

OCC had appealed the suspension of the automatic renewal process in order to reinstate automatic approval, and OCC said that resolution of such appeal in OCC's favor (reinstating automatic approval) could also mitigate the auction-related issues.

OCC also noted that PUCO previously ordered the utilities to propose minimum stay rules for governmental aggregations, and such proposed tariffs are now pending before PUCO, as previously reported

"Minimum stay rules are relevant to the auction. They could reduce risk for auction bidders by limiting a government aggregator’s ability to return its customers to the utility’s standard service offer. The risk of uncertainty about how minimum-stay rules will be implemented, including when they will become effective, could add risk and cause bidders to submit higher bid prices. But the minimum-stay rules, if resolved before the auction, could moderate both risk and higher prices," OCC said

Case No. 16-776-EL-UNC