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AEP Ohio's electric security plan IV

February 9, 2018

Role of the Commission

In formulating its decision in a case, the Commission must balance the interests of many parties and stakeholders while adhering to its mission, “to assure all residential and business consumers access to adequate, safe and reliable utility services at fair prices, while facilitating an environment that provides competitive choices.”

The Commission must balance this responsibility with an obligation to ensure Ohio’s regulated utilities the ability to continue to provide adequate, safe and cost-effective services to Ohio’s consumers and continue to invest in infrastructure improvements and innovative technologies.

In every case that comes before the Commission, a formal record is created. The case record includes written testimony, public testimony and cross-examination of expert witnesses. The Commission cannot make arbitrary decisions; information that is not in the formal record cannot be considered by the Commission in formulating its decision in a case.

Working as the neutral arbiter, it is the Commission’s goal to put Ohio in a position as a leader in developing regulatory certainty, rate stability and modernized grid technologies.

ESP 101

State law requires electric distribution utilities to provide their customers a default generation service. This is called a standard service offer, or SSO. An SSO may be in the form of either an electric security plan (ESP) or market rate offer (MRO). Electric distribution utilities are required to file applications with the PUCO to establish either an ESP or MRO.

ESPs establish the pricing and supply of generation service, and may include distribution system investments, grid modernization, economic development and job retention initiatives and energy efficiency measures. The PUCO is tasked with determining whether an ESP, including its pricing and all other terms and conditions, is more favorable in the aggregate as compared to the expected results that would otherwise apply under an MRO.

AEP Ohio’s electric security plan

The PUCO approved AEP Ohio’s first ESP in March 2009, setting gradual increases for the base price of electric generation through December 2011.

In 2012, the PUCO approved AEP Ohio’s second ESP, in effect until May 31, 2015. The second ESP brought AEP Ohio’s SSO load to be fully provided through competitive auctions. The second ESP also directed AEP Ohio to separate its generation assets from its distribution business.

In 2015, the PUCO approved AEP Ohio’s third ESP, in effect until May 31, 2018. The third ESP again planned for AEP Ohio’s SSO load to be fully provided through competitive auctions.

In November 2016, AEP Ohio filed a proposal to modify and extend its third ESP by six years.

What is AEP Ohio requesting in its ESP filing?

In November 2016, AEP Ohio filed a proposal to modify and extend its current ESP through May 2024. The PUCO approved the current ESP in February 2015, and it is set to expire in May 2018.

The proposed ESP would maintain the competitive bidding process.  AEP Ohio proposes to use the power from the Ohio Valley Electric Corporation (OVEC) entitlement to serve a bypassable portion of its SSO load, instead of including the cost and revenues of that entitlement in the PPA Rider.

AEP Ohio proposes a Distribution Technology Rider (DTR) in order to modernize the company’s infrastructure. The proposed rider would allow for the installation of electric vehicle charging stations, microgrid technology, smart street lighting controls and a next generation utility communication system throughout the company’s territory. The DTR would also allow for the enhancement of security for AEP Ohio’s critical distribution infrastructure.

AEP Ohio proposes a pilot program to establish a bypassable Competition Incentive Rider (CIR) as an addition to the SSO non-shopping rate above the auction price. The purpose of this rider is to incentivize shopping, while recognizing that there may be costs associated with providing retail electric service that are not reflected in the SSO bypassable rates. Revenue collected from the CIR would be refunded to all customers through the SSO Credit Rider.

AEP Ohio proposes a Renewable Generation Rider (RGR) to recover costs of renewable generation investment. The RGR would work as a placeholder until such time that the Commission might approve charges for specific projects.

AEP Ohio’s modified ESP proposal also includes several other new riders and tariffs, including: a Sub-metering Rider, an Automaker Credit Rider, an LED Lighting Tariff, a Basic Transmission Cost Recovery (BTCR) provision for County Fairgrounds, a pilot BTCR program for single coincident peak rate design for certain customers, a modification to the Auction Cost Reconciliation Rider (ACRR), a modification to the Distribution Investment Rider, a modification to the Economic Development Rider and an increase to the distribution customer charge with an offsetting reduction to the distribution energy charge.

What agreement did AEP Ohio, PUCO staff and other parties reach?

On August 25, 2017, AEP Ohio, PUCO staff and numerous other parties reached a settlement agreement in the electric security plan case.  Among other things, the settlement agrees to forego the change to the fixed customer charge and volumetric portion of AEP Ohio’s distribution rates that the utility sought in its initial application. The proposed Sub-metering Rider, LED Lighting Tariff, and modification of the PPA Rider and ACRR have also been withdrawn.  In place of the proposed DTR, the settlement agreement proposes a new Smart City Rider that would allow for the installation of electric vehicle charging stations and microgrid technology.

The settlement agreement was signed by PUCO staff, AEP Ohio, the Ohio Energy Group, the Ohio Hospital Association, Mid-Atlantic Renewable Energy Coalition, Environmental Law and Policy Center, Ohio Partners for Affordable Energy, Industrial Energy Users-Ohio, the Electric Vehicle Charging Association, Ohio Manufacturers’ Association Energy Group, Interstate Gas Supply, Inc., Ohio Environmental Council and Environmental Defense Fund, Retail Energy Supply Association, Natural Resources Defense Council,  Constellation NewEnergy, Inc., and the Sierra Club.  Non-opposing parties include: Commerce Energy, Inc., Walmart Stores East, L.P. and Sam’s East Inc., and The Kroger Company. 

The agreement, referred to as a stipulation, serves as a recommendation to the five-member Commission, which has the ultimate decision making authority. Commissioners take settlement agreements into consideration, along with all evidence supported in the case record, when forming their opinions. The Commission may accept, reject or modify a stipulation.

How might my bill be affected?

According to the company's testimony in support of the stipulation, the average residential customer using 1,000 kilowatt hours (kWh) would experience a monthly bill increase of $0.48, while small business and industrial customers would see a modest decrease in rates.

How can I make my voice heard?

Customers may write to the PUCO online or by mail at 180 East Broad Street, Columbus, Ohio 43215. Correspondences should include the case number 16-1852-EL-SSO.

The PUCO has scheduled the following local public hearings:

Monday, Feb. 12, 2018 at 6 p.m.
Ohio History Center, Cardinal Classroom
800 East 17th Avenue
Columbus, Ohio 43211

Tuesday, April 25, 2017 at 12:30 p.m.
Commission Offices, Hearing Room 11-B
180 E. Broad Street
Columbus, Ohio 43215

Monday, April 17, 2017 at 6 p.m.
Ohio History Center, Cardinal Classroom
800 East 17th Avenue
Columbus, Ohio 43211

Thursday, April 13, 2017 at 6 p.m.
Washington State Community College, Arts & Science Building, Harvey Graham Auditorium
710 Colegate Drive
Marietta, Ohio 45750

Monday, April 10, 2017 at 6 p.m.
Bucyrus City Hall, Council Chambers
500 S. Sandusky Avenue
Bucyrus, Ohio 44820

Those who testify at the local public hearings will have their comments added to the case record.

For more information

To view AEP Ohio’s ESP application, visit www.PUCO.ohio.gov and click on the link in the Docketing Information System (DIS) and enter case number 16-1852-EL-SSO.