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Dayton Power and Light Company's electric security plan III

February 2, 2017

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 a MRO.

What did DP&L request in its application?

On Feb. 22, 2016, DP&L filed an application to establish an ESP for the term Jan. 1, 2017 through Dec. 31, 2026.

In this application, DP&L proposes to secure all supply needed for its SSO through a competitive bidding process. On Oct. 11, 2016, DP&L filed an amended application. This application requests approval of a Distribution Modernization Rider (DMR) during the seven year ESP term in the amount of $145 million per year. The proposed rider would allow DP&L to maintain its financial integrity and allow it to access equity and debt capital in order to finance transmission and distribution infrastructure modernization investments.

How did the PUCO rule on DP&L’s application?

On Oct. 20, 2017, the PUCO adopted an agreement that established an ESP for DP&L.  The plan determined the SSO offer through Oct. 31, 2023.

DP&L will continue to use a competitive bidding process to secure electric load for its nonshopping customers. 

DP&L will recover/credit the net proceeds from selling power from its share of the Ohio Valley Electric Corporation into the regional marketplace through the nonbypassable Reconciliation Rider.

DP&L will also establish a DMR to provide it with capital so that it will be financially healthy enough to make future investments in grid modernization.  Although DP&L requested a $145 million DMR annually for six years, the Commission approved recovery on the DMR at $105 million per year for three years. DP&L will also file a comprehensive grid modernization plan by Aug. 1, 2018 for Commission review.

DP&L will end the collection of its annual $73 million retail stability charge with the implementation of the DMR.  A residential customer using 750 kilowatt hours per month will see a monthly increase of $2.92 during the term of the DMR.

Additionally, DPL Inc. will forgo paying dividends to AES Corporation during the term of the ESP. DPL Inc. will also forego making any tax-sharing payments to AES Corporation during the term of the DMR, and instead will convert any tax-sharing liabilities to equity investments in DPL Inc.

Did the PUCO consider public opinion in this case?

On Sept. 27, 2016, the PUCO held two local hearings to provide the public an opportunity to express their views regarding DP&L’s ESP application. The hearings were held in Dayton.

Those who testified at the local public hearings had their comments included in the case record.

For more information

The entire case record, including the company’s application, accompanying testimony and the Commission’s order can be viewed online by visiting the case docket for case 16-395-EL-SSO. To better understand the PUCO rate case process, please visit the PUCO website