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Nucor Steel Seeks Imposition of Cost Cap on Bypassable Rider AER at Ohio Edison
September 13, 2011
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Nucor Steel Marion, Inc. has sought a determination from the Public Utilities Commission of Ohio that alternative energy compliance costs at Ohio Edison have exceeded the 3% cost cap, and asked PUCO to cap Ohio Edison's bypassable alternative energy rider at 3% as a result.
However, whether the 3% compliance cost cap has been hit depends on the calculation used to determine generation costs. While statute holds that the calculation shall consist of comparing the total expected cost of "generation" to customers of an electric utility or electric services company, while satisfying an alternative energy portfolio standard requirement, to the total expected cost of generation to customers of the electric utility or electric services company without satisfying that alternative energy portfolio standard requirement, "generation" is not defined, and PUCO has not previously opined on how such generation costs shall be calculated.
Notably, Nucor Steel uses the "Blended Competitive Bid" price for the three FirstEnergy Utilities as the "cost of generation to customers of the electric utility or electric services company without satisfying [the] alternative energy portfolio standard requirement."
This Blended Competitive Bid price is 5.560 cents per kWh. Nucor said that the Blended Competitive Bid price, "formed the basis for the generation charges recovered through the Generation Service Rider ('Rider GEN')." However, the price of 5.560 cents is not actually charged to customers, and Rider GEN varies by utility and class.
Ohio Edison recently submitted an updated alternative energy resource rider (Rider AER) charge of 0.2654 cents/kWh for GT Rider customers. This equals 4.8% of the Blended Competitive Bid price, thus compelling the imposition of the Rider AER rate cap, Nucor said.
Nucor sought to cap Rider AER, which is bypassable and is part of the price to compare, at 0.1668 cents/kWh.
Nucor said that the 3% cost cap has been exceeded at Toledo Edison and Cleveland Electric Illuminating as well, but did not specify a specific cap for each's Rider AER
Nucor also requested that PUCO open an investigation of the FirstEnergy companies' alternative energy portfolio compliance costs and how the cost cap should be applied going forward.
Aside from whether the Blended Competitive Bid is an appropriate price for generation, Nucor also omits the costs of generation reconciliations under Rider GCR. However, it does not appear including Rider GCR would result in the cost cap not being exceeding in any event.
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