Updated:
PUCO Says Parties' Obligation To Implement Retail Market Enhancements Contained In DP&L ESP Terminated With Withdrawal Of ESP

PUCO Sets Process For Further Default Service Supply Procurement, Pricing

PUCO Authorizes Dayton Power & Light To Withdraw From Electric Security Plan

December 18, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Updated: 3:45 p.m.

A written order by the Public Utilities Commission of Ohio has been issued concerning Dayton Power & Light's withdrawal of its third electric security plan (ESP III)

As previously reported by EnergyChoiceMatters.com, ESP II contained various retail market enhancements, and RESA had sought confirmation that such enhancements would continue since they were part of a stipulation among parties including DP&L. Such retail market enhancements included a supplier consolidated billing pilot and terms concerning a non-commodity billing process that would allow retail electric suppliers to include non-commodity products and services on a utility consolidated bill

In its order, PUCO held that, "We cannot accept RESA’s recommendation to continue the competitive market enhancements contained in the amended stipulation filed in the ESP III Case. ESP III Case, Opinion and Order at ¶14. These competitive market enhancement are not independent of ESP III, and any obligation of DP&L, or any other party, to implement the competitive market enhancements is terminated with the withdrawal of ESP III."

Concerning default service procurement, PUCO ordered that current procurements and rates shall be honored, and directed DP&L to continue to request future competitive bid plan auctions to continue to serve Standard Service Offer (SSO) customers

PUCO said, "We note that, in the Finding and Order issued on August 26, 2016, the Commission modified two provisions of ESP I, in order to maintain the integrity of competitive wholesale and retail markets in this state. First, the Commission approved DP&L’s proposal to continue to recover these costs of energy and capacity to serve SSO customers through a competitive bidding process (CBP) in order to honor existing contracts with CBP suppliers and maintain current PJM obligations for all suppliers. In the Finding and Order, the Commission noted that R.C. 4928.143(C)(2)(b) requires the Commission to adjust for any expected increases or decreases in fuel costs from those contained in the previous SSO; thus the Commission determined that R.C. 4928.143(C)(2)(b) allows adjustment for purchased power as well as fuel, as it is longstanding regulatory practice for 'fuel' and 'purchased power' to be used interchangeably. ESP I Case, Finding and Order (Aug. 26, 2016) at ¶ 21; Third Entry on Rehearing (Dec. 14, 2016) at ¶ 17. We expect DP&L to continue to request appropriate CBP auction schedules as necessary to continue to serve SSO customers until DP&L’s next SSO is approved."

PUCO further noted, "Second, the Commission [previously] continued DP&L’s transmission cost recovery riders, TCRR-B (bypassable) and TCRR-N (nonbypassable), approved by ESP III, in order to avoid unduly disrupting both the CBP supplying the SSO and individual customer contracts with competitive retail electric service suppliers. ESP I Case, Finding and Order at ¶ 24; Third Entry on Rehearing at ¶ 22-23," PUCO said

"Moreover, we affirm our previous conclusion that R.C. 4928.02(G) provides that it is the policy of this state to recognize the continuing emergence of competitive electricity markets through the development and implementation of flexible regulatory treatment and that such flexible regulatory treatment is necessary in these cases to protect the public interest, maintain reasonable rates, ensure the integrity of existing contracts and protect the CBP process for procuring SSO generation. Third Entry on Rehearing at ¶¶ 18, 23," PUCO said

"Accordingly, these two modifications, which were necessary to protect competitive markets in this state, should continue as provisions, terms and conditions of ESP I, as it was in effect prior to the adoption of ESP III," PUCO said

PUCO noted that R.C. 4928.143(E) requires the Commission to periodically test an ESP if the term exceeds three years, and noted that the term of ESP I has cumulatively exceeded the three years specified in the statute. "Accordingly, we direct DP&L to open a docket, no later than April 1, 2020, in which the Commission will conduct both the ESP v. MRO Test and the prospective significantly excessive earnings test specified in R.C. 4928.143(E)," PUCO said

Generally addressing the withdrawal and related tariffs, PUCO said, "DP&L has exercised its statutory right to withdraw ESP III. DP&L’s most recent SSO would be ESP I, which was reinstated by the Commission in the Finding and Order issued on August 26, 2016 in these proceedings. ESP I remained in effect until the effective date of ESP III, on November 1, 2017. According to the plain language of the statute, the Commission must restore the provisions, terms and conditions of ESP I which were in effect prior to the effective date of ESP III."

However, PUCO said that certain riders which DP&L sought to continue were not included in ESP I and may not be continued

"[W]e agree with parties who argued that ESP I did not include riders such as the DIR, the reconciliation rider [OVEC], the decoupling rider, the RCR, and the uncollectible rider, and that these riders should not be continued with the withdrawal of ESP III. Each of these riders was created in the ESP III Case. DP&L has proposed the elimination of the reconciliation rider, and we agree, as the reconciliation rider was created in ESP III. Likewise, although DP&L has proposed to continue the decoupling rider and the RCR, these two riders were created in ESP III and should be eliminated," PUCO said

Such riders were nonbypassable and generally did not affect the retail market

"Further, DP&L has proposed to continue the DIR and uncollectible rider. We disagree. The DIR and the uncollectible rider were created in ESP III and should be eliminated. We acknowledge that the levels of the DIR and uncollectible rider were established in DP&L’s most recent distribution rate case. In re Dayton Power and Light Co., 15-1830-EL-AIR et al., Opinion and Order (Sep. 26, 2016) at ¶ 54. However, both the DIR and the uncollectible rider were created in ESP III and set to zero. Therefore, these two riders should be eliminated with the withdrawal of ESP III. Moreover, neither the DIR nor the uncollectible rider could be created in the distribution rate case. The DIR and uncollectible riders are rate adjustment clauses; and R.C. 4909.18 does not authorize the creation of rate adjustment clauses," PUCO said

"DP&L is directed to file new revised final tariffs, which remove the provisions for the decoupling rider, the RCR, the DIR, and the uncollectible rider," PUCO said

PUCO noted that the Stipulation adopted in these cases contained placeholders permitting DP&L to seek approval of a storm cost recovery rider, as well as a transmission cost recovery rider, and a rider to recover regional transmission organization costs not recovered in the TCRR. Therefore, the Commission found that the storm cost recovery rider and the TCCR-N are authorized by ESP I, independent of ESP III, and should be continued.

PUCO authorized the re-introduction of the rate stabilization charge (Rider RSC) because it was a term of ESP I

PUCO said that, under R.C. 4928.143(C)(2)(a), DP&L has an "absolute" statutory right to withdraw its application for ESP III, thereby terminating it, and that nothing in a stipulation among various parties including DP&L (which includes terms concerning withdrawal from the stipulation) constitutes a waiver of that right.

Earlier:

The Public Utilities Commission of Ohio (PUCO) today issued finding and orders authorizing Dayton Power & Light (DP&L) to, as described in a PUCO news release, "withdraw from its current electric security plan (ESP) and revert to a previous rate plan."

Written orders with specific details were not immediately available

As previously reported, DP&L filed a notice that it would withdraw ESP III after the Commission directed the utility to terminate its Distribution Modernization Rider (DMR) included in ESP III, in response to a recent Ohio Supreme Court Ruling.

See our prior story for more background on the ESP and impact on the retail market from the as-filed withdrawal and replacement tariffs. PUCO has modified certain aspects of the replacement tariffs versus DP&L's filing, but complete specifics, beyond certain riders noted below, were not immediately available

"The PUCO approved the current ESP III on Oct. 20, 2017. With today’s decision, DP&L will revert to its ESP I, first approved by the PUCO on June 24, 2009," PUCO said in a news release

"In its order, the Commission noted several riders or terms and conditions of the current plan will terminate along with ESP III, such as the Distribution Investment Rider and Distribution Decoupling Rider. Meanwhile, provisions of ESP I, such as the Rate Stabilization Charge will be reinstated on customer bills," PUCO said

"The net effect of reverting to ESP I rates results in the reduction of annual revenues to DP&L by approximately $70 million. Customer rate impacts will be known once DP&L files revised tariffs in accordance with today’s Commission order," PUCO said

This story will be updated once a written order is issued by PUCO, check back for more details

Cases 08-1094-EL-SSO, 16-395-EL-SSO

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