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Another Utility Seeks Interim Relief For Default Service Auction, Would Not Use Capacity Proxy Price
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AEP Ohio (Ohio Power) petitioned the PUC of Ohio for interim relief authorizing AEP Ohio to conduct a March 2024 full
requirements Standard Service Offer auction to procure 50% of supplies for the term June 2024 to May 2025 via a 12-month product
AEP Ohio previously procured 50% of the supply for this period, under a 12-month product, in November.
AEP Ohio sought interim relief because a proposed electric security plan covering default service for the period starting June 1, 2024 remains pending before PUCO
Despite PUCO's recent ruling directing utilities to use a capacity proxy price so that utilities could resume longer-term procurements in the absence of a forward PJM base residual auction capacity price, AEP Ohio specifically is not seeking to use a capacity proxy price under its proposal. Limiting the procured supply to a 12-month product would not necessitate a capacity proxy price since the June 2024 delivery year capacity price is known, but a longer-term product would implicate an unknown capacity price
AEP Ohio said that it is not seeking to procure a longer-term contract with a capacity proxy price due to the careful consideration which utilities must take in developing the new use of the proxy price (with the EDC noting the upcoming deadlines in order to conduct the March 2024 procurement), and because bidders are already familiar with the use of the 12-month product, while there is insufficient time to educate bidders about a new capacity proxy price process
AEP Ohio would conduct the 12-month product procurement under the bid plan and process used in its most recent ESP, and does not seek to implement any proposed changes to the procurements that have been included in the currently pending ESP proceeding
Regarding the capacity proxy price, AEP Ohio said, "The Company appreciates the Commission’s action in the above-mentioned proceeding.
However, as recognized by the Commission in its December 13th Order, the implementation of a
capacity proxy rate, as well as a true-up for such rate, will involve careful consideration by, and
coordination between, the Company and its auction manager. The steps needed to implement the
capacity proxy rate (including the calculation methodology, the appropriate education of
potential bidders, as well as the updates to the auction rules, Master SSO Supply Agreement,
bidder information sessions, and other auction documents) and true-up method will not be completed in time for the Company to hold a March 2024 auction following the revised
provisional schedule provided as Appendix A, that largely maintains the various timelines for
bidder deadlines provided in the auction rules. As such, AEP Ohio proposes to conduct the
March 2024 auction consistent with the competitive bidding process approved in the Company’s
current electric security plan, ESP IV, and to revise its auction product schedule to procure 50
tranches of a 12-month product in its March 2024 auction."
"Additionally, as a Commission decision has not yet been made regarding the
Company’s Application, as modified by the Stipulation, procuring a 12-month product in a
March 2024 auction would mean that the Company would not be procuring longer-term products
into the term of its proposed ESP V prior to receiving a Commission decision on the Application
and Stipulation," AEP Ohio said
As previously reported, PUCO Staff have recommended that the FirstEnergy EDCs, which similarly sought relief to conduct a procurement for a 12-month product while their ESP is pending, should use a capacity proxy price and procure half of the sought tranches as a 24-month product
AEP Ohio Docket: Case No. 23-23-EL-SSO
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December 22, 2023
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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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