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Ohio Utility Seeks Delay In Step In Transitioning From Merchant Function
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In compliance tariffs, Duke Energy Ohio has proposed an April 1, 2026 start date for its new wholesale Standard Service Offer (SSO) auction that Duke is now required to use to price natural gas default service
As previously reported, PUCO on December 4 adopted a stipulation establishing the use of an SSO auction at Duke Energy Ohio, replacing the current gas cost recovery (GCR) process for non-shopping customers
Under the SSO, in an annual auction, suppliers will bid to serve, at wholesale, tranches of Duke's non-shopping load under the SSO. SSO Suppliers will bid a retail price adjustment (RPA) at which to serve customers in addition to the applicable NYMEX price. SSO Suppliers will not supply individual customers. See more details here
PUCO's order, and the underlying stipulation adopted in the order, did not include a stipulated or ordered start date for the new SSO-based default service
However, certain other terms of the stipulation, originally executed in August 2023 and pending at PUCO for over a year, had suggested that an April 1, 2025 date would be used, in light of a December 2024 approval date
For example, the stipulation provides that an audit would be conducted of Duke's final GCR period, which was stated to be the period up until, "the change to the SSOR [Standard Service Offer Rate] mechanism (April 1, 2024)". An April 1, 2024 SSOR start date was not possible due to the time that the stipulation was pending consideration at PUCO.
Certain other tariff changes included in the stipulation, noted below, had explicitly included an April 1, 2025 (not 2024) effective date
However, due to PUCO's approval of the SSO transition not being granted until December 4, 2024, Duke expressed concern with using an implementation date that is earlier than April 1, 2026 for the new SSO service, which will sourced from the new wholesale auction and not the existing GCR process
An April 1, 2025 start date for SSO, Duke argued, would not provide an adequate period to allow for SSO bidder education, and would not result in an, "orderly auction process".
Duke warned that a lack of bidder participation, due to a rushed April 1, 2025 implementation, could result in higher rates for customers
Duke also considered using a November 1, 2025 start date for SSO service, with a truncated initial SSO service term (bidders would only serve SSO customers through March 31, 2026, with a 12-month SSO term used thereafter).
Duke noted that such a truncated initial SSO service term would only cover the winter period, which Duke said could result in higher prices over this truncated period. Duke called this result "contrary" to the intent of PUCO's order
As such, Duke proposed to hold the first wholesale SSO auction in February 2026, with service under the new SSO starting on April 1, 2026
In seeking PUCO approval for an April 1, 2026 SSO start date (along with different new dates for other changes noted below), Duke said that it was not able to "conclusively resolve" its concerns with PUCO Staff, though Duke did not specifically recite Staff's position on the SSO start date
As previously reported, PUCO in the SSO order adopted a change in how balancing fees are charged to customers, with this change specifically effective April 1, 2025
Specifically, PUCO adopted the stipulation whose stipulated tariff requires that, effective April 1, 2025, Duke shall cease charging balancing fees to retail suppliers, with Duke instead billing balancing fees directly to all customers on a nonbypassable basis, without
markup
Balancing fees are currently included in retail suppliers' prices (to the extent the supplier chooses to recover balancing fees from customers)
While providing for an April 1, 2025 effective date for the change in how balancing fees are collected, the stipulation had also provided for the existence of a transition period during which time retail suppliers would remove balancing fees from their retail rates, given that the fees would, going forward, be directly charged by Duke to all customers. The time period for this transition was not explicitly defined in the stipulation, but, had the anticipated April 1, 2024 start for SSO service been adopted, the transition period (in terms of notice to the market) would have been at least 12 months in length.
The stipulation also requires suppliers to provide to Duke a "statement/affidavit" that the supplier has "modified" [past tense] its
customer rates, and has "complied" [past tense] with the terms of the balancing fee change. There was no specific deadline for suppliers to provide such an affidavit, except that, Duke, per the stipulation, would inform PUCO Staff of any supplier not providing such an affidavit within 6 months of the stipulation's approval (note that the language requires the supplier to affirm that it has "modified" its rates, not that it will do so coincident to Duke assuming responsibility for the balancing charges. While, as noted, there is no deadline for the affidavit per se, there is the reporting requirement from Duke to PUCO Staff concerning suppliers not providing an affidavit within 6 months, which, depending on timing, could be read as requiring suppliers to affirm that they have already removed the balancing charges from their rates (not their future rates), prior to Duke assuming responsibility for collecting the charges from all customers)
In light of the stipulation's expectation that there would be a transition period for Duke to assume the collection of balancing charges from all customers, with such fees removed from retail supplier rates, Duke proposed that this change in balancing charge collection now be effective June 1, 2025, rather than April 1, 2025
Duke said that a June 1, 2025 effective date for the balancing charge change would provide time for retail suppliers to make necessary changes in their pricing while still allowing the change in balancing charge collection to occur, "as quickly as possible after the six-month period ends."
Associated with this proposed June 1, 2025 effective date for the balancing charge change, Duke proposed to maintain the current rates under Rider FBS (Firm Balancing Service) and Rider EFBS
(Enhanced Firm Balancing Service), unchanged, through June 1, 2025
"While
it would have been preferable to start the SSO auction and balancing changes on April 1st with the
new gas year, Duke Energy Ohio believes its proposal captures the intent of the Stipulation and
Commission Order," Duke said
Case 21-903-GA-EXM
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January 3, 2025
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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