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Choice Utility Which Divested Generation Now Seeking To Own, Operate "Natural Gas Powered" Generation
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AEP Ohio is seeking, through two proposed agreements filed at the PUC of Ohio, to own and operate two natural gas-powered generation systems (fuel cells) to be located at two customer data center locations
Specifically, under a statute allowing a utility to construct renewable generation at a mercantile customer site (R.C. 4928.47(A)), AEP Ohio is seeking PUCO authorization for separate agreements to own and operate behind-the-meter fuel cell systems to serve separate locations housing Amazon Data Services, and Cologix Johnstown (a data center operator)
Each fuel cell system will use natural gas to generate electricity using solid
oxide fuel cells, which qualify as a renewable resource under statute
The size of each system was filed on a confidential basis
The Amazon agreement is a 6-year agreement, and the Cologix agreement is a 15-year agreement
AEP Ohio said that it is not seeking generation ownership on an, "indefinite, ongoing basis", but that PUCO approval of the agreements would allow AEP Ohio to own the systems during the "interim" and "explicitly limited" term of the customer agreements -- 6 or 15 years, depending on the customer
Per the statute, ratepayers cannot be assigned any costs arising from such agreements or generation
AEP Ohio said that the systems will not export any power to the grid
"The Fuel Cell System will be designed so that it will not deliver any electric
energy to the grid. Even if the Fuel Cell System were to deliver energy to the grid (which it
cannot), neither AEP Ohio nor the Customer would receive any compensation for delivering
energy to the grid," AEP Ohio stated
AEP Ohio said that the agreements do not require any modification to AEP Ohio's existing corporate separation plan, citing the statutory authority for such agreements
AEP Ohio further said that the provision of behind-the-meter, customer-sited generation, which does not constitute retail electric service (with retail service defined as using the grid and not behind-the-meter activities), does not fall within the corporate separation plan requirements
The Retail Energy Supply Association alleged in a motion to intervene in each proceeding that, "AEP Ohio ... requests that the Commission completely ignore all corporate
separation requirements and allow AEP Ohio to proceed on this project, and future
projects with blatant disregard for Ohio’s pro-market energy policies or Ohio’s long-history
of enforcing antitrust provisions."
Citing a separate PUCO proceeding examining a data center tariff proposed by AEP Ohio, RESA alleged, "As evidenced in the data center case, AEP Ohio has utilized
distribution service employees to market its unregulated products and services to
customers with information and access not provided to competitive market participants
like RESA’s members. It is yet to be determined if that occurred with respect to this
Application, but a review must occur to ensure both statutory compliance and the
reservation of competitive energy markets."
Concerning corporate separation, AEP Ohio said in its initial applications for the fuel cell agreements that, "Approving the Agreement does not require any modification to AEP Ohio's
approved corporate separation plan. R.C. 4928.47 provides an independent statutory basis for
AEP Ohio to construct and own the Fuel Cell System for the benefit of the Customer. Indeed,
R.C. 4928.47 -- the specific statute governing this situation that was enacted well after R.C.
4928.17 [relating to corporate separation plans] -- reflects the General Assembly's intent that an Ohio electric utility may own a
behind-the-meter renewable resource asset that is located on the customer's premises and
whose output is used only by the customer. By enacting R.C. 4928.47, the General Assembly
expressed clear legislative intent to provide an exception to the general rule in R.C. 4928.17
that electric utilities are prohibited from owning generation assets unless explicitly approved by
the Commission in a corporate separation plan. As such, the Commission should grant this
Application without requiring any modification to AEP Ohio's Commission-approved corporate separation plan."
AEP Ohio further said, "To the extent the Commission concludes that the Fuel Cell System being owned
by AEP Ohio during the contract term requires a governing provision in its corporate
separation plan, AEP Ohio alternatively requests that the Commission issue an order granting
the Application and directing AEP Ohio to file an 'alternative' functional corporate separation
plan in accordance with R.C. 4928.17(C). The alternative functional corporate separation plan
would permit AEP Ohio's ownership of the Fuel Cell System for an interim period coterminous
with the contract term of the Agreement. Importantly, there is no need to file an amendment to
AEP Ohio's existing corporation separation plan pursuant to R.C. 4928.17(D) because the
alternative functional corporate separation plan authorized under R.C. 4928.17(C) would be
narrow in scope (i.e., the Fuel Cell System) and explicitly limited in duration. AEP Ohio is not
seeking authorization to own the Fuel Cell System (or any other generation assets) under R.C.
4928.47 on an indefinite, ongoing basis. Accordingly, if the Commission determines any filing
is required under R.C. 4928.17, it should direct AEP Ohio to file an alternative functional
corporate separation plan in accordance with R.C. 4928.17(C), which would enable AEP Ohio
to own the Fuel Cell System for an interim period of the contract term."
AEP Ohio further said, "As a related matter, AEP Ohio submits that the Agreement is simply not encompassed by the corporate
separation requirements of R.C. 4928.17. The term 'retail electric service' is defined in R.C. 4928.0l(A)(27) as
'any service involved in supplying or arranging for the supply of electricity to ultimate consumers in this state,
from the point of generation to the point of consumption.' This definition only encompasses supply and
distribution of electricity over the grid and not activities such as customer-sited renewable resources that offset a
customer's power requirements."
Case No. 25-0133-EL-AEC -- Amazon
Case No. 25-0134-EL-AEC -- Cologix
Johnstown
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March 3, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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