August 3, 2012
Update: On August 2, 2012, the Attorney Examiner issued an Entry suspending the current procedural schedule in order to give parties more time to conduct settlement discussions. Accordingly, a new procedural schedule will be established by subsequent entry.
As discussed at this week’s monthly meeting, a settlement meeting was held on July 31, 2012, on DP&L’s settlement proposal. However, rather than discussing DP&L’s proposal, the parties told DP&L they needed to speak together without the company to explore the opportunity for resolution of the major issues amongst the parties. Without the company in the room, the Ohio Consumers’ Counsel (“OCC”) announced that they must have 100% shopping starting in 2013 or they couldn’t settle. The industrial groups said that most of their customers are already shopping and don’t want to pay a higher nonbypassable charge to get a competitive bidding process for non-shopping customers faster and, in fact, the $73 million was too high anyway. After a very productive discussion (as compared to AEP ESP negotiations for sure), a rough skeleton of a counter proposal was developed as follows:
• There would be 100% CBP for residential (and, most likely small commercial customers) starting in 2013. In exchange, residential customers will pay their allocation of the $73 million annual nonbypassable charge of 42% to DP&L.
• For commercial and industrial customers, most are already shopping. Thus, there is less value to commercial and industrial customers of an auction. Thus, commercial and industrial customers will only pay 2/3rd of their allocation of the $73 million in the first year and 1/3rd in the second year and none thereafter.
• DP&L would not be permitted to participate in the auctions until it divests its generation assets (which the industrial customers expressed a preference to push out into the future in exchange for less ESSC).
• DP&L must remain a PJM RPM entity (price capacity at the PJM RPM Price and not switch to an FRR entity (like AEP)).
• DP&L must implement the list of competitive enhancements the marketers came up with PLUS make the peak load contribution (“PLC”) amount available to customers.
• Individual intervenors would not get any cash payments for signing on to the settlement.
The parties, without DP&L are still working to produce a counter proposal that can be unanimously supported or non-opposed. The reduced ESSC is good for OMAEG members – particularly as it did not look like DPLER was going to provide favorable terms under new contracts. We will provide updates as the process develops.
