Update: Recall that DP&L requested a five-year ESP that annually increased the percentage of competitively acquired rates into SSO rates, reaching full competitive market status at the end of the five years. DP&L also requested several non-bypassable riders, most significant of which was the service stability rider (“SSR”) of $137.5 million annually for a period of five years. DP&L argued that this charge was needed to maintain its “financial integrity” due to customers that switch to competitive generation providers. DP&L also requested a Bid-True-Up rider, a new “switching tracker” charge designed to compensate for lost revenues resulting from customers that switch providers, and several other fees.
OMAEG and other intervening parties opposed DP&L’s request because of the financial impact on manufacturers, stressing DP&L’s failure to adequately establish that the SSR was justified or would create stability in electric rates for consumers. Other Intervenors (FES, OCC, Duke Energy Retail and others) also urged the PUCO to adopt a shorter timeframe for the end of the SSR, arguing that a quicker move to competitive market rates (which are currently low) should benefit consumers.
On September 4, 2013, the PUCO issued an order approving DP&L’s electric security plan (“ESP”) with modifications. The PUCO directed that the ESP should start on January 14, 2014 and end December 31, 2015 (*see following narrative for a subsequent amendment to this portion of the Order.) Thus, the ESP was approved for a two-year period, instead of the five years requested. DP&L was also required to conduct an energy-only auction for 10% of its standard service offer load for 2014; 40% for 2015; and 70% 2016. DP&L is expected to have moved fully to market and divested all of its generation assets when the ESP ends.
As to the SSR, where most of the evidence and argument was focused, the PUCO found the SSR is a non-bypassable stability charge. The PUCO determined that both shopping and non-shopping customers benefit from the SSR and that the SSR was necessary for maintaining DP&L’s financial integrity and for the provision of default service. After examining a great deal of testimony related to the amount of the SSR, the PUCO authorized DP&L to collect $110 million per year for 2014 and 2015. DP&L can then apply for a 10-month extension of up to $92 million to be collected in 2016 (The SSR-Extension, or “SSR-E”). This represents a $26.5 million reduction from what DP&L initially requested, but is still significantly higher than DP&L’s present $73 million annual rate stabilization charge (“RSC”), which some Intervenors argued should set the ceiling for the SSR. However, the PUCO ruled that collection of the increase in SSR over the amount of the current RSC could not begin until DP&L began its move to market pricing and blending of market rates began.
The PUCO also established a formula for collection of the SSR, which is favorable for manufacturers and generally consistent with arguments presented by the OMAEG, other Intervenors and Staff, as follows:
1) a SEET threshold of 12% is established, consistent with the PUCO’s holdings in the AEP ESP cases and will ensure that DP&L does not benefit disproportionately from the SSR;
2) all SSR revenues must remain with DP&L, and cannot be transferred to affiliates or through dividends;
3) Staff’s proposed rate design for the SSR was adopted and amended to include the 1-CP class-allocation methodology instead of DP&L’s flat rate customer charge;
4) finally, the SSR was authorized only through December 31, 2015, with an opportunity for DP&L to seek further relief after that time.
The PUCO denied DP&Ls request for the Switching Tracker and denied or significantly limited other requested riders that would have any significant impact on manufacturers.
On September 6, 2013, the PUCO held a special meeting to correct the Order issued on September 4, 2013 because of “administrative errors.” The Correction will negatively impact manufacturers and all consumers, undermining many of the limitations on the SSR outlined above. The Order, issued at 10:00 am today, generally extends all timeframes for the SSR and SSR-E. The ESP was extended to correct the end date of the ESP from December 31, 2016 to May 31, 2017. The SSR end date is extended by a full year, to December 31, 2016, meaning that the SSR will be effective for three years, instead of the two years authorized by Wednesday’s Order. The SSR-E period is similarly moved back one year to January 1, 2017, but will end after 5 months, on May 31, 2017, with the amount of the SSR-E reduced to $45.8 million. Requirements for the energy-only auction are adjusted accordingly.
The plan, still effective January 1, 2014, still requires DP&L to fully move to a competitive market and divest all generation assets by May 31, 2017. Unchanged by this revised Order is the requirement for generation rates to be fully set through a competitive bidding process beginning in June 2017.
