News and Analysis
This week the Federal Energy Regulatory Committee (FERC) issued a decision that halts the underlying transactions of the Public Utilities Commission of Ohio (PUCO)-approved subsidy requests from Ohio-based utilities AEP and FirstEnergy. Their bailout proposals would have forced Ohio customers to subsidize old, inefficient power plants for the next eight years at an estimated cost of $6 billion.
OMA president Eric Burkland issued a statement commenting on the FERC’s decision, saying: “The OMA strongly opposed the PUCO decision that harmed wholesale markets that are benefitting Ohio electricity consumers and that served to subsidize potentially uneconomic utility generating units. … The unanimous FERC decision is welcomed by Ohio manufacturers that depend on markets to provide the cost and innovation benefits of competition.”
The non-bypassable new costs under the PUCO-approved plans would have come at a time when the competitive electricity marketplace has begun to mature and is producing benefits in cost savings and innovative, new products. The utilities’ plans would add costs to customers’ bills with no commensurate benefits.
In an effort to prevent the potential damage, the OMA Energy Group, among others, pursued its available legal appeals to the FERC.
This one-page summary of the FERC decision prepared by OMA energy counsel, Carpenter Lipps & Leland notes: “FERC agreed with the arguments asserted by OMAEG (OMA Energy Group) … that customers are captive because they have no ability to avoid the costs associated with the Affiliate PPAs by shopping with a competitive supplier.”
Senator Bill Seitz (R-Green) introduced a bill, Senate Bill 320, that extends the freeze on the state’s renewable and energy efficiency standards for another three years. The bill makes extensive other changes to the state’s energy statutues.
Read this analysis prepared for the OMA by Runnerstone.
Late last week, the Ohio Supreme Court decided two separate cases impacting AEP customer charges.
In the first case, Justice Sharon Kennedy authored the high court’s decision finding that the PUCO incorrectly authorized AEP to recover from customers the equivalent of transition revenues through the retail stability rider. This is a significant win for customers, estimated to result in a $310 million reduction to customers.
In another case also authored by Justice Kennedy dealing with AEP’s capacity-pricing mechanism, the court found in favor of AEP, stating that the PUCO erred by failing to adequately explain the method it used to calculate credits used to reduce the capacity charge. The court did not find that the capacity charge collected was incorrect, just that the PUCO had not adequately explained its decision.
Both cases were sent back to the PUCO.
In a decision with major implications for the recently approved, customer-punishing power purchase agreement (PPA) cases of AEP and FirstEnergy, the U.S. Supreme Court ruled unanimously that a Maryland Public Service Commission (Maryland PSC) plan to boost in-state generating capacity with subsidies paid by ratepayers unlawfully intruded on the Federal Energy Regulatory Commission’s (FERC) jurisdiction over wholesale rates.
The court affirmed that FERC has the exclusive authority to set wholesale energy and capacity prices and oversee whether those rates and charges are just and reasonable.
An OMA Energy Group analysis of the decision notes: “The Court’s decision bolsters OMA Energy Group’s position in the AEP and FirstEnergy PPA cases before FERC. Just like in the Maryland case, the PPAs in the AEP and FirstEnergy cases guarantee a rate that is distinct from the clearing price set in PJM’s capacity auction. The PPAs at issue in the AEP and FirstEnergy cases guarantee a payment to the generators different from the clearing price set in the PJM auction.”
OMA Energy Group has argued that this type of arrangement, just like in Maryland, impermissibly interferes with FERC’s authority to oversee wholesale rates as the guaranteed revenue stream from customers will make the affiliate generating units agnostic to wholesale-market prices, distort wholesale-market price signals, and deter new entry from competitive generation suppliers.
Read more in this energy blog by OMA counsel Bricker & Eckler.
The American Council for an Energy-Efficient Economy (ACEEE) has posted a new web page of national indicators of energy efficiency in the U.S. The web page shows energy efficiency trends by sector.
According to ACEEE metrics, nationally, energy productivity is trending upward over a five-year period. Productivity is the amount of service or useful work produced by a unit of energy.
Similarly, the energy intensity of the U.S. industrial sector (manufacturing, agriculture, mining, and construction) has been improving steadily. Nationally, less energy is needed per dollar of goods produced.
OMA general counsel, Bricker & Eckler, has drafted a summary of the renewable and advanced energy provisions of both cases here. Bricker also put together a one-pager on what’s next on the matters, which you can read here.
The OMA Energy Group has filed a complaint with the Federal Energy Regulatory Commission (FERC), asking FERC to void the decisions as illegal, customer-punishing incursions into the operation of wholesale electricity markets. The Energy Group is also evaluating legal options to stop implementation.
The meeting will be held at Ariel Corp., 3194 Massillon Rd., Akron, OH 44312
As usual, a call-in option will be available at: (866) 362-9768, 940-609-8246#
In addition, members are invited to a networking dinner the evening prior, Wednesday, May 25, at Bender’s Tavern, 137 Court Ave SW, Canton, OH 44702.
Please register here for in-person or call-in attendance, and dinner option. Or call us at (800) 662-4463.
Senator Bill Seitz (R – Cincinnati) shared with interested parties draft legislation to revise Ohio’s renewable and energy efficiency standards. Senate Bill 310 from the prior session, instituted a freeze of escalating standards. That freeze is slated to go back into effect in early 2017.
The Senate bill draft would extend the freeze for both renewable energy and energy efficiency for an additional three years. The bill also reduces annual benchmarks in out years and expands the ability of business customers to opt-out of the riders.
Columbus Dispatch reporter Dan Gearino posted an article describing some early reactions to the proposal.
Since 2012, enabled by Senate Bill 315, electricity customers have been able to seek an energy efficiency rebate for Combined Heat and Power (CHP) and Waste Energy Recovery (WER) systems from their electric utility.
This 90-minute webinar on Tuesday, April 12 at 10:30 a.m. EDT will feature presentations from Jon Williams, AEP-Ohio, Manager, Energy Efficiency & Demand Response, and two AEP-Ohio industrial customers, Kraton Polymers and Solvay Specialty Polymers, that have developed qualifying CHP projects. Presenters will discuss project financing, efficiency and savings benefits, as well as challenges and lessons learned.
This webinar is designed for CHP and WER developers and electric customers, clean energy policy advocates, technical experts, policymakers and regulators and their staff. This webinar is free and open to the public, but advance registration is required.