News and Analysis
PJM, the regional transmission organization (RTO) and administrator of the wholesale power markets in Ohio this week filed a post-hearing brief expressing concerns about the negative effects on electricity markets of AEP’ s power purchase agreement (PPA) case pending before the Public Utilities Commission of Ohio (PUCO).
PJM said of its reason for filing, “(Addressing faults in the proposal) is critical in order to send the right signal as to Ohio’s interest in attracting competitive generation to meet the state’s future economic development needs. Silence on this issue will only make it harder for investors in new generation to view Ohio as a place where their investment is welcome and can compete fairly with existing legacy generation of the sort covered by the Stipulation.”
As to the claim that system reliability will be threatened if the PPA is not approved, PJM wrote, “There has been significant new generation entry that, combined with demand response and imports within PJM’s capacity import limit, has consistently kept PJM’s reserve margins on target. Indeed, as various witnesses noted, there are several substantial new plants under construction or proposed for Ohio.”
PJM Independent Market Monitor Dr. Joseph Bowring also filed a brief, in which he stated, “The purpose of the PPA Rider is to transfer the costs and market risks associated with the PPA Rider Units from AEP’s shareholders to AEP’s ratepayers. AEP has not demonstrated and cannot demonstrate why customers should bear these costs and take these risks, if a well-informed generation owner is not willing to do so.”
Manufacturers, and other electricity consumers, have benefited from Ohio’s move to a deregulated electricity market. This week, the OMA Energy Group filed a brief in the AEP case which would undermine the market and force large costs on its customers for the next eight years for no benefit.
“Electricity is a critical cost component for manufacturers in producing their products. By allowing manufacturers to shop for their electricity supply, and having suppliers compete to provide that electricity, the cost component compared to what would otherwise be available to manufacturers under the utilities’ tariffed rates has come down. The downward pressure on prices created by a competitive market should be fostered,” the OMA Energy Group wrote in its brief.
Yet, the brief states, “If accepted, the (proposal) … will saddle distribution customers with the generation costs of a fleet of aging and expensive coal units and threaten to erase the gains made by Ohio manufacturers and other consumers in the competitive market. That outcome is unfaithful to the General Assembly’s unambiguous market-based directive and will thwart the state’s effectiveness in the global economy. Indeed, as one of the top generators of electricity in the nation, the harms to Ohio could be especially painful. Given the interconnectedness of the electrical grid and the competitive markets, these harms will have ripple effects beyond Ohio’s borders.”
Last week the U.S. Supreme Court breathed new life into “demand response” programs across the nation. Specifically, in a 6-2 decision the justices upheld the Federal Energy Regulatory Commission’s authority to regulate wholesale demand response programs. Therefore, Ohio energy consumers can continue to participate in the PJM demand response programs.
Read more about benefits of participating in demand response programs in this OMA Energy Guide blog.
Litigation continues at the Public Utilities Commission of Ohio (PUCO) regarding proposed FirstEnergy and AEP “power purchase agreement” (PPA) case settlements.
The PUCO is expected to decide the cases in the coming months.
If the PUCO approves the utilities’ proposals, all customers in each utility’s service territory would be required to pay non-bypassable PPA riders.
Use this calculator to estimate what your company might pay.
Concerned members should send a letter (on company letterhead) to the PUCO to express opposition. Include the case numbers in the subject line: PPA Cases 14-1693-EL-RDR; 14-1297-EL-SSO, and email to the PUCO.
Here’s a model letter that you can customize and send. Please consider sending a copy of your letter to Governor Kasich and to your state representative and state senator, as well as to OMA’s Ryan Augsburger.
“FirstEnergy just asks for too much” is what Akron Beacon Journal editorial page editor, Michael Douglas, says of the FirstEnergy request before the Public Utilities Commission of Ohio.
“It defines the benefits too narrowly. The proposal shifts considerable risk from shareholders to consumers.”
What he’s talking about is FirstEnergy’s request of the regulators to provide guaranteed revenue for the next eight years in the form of a Power Purchase Agreement whereby the utility would purchase power from its own generation plants at customer-subsidized prices.
This week John Funk of the Plain Dealer reported that the Electric Power Supply Association and the Retail Energy Supply Association have asked for an immediate FERC review of AEP and FirstEnergy special deals called “power purchase agreements” that are before the Public Utilities Commission of Ohio (PUCO). And, separately, the Office of the Ohio Consumers’ Counsel has filed its own objections with the FERC this week.
The complaining parties say that the utilities’ proposals do not meet the competitive standards the PUCO established in previous cases and are disruptive to the electricity market.
The Public Utilities Commission of Ohio (PUCO) Nominating Council met this week to interview applicants for the position of commissioner of the PUCO to fill a five-year term commencing on April 11, 2016.
The Nominating Council subsequently selected four candidates to submit to Gov. John R. Kasich for his consideration: Asim Z. Haque, who currently holds the seat that is up for appointment, Robert E. Burns, Alan L. Erenrich, and Allan Sears.
The PUCO Nominating Council is a broad-based, 12-member panel charged with screening candidates for the position of commissioner.
The board of the Ohio Consumers’ Counsel released a report this week that it titled, “Everyone is Unhappy.”
Referring to the state’s electricity system, the board noted that “thirty-two states have cheaper electricity for residential consumers than Ohio,” and that among the states that have enacted some form of generation deregulation Ohio’s “rate of cost increase stands alone as the highest.”
“So what to do? Consumers have grounds to be unhappy, commerce and business have grounds to be unhappy, and utility executives and stockholders have grounds to be unhappy. In fact, they all might have grounds to be very unhappy in the future, if some analysts are correct and the investor-owned utilities plunge into a death spiral,” wrote the board.
The group calls for the legislative creation of a task force to study reforms in Ohio electricity law.
CEOs of some of the country’s largest competitive electric suppliers traveled to Columbus this week to meet with state leaders to express their opposition to AEP and FirstEnergy utility power purchase agreement settlement proposals before the PUCO that will guarantee utility profits and bypass competitive bidding for electricity.
As reported in The Columbus Dispatch: “The number one biggest lie is that it’s going to save consumers money,” said Robert Flexon, president and CEO of Dynegy, a Houston-based electricity company that owns power plants in Ohio.
OSCO Industries, Inc. CEO, John Burke, sent a letter to the PUCO saying: “… AEP’s PPA proposal will significantly impair OSCO’s ability to compete in today’s marketplace.” And, “The PPA is a complete reversal of about 15 years of migration toward deregulating electric generation in our state and provides an unjustified wind-fall for AEP.”
In the FirstEnergy Solutions (FES) RTO Expense Surcharge Case, the Public Utilities Commission of Ohio (PUCO) denied FES’ motion to dismiss the complaint that was filed by numerous OMA members (complainants). Complainants alleged that FES unlawfully passed through charges associated with the 2014 polar vortex.
The PUCO also granted the complainants’ request to prevent termination of service and ordered that the case be set for an evidentiary hearing. Contact OMA’s Ryan Augsburger for more information.