Update: On April 2, 2015, the Commission issued an opinion and order on Duke’s ESP application. The Commission’s order made the following determinations of special importance to OMA. First, with regard to the proposed Price Stability Rider, the Commission determined, much as it did in the AEP ESP Order, that Duke’s proposed PSR is authorized under Ohio law as it is a charge, functions as a financial limitation on shopping, and, in theory, would stabilize rates. The language used by the Commission in its evaluation of Duke’s PSR virtually mirrored the language used in the AEP ESP Order. Thus, the Commission authorized Duke to establish a placeholder PSR at an initial rate of zero. Further, the Commission found that Duke had not sufficiently demonstrated that the PSR would provide customers with sufficient benefit from the financial hedging mechanism or any other benefit commensurate with the rider’s potential costs; thus, it denied recovery of any costs through the placeholder PSR.
Second, the Commission approved Duke’s proposed distribution capital investment rider (Rider DCI) subject to certain modifications. Importantly, rather than adopting Duke’s proposed rate design for the rider, they adopted the rate design that OMA and other parties proposed, which provides for an equal percentage increase on distribution rates to all classes, to the extend such increases are necessary. The Commission also imposed annual caps for Duke’s recovery under Rider DCI of $17 million in 2015, $50 million in 2016, $67 million in 2017, and $35 million for the first five months of 2018.
Third, as recommended by OMA and other parties, the Commission determined that it was in customers’ best interests to continue the load factor adjustment rider (Rider LFA) through the ESP term, but gradually phase out the rider over the term of the ESP. Thus, the rider will continue as it has under Duke’s current ESP, but will be reduced by 33 percent in the first year of the new ESP term, 33 percent in the second year, and 34 percent in the third year. The rider will conclude with a final true-up.
Fourth, the Commission found that the large customer interruptible load program should continue, with modifications which make participating customers subject to unlimited emergency-only interruptions year round. The Commission also determined that the level of credit should remain at 50 percent of net cost of new entry, and that Rider DR-ECF, through which Duke may apply for recovery of the costs of its interruptible program, should continue. The Commission directed Duke to also bid the additional capacity resources associated with the program into PJM’s base residual auctions held during the ESP term, with any resulting revenues credited back to customers through Rider DR-ECF.
Fifth (and interestingly), the Commission noted that demand response plays an important role in ensuring reliability, while also encouraging state economic development, and found that, because of the possibility that federal proceedings may significantly alter the jurisdiction of demand response, a new placeholder pilot demand response rider should be established. The Commission stated that within 30 days of a final order from the U.S. Supreme Court or an order denying petitions for certiorari of the pertinent demand response case reviewing FERC Order 745, Duke or the Commission may open a new docket to revisit any provisions in the ESP case that relate to demand response and load management mechanisms within Duke’s service territory.
Applications for rehearing of the Commission’s Opinion and Order must be filed by May 4, 2015.
