Update: On August 7, 2013, the PUCO issued its opinion and order regarding the evaluation of FirstEnergy’s alternative energy rider (“Rider AER”). The PUCO disallowed $43,362,796.50 of FirstEnergy’s recovery which correlated to FirstEnergy’s renewable energy credits (“RECs”) purchases in 2011. With respect to these REC purchases, the PUCO stated, among other reasons, that “actual purchase price was not the result of a competitive bid but a negotiated purchase price. That negotiated price was unsupported by any testimony in the record.” Further, the PUCO directed FirstEnergy to credit Rider AER in that amount within 60 days of the issuance of a final appealable order in this proceeding.
Another issue in this proceeding involves the disclosure of REC supplier information including, name and pricing. OCC adamantly argued that the PUCO should make this information open to the public. FirstEnergy argued that this information is business proprietary and should remain confidential. The PUCO held that it will permit a generic disclosure of FirstEnergy Solutions, which is FirstEnergy’s subsidiary, as a successful bidder in the competitive solicitations. However, specific information related to bids by FirstEnergy Solutions, such as quantity and price of RECs contained in such bids, shall continue to remain confidential.
The PUCO also set forth a method for calculating the 3% cost cap in its Order, hopefully putting an end to complaints that the statutory formula is vague and requires a legislative fix. The PUCO largely adopted Staff recommended calculation, which was based on “the plain reading of the statute” and noted that the cost of compliance was a “very small percentage of the Company’s cost of SSO generation, even at prices argued by intervenors to be significantly high.”
Counsel will prepare a handout for the upcoming OMAEG meeting to further illustrate the formula to calculate the 3% cap, which was can be summarized as follows:
sales baseline in MWhs for the applicable compliance year (an average of the utility’s annual retail sales from the three preceding years)
X
a “reasonably expected” dollar per MWh figure for the compliance year (weighted average of the cost of SSO supply for delivery net of distribution system losses)
X
3%
=
the maximum funds available to be applied toward compliance resources for that compliance year.
The PUCO further found that utilities should calculate the 3% cost cap early in the compliance year and seek PUCO direction after the utility reaches its maximum and before incurring additional costs. Finally, the PUCO denied AEP’s Motion to intervene and reopen the proceedings, finding that AEP missed the deadline for taking such actions and did not set forth a compelling reason why AEP could not have acted earlier.
It is highly likely that FirstEnergy and OCC will file applications for rehearing within the thirty-day deadline for filing such an application. FirstEnergy has already publicly criticized the ruling and promised an appeal. The OCC may appeal to urge the PUCO to disallow an even greater amount, potentially arguing that records currently under seal should be opened to the public to allow a greater transparency. We will continue to monitor this proceeding and provide updates accordingly.
