June 29, 2012
Update: On June 28, 2012, DP&L convened another settlement meeting where it rolled out a revised settlement proposal. Please recall that settlement negotiations are confidential. Please do not share or distribute. The proposal is:
The term is from January 1, 2013 through May 31, 2018. However, DP&L has agreed to conduct a competitive bidding process (“CBP” or auction) to set the prices for standard service offer (“SSO”) customers over a shortened time frame to get to full market. Specifically, in 2013, 33% of the SSO load would be priced pursuant to the CBP and that price would be blended with the current SSO price. In June 2014, 67% of the SSO load would be priced pursuant to a CBP and 100% of the SSO load would be priced pursuant to the CBP as of June 1, 2015. Shopping customers in DP&L’s service are already priced at the PJM RPM price for capacity so that is not an issue as in the AEP-Ohio cases. DP&L has also agreed to spin off its generating assets (which it said it was unwilling to do prior to this meeting). DP&L enlisted Deutsche Bank to help with that process and determined that it could be completed by no later than December 31, 2017. However, in order to complete the corporate separation and ensure financial integrity of both entities, DP&L has asked for a nonbypassable charge of $73 million annually. The $73 million is the same amount that is currently being recovered as essentially a provider of last resort charge. Thus, there is no resulting rate increase from the charge. In other words, DP&L has tried to balance a zero rate increase that customers want with a move to competition that CRES providers want. Also, because of DP&L’s currently high SSO rates, blending the rates going forward with a CBP is actually predicted to reduce the SSO rates by 8% in 2013, 10% in 2014 and 10% in 2015. DP&L has also agreed to pull the currently bypassable, generation related riders out of the “reconciliation rider” and keep them bypassable as opposed to its initial proposal to make them nonbypassable. DP&L has also agreed to not seek recovery of its rate case expenses. Finally, DP&L has agreed to take a number of measures to foster competition, like: eliminating the 12-month stay, eliminate fees charged to CRES providers for different billing features and reducing the switching fee to $5.
The parties requested that DP&L provide bill impacts of its proposal. Additionally, many parties raised concerns with calling this settlement proposal an MRO when it accelerates the transition to market faster than what is statutorily permitted under an MRO. DP&L finally, essentially said that if it is able to get the total package it thinks it needs, it will call the package an ESP. This is a good thing as once the PUCO grants an MRO, the utility may never revert to an ESP. DP&L committed to getting the bill impacts out to the parties and we will reconvene on July 16, 2012.
