Rep93 From: Rep93 Sent: Thursday, June 15, 2017 9:02 AM To: Snider, Grace Subject: FW: OMA Opposition to H8 239 SB 155, Bailout Bill? Attachments: OVEC Bailout White Paper 6.7.17 LS formatting and RA editdocx From: raugsburger@ohiomfg.com Sent: Wednesday, June 14, 2017 4:32 PM To: Rep93 Subject: RE: OMA Opposition to H8 239 SB 155, Bailout Bill? House Bill 239 Senate Bill 155, the Bailout Bill? would allow investor?owed utilities and their af?liates to collect from electricity customers hundreds of millions of dollars annually to subsidize two power plants owned and operated by the Ohio Valley Electric Corporation (OVEC). The legislation authorizes the utilities to collect these charges from customers until the assets are retired, potentially for 23 years or more. The legislation would impose new above?market charges on manufacturers and distort the market for competitive generation. This bill will diminish our state?s business attractiveness and undermine job retention and creation. We are sharing with you the attached white paper on the Bailout Bill? as you deliberate on the proposed legislation. Please do not hesitate to contact me if you have questions or require additional information. Thank you. Sincerely, Ryan Augsburger Vice President Managing Director of Public Policy Services Attachment Utilities Seek Another Bailout, This Time for Obsolete ?National Defense? Assets Legislation was recently introduced in the Ohio General Assembly that would allow Ohio?s investor?owned electric utilities (utilities) or their affiliates, who are part owners of the Ohio Valley Electric Corporation (OVEC) power plants, to collect from customers unwarranted subsidies to support the uneconomic power plants in which the utilities or their affiliates have an ownership stake, including an OVEC plant located in Indiana. The legislation would guarantee utilities recovery of all costs associated with the OVEC plants, including deterred costs. The legislation authorizes the utilities to collect these charges from all electricity users in Ohio under certain circumstances, which would remain in place until the assets are retired. The utilities? rationale for the necessity of this request is a red herring. The OVEC plants are no different than any other electricity generation resource currently bidding into the wholesale market against other generation resources. What is different is that the OVEC plants are inefficient, produce expensive power and cannot get a foothold in the market. The utilities want i the Ohio General Assembly to provide subsidies so they can ignore the market, keep the plants open, have Ohioans purchase power from the plants and pay prices that are higher than for other i sources of electricity, and avoid having to write down the value of these plants as they should have done years ago. If approved, this would not be the utilities? first consumer-paid subsidy. Ohio?s investor? owned utilities received $9.2 billion in ?stranded assets? and ?regulatory transition? payments from 2000 to 2010. Despite collecting these payments, utilities failed to write down their i noncompetitive generating plants including OVEC - which are the assets that were i ?stranded.? Now the utilities want more. This is utility regulation right out of the pages of Laura Numeroff?s children?s book If You Give A Mouse A Cookie, the classic tale of a mouse that gets the cookie it asks for, but always wants more. From 2000 to 2017, the utilities received $15.7 billion of cookies and are now asking for whatsome have estimated to be an additional $300 million per yearfor the life of the plants. Another source, the Ohio Legislative Service Commission (LSC), has estimated the costs paid by consumers to be potentially as high as $256.6 million per year for the 24~year period of the current OVEC contract. Clearly, it?s time to put a lid on the cookie jar. Ohio ratepayers should not be required to support uneconomic power plants operating at barely half-capacity, such as the OVEC plants. Requiring customers in Ohio to pick up this tab would increase operating costs for Ohio?s businesses and disadvantage these businesses ., compared to businesses in competing states with lower electricity costs. The subsidy would be i levied on a significant segment of the population, including customers in Dayton Power Light, Duke Energy Ohio and FirstEnergy service territories. The Ohio Manufacturers? Association June 7, 2017 1 Background The Ohio Valley Electric Corporation is a companyjointly owned by several electric utilities.1 OVEC and its wholly owned subsidiary, Indiana?Kentucky Electric Corporation, own and operate two electricity generating complexes: Kyger Creek Power Plant, near Gallipolis, Ohio, and Clifty Creek Power Plant, near Madison, Indiana. Ohio?s Kyger Creek complex has five electricity generating units, and Indiana?s complex has six generating units. According to website, OVEC was formed in the early 19503 by investor?owned utilities to generate electricity to meet the substantial electric power requirements of the uranium enrichment facilities then under construction by the Atomic Energy Commission (AEC) just south of Piketon, Ohio. Piketon?s Portsmouth Gaseous Diffusion Plant was built from 1952 to 1956 and was one of the three large gaseous diffusion plants2 constructed to produce enriched uranium to support the nation?s nuclear weapons program and the US. Navy. For a short period of time much later, the Piketon plant produced enriched uranium for commercial nuclear reactors. in October 1952, OVEC and the AEC entered into a 25?year power purchase agreement to ensure the availability of electricity to meet the needs of the Piketon plant. The agreement provided for excess generating capacity from OVEC generation not needed by Piketon) to be available to the OVEC utility owners. The agreement was later extended through 2005. However, with the Cold War ending in the early 19908, the demand for enriched uranium for national defense purposes dropped. In September 2000, the US. Department of Energy (DOE) notified OVEC that the power purchase agreement with Piketon was being canceled. in May 2001, the Piketon plant ceased operations, with the remaining work going to Paducah, Kentucky, and Piketon relegated to ?cold-standby? status. In 2003, the power agreement between OVEC and Piketon was terminated. Piketon?s status was clarified in 2006 when the plant?s status shifted from ?cold?standby? to ?cold?shutdown.? in May 2011, the power agreement between OVEC and Piketon was amended to make OVEC's entire generating capacity available to the utility owners to suppiy other customers. The current power agreement extends to June 30, 2040. Today, the Piketon plant remains shut down and is preparing for decontamination and decommissioning. The timing is critical. As far back as 2000(prior to the. implementation of electricity deregulation in Ohio), the utilities knew that Kyger Creek and Clifty Creek Power Plants would no longer be used or needed to serve the demands of national defense. What wouio? the iegisiation do? Essentially, what?s being proposed is a new utility giveaway bill that would bail out OVEC based on the pretense of OVEC being a ?national security asset" because it initially was created, in part, to provide electricity needed to produce enriched uranium to support the nation?s nuclear weapons program. Key provisions of the legislation include the following: 1American Electric Power, Dayton Power Light, Duke Energy Ohio and FirstEnergy Solutions all have equity stakes in OVEC. 2The other gaseous diffusion plants were in Paducah, Kentucky and Oak Ridge, Tennessee. The Ohio Manufacturers? Association June 7, 2017 . 2 Changes state policy to recognize OVEC resources as "national security generation" and preserves ongoing, yet unspecified, benefits associated with such resources. Guarantees cost recovery of a_ll costs associated with OVEC, including deferred costs, which could potentially be substantial since the OVEC power plants are currently operating at partial load, they aren?t efficient and they are likely losing money. Allows the PUCO no discretion under the bill, the Commission must approve recovery for a_ll costs. Approves cost recovery from customers of the utilities of all costs even if the OVEC ownership share is owned by an unregulated affiliate. The bill is silent as to how the affiliate will obtain the revenue from the utility to support its ownership share of OVEC. May allow a utility to serve its Standard Service Offer (880) with OVEC power Requires the Standard Service Offer (880) to include OVEC cost recovery. Allows a utility with an af?liate to use the affiliate-owned power to serve the utility?s SSO regardless of its price, regardless of the management practices of the operating utility, regardless of how it will affect regional markets for electricity generation, regardless whether an unregulated affiliate owns the share of OVEC, and regardless of whether the power is being produced from the Ohio?sited plant. Allows a utility to reopen and revise its current ESP to potentially collect more costs, even though the utility may already be receiving subsidies for OVEC. if the OVEC power is sold in the wholesale markets and revenues are credited to offset the costs to customers, the cost recovery rider will be non?bypassable. Although not stated, this implies that if OVEC power is used to supply the 880, the cost recovery rider will be bypassable. If the proposed legislation becomes law, and therefore, OVEC is getting full cost recovery for its operations, there would be no incentive for OVEC to operate more efficiently or compete on price in the wholesale market. What?s wrong with this picture? The utilities and their affiliates want a subsidy to operate and maintain the OVEC-power plants. They want Ohio customers, both businesses and individuals, to bail them out and support uneconomic power plants that are no longer used to support, or otherwise related to, national defense. These requests are unreasonable and unwarranted for a variety of reasons: Piketon no longer processes nuclear fuel for weapons, and hasn?t for many years. It thus is not a national security asset. Such a claim is nothing more than ?a rhetorical port in a financial storm.? The utilities knew the risk of supplying Piketon from 2001 to 2006, and the closure of the defense facility should have been factored into the utilities? business decisions. The Piketon nuclear enrichment site was opened in 1952 and closed on September 30, 2006. The utilities were notified in 2000 that the contract with Piketon would be canceled. The contract terminated in 2003. The utilities have already been paid transition revenues to help transition to a fully competitive generation market. The Ohio Manufacturers? Association - June 7, 2017 3 In other words, the utilities knew the risk involved, took money to offset the costs of stranded assets, and are now asking to be compensated for their bad debt. In 2016, Kyger Creek?s annual output was 52 percent, while Clifty Creek?s annual output was 44 percent. These two plants basically were running at, or less than half of, full load. If the utilities are pursuing a national defense rationale to offset their losses in the OVEC plants, the solution should be reached at the national level the costs should be spread over the entire population. capacity is 12.1 percent (or 289.9 MW) more than peak usage at Piketon. The additional 289.9 MW was built to service customers beyond Piketon and has continued to serve other customers after the closure of Piketon. This belies the argument that OVEC was built solely for national security purposes. And this is not a trivial amount it?s the equivalent of one generating unit. Under no circumstances should Ohio electricity users subsidize out?of?state power plants. Piketon?s peak usage (before 2001) was 2,100 MW. Total OVEC capacity is 2,390 MW. Ohio?located Kryger Creek is 45.4 percent of OVEC capacity, and lndiana? located Clifty Creek is 54.5 percent of OVEC capacity. So, if the proposed subsidy is awarded to the utilities, the maximum subsidy should be based on 45.4 percent of 2,100 MW Kyger Creek?s share of peak usage), not 100 percent of total capacity. No matter how you cut it, the legislative proposal is a subsidy for uncompetitive power. Subsidizing power produced with old, inefficient technologies should n_ot be allowed. What alternatives are there for addressing the probfem? Following are two ideas for resolving OVEC without rewarding utility owners (using Kyger Creek as the example): 1. Preferred approach. Provide no subsidy and allow the markets to work. Allow the owners to decide whether to continue operating the OVEC units and sell the power into the wholesale market or sell the plants to a new owner at market value. Alternative approach. lfthe owners cannot sell the plants, and the owners deem the plants to be unprofitable or uneconomic, and the owners decide to close the plants, the owners could seek assistance from the State of Ohio. The state could assist in the closure of the plants by forming a nonpro?t Kyger Creek Decommissioning Corporation that could float bonds secured by a non?bypassable rider across Ohio ratepayers. This would be done only after OVEC turns over the title to the generating units free and clear for $1 to the Decommissioning Corporation. The transfer of assets must include on?site transmission equipment and connections. The site would then be owned free and clear by the Decommissioning Corporation, which couid sell or lease the land for economic development purposes. Proceeds from the sale or lease of the site would be used to accelerate payment of the Decommissioning bonds. This alternative approach calls to mind the Troubled Asset Relief Program (TARP), which was signed into law in October 2008. TARP provided a vehicle for the US. Department of the Treasury to purchase toxic assets and equity from trouble financial institutions to strengthen the nation?s financial sector. It was a key component of the government?s actions to address the subprime mortgage crisis. The Ohio Manufacturers? Association June 7, 2017 4 We?ve seen this movie before The OVEC bailout proposal is the utilities? third attempt at forcing Ohioans to purchase above- market electricity. From 2014 through 2015 two utilities created regulatory mandated power purchase agreements to force Ohioans to consume power from their loss-making coal fired piants first. This included the OVEC plants. The PUCO agreed, but the Federal Energy Regulatory Commission stopped in its tracks this blatant attempt to re?monopolize the electricity generating market. This year witnessed FirstEnergy?s attempt to have Ohioans purchase expensive nuclear power first, with the prospect of Ohio electricity users being forced to bail out FirstEnergy?s plant in along with its two northern Ohio nuclear plants. That proposal is still in play. Now we have a proposal that could funnei upwards of $300 million more per year, indefinitely, to the owners of both the Ohio and Indiana OVEC plants. What?s the bottom tine? There is no compeiling argument for having Ohio ratepayers, electricity customers, pay for uneconomic generation assets. Ohio should n_ot reward utility owners with the subsidies they seek for several reasons: . Under Ohio law, utilities are not allowed to own and operate generation assets. a Utilities had multiple'decades to write down the value of their OVEC plants. a Utilities have already collected stranded costs associated with their OVEC generation assets. 0 Utilities should not be rewarded fortheir bad business decisions. More than half (54.5 percent) of the OVEC assets are in lndiana. Ohio consumers should not be required to subsidize Clifty Creek in Indiana. 0 Utilities should not be permitted to impose on customers even more above?market charges. The mouse has consumed enough cookies. The Ohio Manufacturers? Association - June 2017 5 Rep93 From: raugsburger@ohiomfg.com 5 Sent: Wednesday, June 14, 2017 4:32 PM To: Rep93 Subject: RE: OMA Opposition to H8 239 1 SB 155, Bailout Bill" Attachments: OVEC Baitout White Paper 6.7.17 LS formatting and RA editdocx House Bill 239 Senate Bill 15 5, the Bailout Bill? would allow investor?owned utilities and their af?liates to collect from electricity customers hundreds of millions of dollars annually to subsidize two power plants owned and operated by the Ohio Valley Electric Corporation (OVEC). The legislation authorizes the utilities to collect these charges from customers until the assets are retired, potentially for 23 years or more. The legislation would impose new above?market charges on manufacturers and distort the market for competitive generation. This bill will diminish our state?s business attractiveness and undermine job retention and creation. We are sharing with you the attached White paper on the Bailout Bill? as you deliberate on the prOposed legislation. Please do not hesitate to contact me if you have questions or require additional information. Thank you. Sincerely, Ryan Augsburger Vice President Managing Director of Public Policy Services Attachment Utilities Seek Another Bailout, This Time for Obsolete ?National Defense? Assets Legislation was recently introduced in the Ohio General Assembly that would allow Ohio's investor?owned electric utilities (utilities) or their affiliates, who are part owners of the Ohio Valley Electric Corporation (OVEC) power plants, to collect from customers unwarranted subsidies to support the uneconomic power plants in which the utilities or their affiliates have an ownership stake, including an OVEC plant located in Indiana. The legislation would guarantee utilities recovery of all costs associated with the OVEC plants, including deferred costs. The legislation authorizes the utilities to collect these charges from all electricity users in Ohio under certain circumstances, which would remain in place until the assets are retired. The utilities? rationale for the necessity of this request is a red herring. The OVEC plants are no different than any other electricity generation resource currently bidding into the wholesale market against other generation resources. What i_s different is that the OVEC plants are inefficient, produce expensive power and cannot get a foothold in the market. The utilities want the Ohio General Assembly to provide subsidies so they can ignore the market, keep the plants open, have Ohioans purchase power from the plants and pay prices that are higher than for other sources of electricity, and avoid having to write down the value of these plants as they should have done years ago. If approved, this would not be the utilities? first consumer-paid subsidy. Ohio?s investor- owned utilities received $9.2 billion in ?stranded assets? and ?regulatory transition? payments from 2000 to 2010. Despite collecting these payments, utilities failed to write down their noncompetitive generating plants including OVEC which are the assets that were ?stranded.? Now the utilities want more. This is utility regulation right out of the pages of Laura Numeroff?s children?s book If You Give A Mouse A Cookie, the classic tale of a mouse that gets the cookie it asks for, but always wants more. From 2000 to 2017, the utilities received $15.7 billion of cookies and are now asking for what some have estimated to be an additional $300 million per year for the life of the plants. Another source, the Ohio Legislative Service Commission (LSC), has estimated the costs paid by consumers to be potentially as high as $256.6 million per year for the 24?year period of the current OVEC contract. Clearly, it?s time to put a lid on the cookie jar. Ohio ratepayers should not be required to support uneconomic power plants operating at barely half?capacity, such as the OVEC plants. Requiring customers in Ohio to pick up this tab would increase operating costs for Ohio?s businesses and disadvantage these businesses compared to businesses in competing states with lower electricity costs. The subsidy would be levied on a significant segment of the population, including customers in Dayton Power Light, Duke Energy Ohio and FirstEnergy service territories. The Ohio Manufacturers? Association June 7, 2017 1 Background The Ohio Valley Electric Corporation is a companyjointly owned by several electric utilities.1 OVEC and its wholly owned subsidiary, Indiana?Kentucky Electric Corporation, own and operate two electricity generating complexes: Kyger Creek Power Plant, near Gallipolis, Ohio, and Clifty Creek Power Plant, near Madison, Indiana. Ohio?s Kyger Creek complex has five electricity generating units, and Indiana?s complex has six generating units. According to website, OVEC was formed in the early 19508 by investor-owned utilities to generate electricity to meet the substantial electric power requirements of the uranium enrichment facilities then under construction by the Atomic Energy Commission (AEC) just south of Piketon, Ohio. Piketon?s Portsmouth Gaseous Diffusion Plant was built from 1952 to 1956 and was one ofthe three large gaseous diffusion plants2 constructed to produce enriched uranium to support the nation?s nuclear weapons program and the US. Navy. For a short period of time much later, the Piketon plant produced enriched uranium for commercial nuclear reactors. In October 1952, OVEC and the AEC entered into a 25?year power purchase agreement to ensure the availability of electricity to meet the needs of the Piketon plant. The agreement provided for excess generating capacity from OVEC generation not needed by Piketon) to be available to the OVEC utility owners. The agreement was iater extended through 2005. However, with the Cold War ending in the early 19908, the demand for enriched uranium for national defense purposes dropped. In September 2000, the US. Department of Energy (DOE) notified OVEC that the power purchase agreement with Piketon was being canceled. In May 2001, the Piketon plant ceased operations, with the remaining work going to Paducah, Kentucky, and Piketon relegated to ?cold?standby? status. In 2003, the power agreement between OVEC and Piketon was terminated. Piketon?s status was clarified in 2006 when the plant?s status shifted from ?cold?standby? to ?cold?shutdown.? in May 2011, the power agreement - between OVEC and Piketon was amended to make entire generating capacity available to the utility owners to supply other customers. The current power agreement extends to June 30, 2040. Today, the Piketon plant remains shut down and is preparing for decontamination and decommissioning. The timing is critical. As far back as 2000 (prior to the implementation of electricity deregulation in Ohio), the utilities knew that OVEC's Kyger Creek and. Clifty Creek Power Plants would no longer be used or needed to serve the demands of national defense. What worrio? the Iegisiation do? Essentially, what's being proposed is a new utility giveaway bill that would bail out OVEC based on the pretense of OVEC being a ?national security asset" because it initially was created, in part, to provide electricity needed to produce enriched uranium to support the nation?s nuclear weapons program. Key provisions of the legislation include the following: 1American Electric Power, Dayton Power Light, Duke Energy Ohio and FirstEnergy Solutions all have equity stakes in OVEC. 2The other gaseous diffusion plants were in Paducah, Kentucky and Oak Ridge, Tennessee. The Ohio Manufacturers? Association - June 7, 201 7 2 Changes state policy to recognize OVEC resources as "national security generation" and preserves ongoing, yet unspecified, benefits associated with such resources. Guarantees cost recovery of a_ll costs associated with OVEC, including deferred costs, which could potentially be substantial since the OVEC power plants are currently operating at partial load, they aren?t efficient and they are likely losing money. Allows the PUCO no discretion under the bill, the Commission must approve recovery for a_ll costs. Approves cost recovery from customers of the utilities of all costs even if the OVEC ownership share is owned by an unregulated affiliate. The bill is silent as to how the affiliate will obtain the revenue from the utility to support its ownership share of OVEC. May allow a utility to serve its Standard Service Offer (880) with OVEC power Requires the Standard Service Offer (880) to include OVEC cost recovery. Allows a utility with an af?liate to use the affiliate?owned power to serve the utility?s SSO regardless of its price, regardless of the management practices of the operating utility, regardless of how it will affect regional markets for electricity generation, regardless whether an unregulated affiliate owns the share of OVEC, and regardless of whether the power is being produced from the Ohio?sited plant. Allows a utility to reopen and revise its current ESP to potentially collect more costs, even though the utility may already be receiving subsidies for OVEC. If the OVEC power is sold in the wholesale markets and revenues are credited to offset the costs to customers, the cost recovery rider will be non?bypassable. Although not stated, this implies that if OVEC power is used to supply the 880, the cost recovery rider will be bypassable. If the proposed legislation becomes law, and therefore, OVEC is getting full cost recovery for its operations, there would be no incentive for OVEC to operate more efficiently or compete on price in the wholesale market. What?s wrong with this picture? The utilities and their affiliates want a subsidy to operate and maintain the OVEC power plants. They want Ohio customers, both businesses and individuals, to bail them out and support uneconomic power plants that are no longer used to support, or otherwise related to, national defense. These requests are unreasonable and unwarranted for a variety of reasons: Piketon no longer processes nuclear fuel for weapons, and hasn?t for many years. It thus is not a national security asset. Such a claim is nothing more than ?a rhetorical port in a financial storm.? The utilities knew the risk of supplying Piketon from 2001 to 2006, and the closure of the defense facility should have been factored into the utilities? business decisions. The Piketon nuclear enrichment site was opened in 1952 and closed on September 30, 2006. The utilities were notified in 2000 that the contract with Piketon would be canceled. The contract terminated in 2003. The utilities have already been paid transition revenues to help transition to a fully competitive generation market. The Ohio Manufacturers? Association June 7, 2017 3 In other words, the utilities knew the risk involved, took money to offset the costs of stranded assets, and are now asking to be compensated for their bad debt. In 2016, Kyger Creek's annual output was 52 percent, while Clifty Creek?s annual output was 44 percent. These two plants basically were running at, or less than half of, full load. If the utilities are pursuing a national defense rationale to offset their losses in the OVEC plants, the solution should be reached at the national level the costs should be spread over the entire population. capacity is 12.1 percent (or 289.9 MW) more than peak usage at Piketon. The additional 289.9 MW was built to service customers beyond Piketon and has continued to serve other customers after the closure of Piketon. This belies the argument that OVEC was built solely for national security purposes. And this is not a trivial amount it?s the equivalent of one generating unit. Under no circumstances should Ohio electricity users subsidize outwof-state power plants. Piketon?s peak usage (before 2001) was 2,100 MW. Total OVEC capacity is 2,390 MW. Ohio?located Kryger Creek is 45.4 percent of OVEC capacity, and Indiana? located Clifty Creek is 54.5 percent of OVEC capacity. 80, if the proposed subsidy i_s awarded to the utilities, the maximum subsidy should be based on 45.4 percent of 2,100 MW Kyger Creek?s share of peak usage), not 100 percent of total capacity. No matter how you cut it, the legislative proposal is a subsidy for uncompetitive power. Subsidizing power produced with old, inefficient technologies should n_ot be allowed. What attematr?ves are there for addressing tire probfem?? Following are two ideas for resolving OVEC without rewarding OVEC's utility owners (using Kyger Creek as the example): 1. Preferred approach. Provide no subsidy and allow the markets to work. Allow the owners to decide whether to continue operating the OVEC units and sell the power into the wholesale market or sell the plants to a new owner at market value. Alternative approach. lfthe owners cannot sell the plants, and the owners deem the plants to be unprofitable or uneconomic, and the owners decide to close the plants, the owners could seek assistance from the State of Ohio. The state could assist in the closure ofthe plants by forming a nonprofit Kyger Creek Decommissioning Corporation that could float bonds secured by a non?bypassable rider across Ohio ratepayers. This would be done only after OVEC turns over the title to the generating units free and clear for $1 to the Decommissioning Corporation. The transfer of assets must include on?site transmission equipment and connections. The site would then be owned free and clear by the Decommissioning Corporation, which could self or lease the land for economic development purposes. Proceeds from the sale or lease of the site would be used to acceierate payment of the Decommissioning bonds. This alternative approach calls to mind the Troubled Asset Relief Program (TARP), which was signed into law in October 2008. TARP provided a vehicle for the US. Department of the Treasury to purchase toxic assets and equity from trouble financial institutions to strengthen the nation?s financial sector. It was a key component of the government?s actions to address the subprime mortgage crisis. The Ohio Manufacturers? Association June 7, 2017 4 We?ve seen this mews heifers The OVEC bailout proposal is the utilities? third attempt at forcing Ohioans to purchase above? market electricity. From 2014 through 2015 two utilities created regulatory mandated power purchase agreements to force Ohioans to consume power from their toss?making coal fired plants first. This included the OVEC plants. The PUCO agreed, but the Federai Energy Regulatory Commission stopped in its tracks this blatant attempt to re-monopolize the electricity generating market. This year witnessed FirstEnergy?s attempt to have Ohioans purchase expensive nuclear power first, with the prospect of Ohio electricity users being forced to bail out FirstEnergy?s plant in along with its two northern Ohio nuclear plants. That proposal is still in play. Now we have a proposal that couid funnel upwards of $300 million more per year, indefinitely, to the owners of both the Ohio and Indiana OVEC plants. What?s the hottest line? There is no compelling argument for having Ohio ratepayers, electricity customers, pay fOr uneconomic generation assets. Ohio should ?g reward utility owners with the subsidies they seek for several reasons: a Under Ohio law, utilities are not allowed to own and operate generation assets. had multiple decades to write down the value of their OVEC plants. a Utilities have already coilected stranded costs associated with their OVEC generation assets. . Utilities should not be rewarded for their bad business decisions. - More than half (54.5 percent) of the OVEC assets are in indiana. Ohio consumers shouid not be required to subsidize Ciifty Creek in lndiana. . Utilities should not be permitted to impose on customers even more above?market charges. The mouse has consumed enough cookies. The Ohio Manufacturers? Association - June 7, 2017 5 Rep93 From: Janice Tinkham Sent: Wednesday, June 14, 2017 11:40 AM To: Rep93 Subject: NO to Ohioans should not have to pay for Ohio Vaiiey Electric Corporation's bad business decisions. Rep. Ryan Smith, As a hardworking Ohioan, I go to great to budget and make prudent ?nancial decisions for myself and my family. Why should we not expect the same behavior from corporate utilities in Ohio? If I were to make a bad choice to invest in fax machines at a time when everyone else was moving towards cloud computing, how could I reasonably ask you - as an Ohio policymaker to bail me out when I lose a ton of money on my fax machine investment? Senate Bill 155 and House Bill 239 essentially propose such a scenario - awarding money to entities that have made a poor choice. The joint utility shareholders of the Ohio Valley Electric Corporation (OVEC) which are AEP, FirstEnergy, Duke and Dayton Power Light stand to receive a huge windfall if these bills become law, but at the expense of all their customers. And for what? To prop up two jointly-owned coal ?red power plants - Kyger Creek in Cheshire, Ohio and Cli?y Creek in Madison, Indiana. How does it makes sense that an Ohioan would pay to prop up a plant not even located in Ohio? Senate Bill 155 and House Bill 239 comes at a huge cost: $256 million per year for the next 23 years! That?s approximately $420 that I will have to pay, eating into my budget for all the other household expenses. Senate Bill 155 and House Bill 239 prevents Ohio from moving forward, and locks Ohio electric consumers paying for coal??red power plants that should be headed for retirement by now. If these bills become law, Ohio electric consumers would be bailing out these uncompetitive coal plants until these plants are 85 years old! These bills keep us stuck in an energy past, would increase my electric bill but provide no additional benefits to me as a customer, and would reward corporate utilities for bad business decisions they made on their own. As their customer, I should not be responsible for propping up failing investments of Ohio utilities. For these reasons, I urge you to VOTE NO on Senate Bill 155 or House Bill 239. Janice Tinkham 4115 State Route 7 Cheshire, OH 45620 Rep93 From: Rep93 Sent: Wednesday,_June 14, 2017 9:42 AM To: Snider, Grace Subject: FW: OVEC Draft Language Attachments: AEP Ohio Revisions 6?12?17 (rediine of deferral ciarification).pdf From: Gentil, Ryan Sent: Wednesday, June 14, 2017 9:41 AM To: Rep30 Lehman, Ryan Rep93 Rep68 Rep04 Subject: OVEC Draft Language Please find attached the draft OVEC language that was sent from the utilities to the industrial groups. This is still a work in progress, and we expect to receive feedback today. #5me Introduced 132ml General Assembly Regular Session H. B. No. 239 2017-2013 Representatives Smith, R., Carfagna A BILL To amend sections 4928.01, 4928.02, 4928.141, 4928-142, and 4928.143 of the Revised Code to allow electric distribution utilities to recover costs for a national security generation resource. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: Section 1. That sections 4928.01, 4928.02, 4928.141, 4928.142, and 4928.143 of the Revised Code be amended, and section 4928.14? enacted, to read as follows: Sec. 4928.01. (A) As used in this chapter: (1) "Ancillary service" means any function necessary to the provision of electric transmission or distribution service to a retail customer and includes, but is not limited to, scheduling, system control, and dispatch services; reactive supply from generation resources and voltage control service; reactive supply from transmission resources service; regulation service; frequency response service; energy imbalance service; operating reserve?spinning reserve service; operating reserve~supplemental reserve service; load following; backvup supply service; real-power loss replacement service; dynamic scheduling; system black start capability; and network stability service. (2) "Billing and collection agent" means a fully independent agent, not affiliated with or otherwise controlled by an electric utility, electric services company, electric cooperative, or governmental aggregator subject to certification under section 4928.08 of the Revised Code, to the extent that the agent is under contract with such utility, company, cooperative, or aggregator solely to provide billing and collection for retail electric service on behalf of the utility company, cooperative, or aggregator. (3) "Certified territory" means the certified territory established for an electric supplier under sections 4933.81 to 4933.90 of the Revised Code- "Competitive retail electric service" means a component of retail electric service that is competitive as provided under division (B) of this section. (5) ?Electric cooperative" means a notwforwprofit electric light company that both is or has been financed in whole or in part under the "Rural Electrification Act of 1936," 49 Stat. 1363, 7 U.S.C. 9C1, and owns or operates facilities in this state to generate, transmit, or distribute electricity, or a not?for?profit successor of such company. "Electric distribution utility" means an electric utility that supplies at least retail electric distribution service. "Electric light company" has the same meaning as in section 4965.03 of the Revised Code and includes an electric services company, but excludes any self?generator to the extent that it consumes electricity it so produces, sells that electricity for resale, or obtains electricity from a generating facility it hosts on its premises. "Electric load center" has the same meaning as in section 4933.81 of the Revised Code. (9) "Electric services company" means an electric light company that is engaged on a for~profit or not?for?profit basis in the business of supplying or arranging for the supply of only a competitive retail electric service in this state. "Electric services company" includes a power marketer, power broker, aggregator, or independent power producer but excludes an electric cooperative, municipal electric utility, governmental aggregator, or billing and collection agent. (10) "Electric supplier" has the same meaning as in section 4933.81 of the Revised Code. {11) "Electric utility" means an electric light company that has a certified territory and is engaged on a forwprofit basis either in the business of supplying a noncompetitive retail electric service in this state or in the businesses of supplying both a noncompetitive and a competitive retail electric service in this state. "Electric utility" excludes a municipal electric utility or a billing and collection agent. (12) "Firm electric service" means electric service other than nonfirm electric service. (13) "Governmental aggregator" means a legislative authority of a municipal corporation, a board of township trustees, or a board of county commissioners acting as an aggregator for the provision of a competitive retail electric service under authority conferred under section 4928.20 of the Revised Code. (14) A person acts "knowingly," regardless of the person?s purpose, when the person is aware that the person's conduct will probably cause a certain result or will probably be of a certain nature. A person has knowledge of circumstances when the person is aware that such circumstances probably exist. {15) "Level of funding for low?income customer energy efficiency programs provided through electric utility rates" means the level of 100 101 102 103 104 105 106 10? 108 109 110 111 funds specifically included in an electric utility's rates on October 5, 1999, pursuant to an order of the public utilities commission issued under Chapter 4905. or 4909. of the Revised Code and in effect on October 4, 1999, for the purpose of improving the energy efficiency of housing for the utility's low?income customers. The term excludes the level of any such funds committed to a specific nonprofit organization or organizations pursuant to a stipulation or contract. (16) "Lowmincome customer assistance programs" means the percentage of income payment plan program, the home energy assistance program, the home weatherization assistance program, and the targeted energy efficiency and weatherization program. {17] "Market development period" for an electric utility means the period of time beginning on the starting date of competitive retail electric service and ending on the applicable date for that utility as specified in section 4928.40 of the Revised Code, irrespective of whether the utility applies to receive transition revenues under this chapter. (18) "Market power" means the ability to impose on customers a sustained price for a product or service above the price that would prevail in a competitive market. (19) "Mercantile customer" means a commercial or industrial customer if the electricity consumed is for nonresidential use and the customer consumes more than seven hundred thousand kilowatt hours per year or is part of a national account involving multiple facilities in one or more states. (20) "Municipal electric utility" means a municipal corporation that owns or operates facilities to generate, transmit, or distribute electricity. {21} "Noncompetitive retail electric service" means a component of retail electric service that is noncompetitive as provided under division (B) of this section. 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 (22} "Nonfirm electric service" means electric service provided pursuant to a schedule filed under section 4905.30 of the Revised Code or pursuant to an arrangement under section 4905.31 of the Revised Code, which schedule or arrangement includes conditions that may require the customer to curtail or interrupt electric usage during noremergency circumstances upon notification by an electric utility. (23) "Percentage of income payment plan arrears" means funds eligible for collection through the percentage of income payment plan rider, but uncollected as of July 1, 2000. {24) "Person" has the same meaning as in section 1.59 of the Revised Code. (25} "Advanced energy project" means any technologies, products, activities, or management practices or strategies that facilitate the generation or use of electricity or energy and that reduce or support the reduction of energy consumption or support the production of clean, renewable energy for industrial, distribution, commercial, institutional, governmental, research, not~for-profit, or residential energy users, including, but not limited to, advanced energy resources and renewable energy resources. "Advanced energy project" also includes any project described in division (A), (B), or (C) of section 4928.621 of the Revised Code. {26) "Regulatory assets" means the unamortized net regulatory assets that are capitalized or deferred on the regulatory books of the electric utility, pursuant to an order or practice of the public utilities commission or pursuant to generally accepted accounting principles as a result of a prior commission ratewmaking decision, and that would otherwise have been charged to expense as incurred or would not have been capitalized or otherwise deferred for future regulatory consideration absent commission action. "Regulatory assets" includes, but is not limited to, all deferred demand?side management costs; all deferred percentage of income payment plan arrears; post?in-service capitalized charges and assets recognized in connection with statement 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 of financial accounting standards no. 109 (receivables from customers for income taxes); future nuclear decommissioning costs and fuel disposal costs as those costs have been determined by the commission in the electric utility?s most recent rate or accounting application proceeding addressing such costs; the undepreciated costs of safety and radiation control equipment on nuclear generating plants owned or leased by an electric utility: and fuel costs currently deferred pursuant to the terms of one or more settlement agreements approved by the commission. (27) "Retail electric service" means any service involved in supplying or arranging for the supply of electricity to ultimate consumers in this state, from_the point of generation to the point of consumption. For the purposes of this chapter, retail electric service includes one or more of the following "service components": generation service, aggregation service, power marketing service, power brokerage service, transmission service, distribution service, ancillary service, metering service, and billing and collection service. (28) "Starting date of competitive retail electric service" means January 1, 2001. (29} "Customer?generator" means a user of a net metering system. (30) "Net metering" means measuring the difference in an applicable billing period between the electricity supplied by an electric service provider and the electricity generated by a customer? generator that is fed back to the electric service provider. (31) "Net metering system" means a facility for the production of electrical energy that does all of the following: Uses as its fuel either solar, wind, biomass, landfill gas, or hydropower, or uses a microturbine or a fuel cell; Is located on a customer~generator's premises; 173 Operates in parallel with the electric utility's 174 transmission and distribution facilities; 175 Is intended primarily to offset part or all of the 176 customer?generator's requirements for electricity. {32) "Self-generator" means an entity in this state that owns or 178 hosts on its premises an electric generation facility that produces 179 electricity primarily for the owner's consumption and that may provide 180 any such excess electricity to another entity, whether the facility is 181 installed or operated by the owner or by an agent under a contract. 182 (33} "Rate plan" means the standard service offer in effect on 183 the effective date of the amendment of this section by 8.3. 221 of the 184 127th general assembly, July 31, 2008. 185 (34} ?Advanced energy resource" means any of the following: 186 Any method or any modification or replacement of any 187 property, process, device, structure, or equipment that increases 188 the generation output of an electric generating facility to the 189 extent such efficiency is achieved without additional carbon 190 dioxide emissions by that facility; 191 Any distributed generation system consisting of 192 customer cogeneration technology; 193 Clean coal technology that includes a carbon?based 194 product that_is chemically altered before combustion to 195 demonstrate a reduction, as expressed as ash, in emissions of 196 nitrous oxide, mercury, arsenic, chlorine, sulfur dioxide, or 197 sulfur trioxide in accordance with the American society of 198 testing and materials standard D1757A or a reduction of metal 199 oxide emissions in accordance with standard D5142 of that 200 society, or clean coal technology that includes the design 201 capability to control or prevent the emission of carbon dioxide, 202 which design capability the commission shall adopt by rule and 203 204 205 206 207 208 209 210 211 212 213 214 2l5 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 shall be based on economically feasible best available technology or, in the absence of a determined best available technology, shall be of the highest level of economically feasible design capability for which there exists generally accepted scientific opinion; Advanced nuclear energy technology consisting of generation technology as defined by the nuclear regulatory commission; other, later technology; or significant improvements to existing facilities; Any fuel cell used in the generation of electricity, including, but not limited to, a proton exchange membrane fuel cell, phosphoric acid fuel cell, molten carbonate fuel cell, or solid oxide fuel cell; Advanced solid waste or construction and demolition debris conversion technology, including, but not limited to, advanced stoker technology, and advanced fluidized bed gasification technology, that results in measurable greenhouse gas emissions reductions as calculated pursuant to the United States environmental protection agency's waste reduction model Demand?side management and any energy efficiency improvement; Any new, retrofitted, refueled, or repowered generating facility located in Ohio, including a simple or combined-cycle natural gas generating facility or a generating facility that uses biomass, coal, modular nuclear, or any other fuel as its input; Any uprated capacity of an existing electric generating facility if the uprated capacity results from the deployment of advanced technology. 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 "Advanced energy resource" does not include a waste energy recovery system_that is, or has been, included in an energy efficiency program of an electric distribution utility pursuant to requirements under section 4928.66 of the Revised Code. (35) "Air contaminant source" has the same meaning as in section 3704.01 of the Revised Code. (36) "Cogeneration technology" means technology that produces electricity and useful thermal output simultaneously. (37} "Renewable energy resource" means any of the following: Solar photovoltaic or solar thermal energy; (ii) Wind energy: Power produced by a hydroelectric facility; (iv) Power produced by a run-of-the-river hydroelectric facility placed in service on or after January 1, 1980, that is located within this state, relies upon the Ohio river, and operates, or is rated to operate, at an aggregate capacity of forty or more megawatts; Geothermal energy; (vi) Fuel derived from Solid wastes, as defined in section 3734.01 of the Revised Code, through fractionation, biological decomposition, or other process that does not principally involve combustion; (vii) Biomass energy; Energy produced by cogeneration technology that is placed into service on or before December 31, 2015, and for which more than ninety per cent of the total annual 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 energy input is from.combustion of a waste or byproduct gas from an air contaminant source in this state, which source has been in operation since on or before January 1, 1985, provided that the cogeneration technology is a part of a facility located in a county having a population of more than three hundred sixty?five thousand but less than three hundred seventy thousand according to the most recent federal decennial census; {ix} Biologically derived methane gas; Heat captured from a generator of electricity, boiler, or heat exchanger fueled by biologically derived methane gas; (xi) Energy derived from nontreated by-products of the pulping process or wood manufacturing process, including bark, wood chips, sawdust, and lignin in spent pulping liquors. "Renewable energy resource" includes, but is not limited to, any fuel cell used in the generation of electricity, including, but not limited to, a proton exchange membrane fuel cell, phosphoric acid fuel cell, molten carbonate fuel cell, or solid oxide fuel cell; wind turbine located in the state?s territorial waters of Lake Erie; methane gas emitted from an abandoned coal mine; waste energy recovery system.placed into service or retrofitted on or after the effective date of the amendment of this section by S.B. 315 of the 129th general assembly, September 10, 2012, except that a waste energy recovery system.described in division of this section may be included only if it was placed into service between January 1, 2002, and December 31, 2004; storage facility that will promote the better utilization of a renewable energy resource; or distributed generation system used by a customer to generate electricity from any such energy. 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 "Renewable energy resource" does not include a waste energy recovery system that is, or was, on or after January 1, 2012, included in an energy efficiency program of an electric distribution utility pursuant to requirements under section 4928.66 of the Revised Code. As used in division of this section, "hydroelectric facility" means a hydroelectric generating facility that is located at a dam on a river, or on any water discharged to a river, that is within or bordering this state or within or bordering an adjoining state and meets all of the following standards: The facility provides for river flows that are not detrimental for fish, wildlife, and water quality, including seasonal flow fluctuations as defined by the applicable licensing agency for the facility. (ii) The facility demonstrates that it complies with the water quality standards of this state, which compliance may consist of certification under Section 401 of the "Clean Water Act of 1977," 91 Stat. 1598, 1599, 33 U.S.C. 1341, and demonstrates that it has not contributed to a finding by this state that the river has impaired water quality under Section 303(d) of the "Clean Water Act of 1977," 114 Stat. 870, 33 U.S.C. 1313. The facility complies with mandatory prescriptions regarding fish passage as required by the federal energy regulatory commission license issued for the project, regarding fish protection for riverine, anadromous, and catadromous fish. (iv) The facility complies with the recommendations of the Ohio environmental protection agency and with the terms of its federal energy regulatory commission license 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 '346 347 348 349 350 351 (38) following: regarding watershed protection, mitigation, or enhancement, to the extent of each agency?s respective jurisdiction over the facility. The facility complies with provisions of the "Endangered Species Act of 1973," 87 Stat. 884, 16 U.S.C. 1531 to 1544, as amended. {vi} The facility does not harm cultural resources of the area. This can be shown through compliance with the terms of its federal energy regulatory commission license or, if the facility is not regulated by that commission, through development of a plan approved by the Ohio historic preservation office, to the extent it has jurisdiction over the facility. {vii} The facility complies with the terms of its federal energy regulatory commission license or exemption that are related to recreational access, accommodation, and facilities or, if the facility is not regulated by that commission, the facility complies with similar requirements as are recommended by resource agencies, to the extent they have jurisdiction over the facility; and the facility provides access to water to the public without fee or charge. The facility is not recommended for removal by any federal agency or agency of any state, to the extent the particular agency has jurisdiction over the facility. "Waste energy recovery system" means either of the A facility that generates electricity through the conversion of energy from either of the following: 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 Exhaust heat from engines or manufacturing, industrial, commercial, or institutional sites, except for exhaust heat from_a facility whose primary purpose is the generation of electricity; (ii) Reduction of pressure in gas pipelines before gas is distributed through the pipeline, provided that the conversion of energy to electricity is achieved without using additional fossil fuels. A facility at a state institution of higher education as defined in section 3345.011 of the Revised Code that recovers waste heat from electricity~producing engines or combustion turbines and that simultaneously uses the recovered heat to produce steam, provided that the facility was placed into service between January 1, 2002, and December 31, 2004. (39) ?Smart grid? means capital improvements to an electric distribution utility?s distribution infrastructure that improve reliability, efficiency, resiliency, or reduce energy demand or use, including, but not limited to, advanced metering, and automation of system functions. (40) "Combined heat and power system" means the coproduction of electricity and useful thermal energy from the same fuel source designed to achieve thermal?efficiency levels of at least sixty per cent, with at least twenty per cent of the system?s total useful energy in the form of thermal energy. {41) "National security generation resource" means all generating facilities owned directly or indirectly by a corporation that was formed prior to 1960 by investoruowned utilities for the original purpose of providing power to the federal government for use in the nation?s defense or in furtherance of national interests, including the Ohio valley electric corporation. 382 383 384 385 386 387 388 389 390 391 392 393 394 395 396 397 398 399 400 401 402 403 404 405 406 40? 408 409 410 411 (42) ?Prudently incurred costs related to national security generation resource? means costs, including deferred costs, allocated pursuant to a power agreement approved by the federal energy regulatory commission that relates to a national security generation resource; such costs shall exclude any added return on investment and, in the event of a premature retirement of a national security generation resource, shall exclude any recovery of remaining debt. (43) ?National security generation resource net impact? means retail recovery of prudently incurred costs related to a national security generation resource less any revenues realized from offering the contractual commitment related to a national security generation resource into the wholesale markets. (B) For the purposes of this chapter, a retail electric service component shall be deemed a competitive retail electric service if the service component is competitive pursuant to a declaration by a provision of the Revised Code or pursuant to an order of the public utilities commission authorized under division (A) of section 4928.04 of the Revised Code. Otherwise, the service component shall be deemed a noncompetitive retail electric service. Sec. 4928.02. It is the policy of this state to do the following throughout this state: (A) Ensure the availability to consumers of adequate, reliable, safe, efficient, nondiscriminatory, and reasonably priced retail electric service; Ensure the availability of unbundled and comparable retail electric service that provides consumers with the supplier, price, terms, conditions, and quality options they elect to meet their respective needs; (C) Ensure diversity of electricity supplies and suppliers, by giving consumers effective choices over the selection of those 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 supplies and suppliers and by encouraging the development of distributed and small generation facilities; (D) Encourage innovation and market access for cost?effective supply? and demand?side retail electric service including, but not limited to, demand?side management, time?differentiated pricing, waste energy recovery systems, smart grid programs, and implementation of advanced metering infrastructure; Encourage cost?effective and efficient access to information regarding the operation of the transmission and distribution systems of electric utilities in order to promote both effective customer choice of retail electric service and the development of performance standards and targets for service quality for all consumers, including annual achievement reports written in plain language; (F) Ensure that an electric utility's transmission and distribution systems are available to a customer?generator or owner of distributed generation, so that the customer?generator or owner can market and deliver the electricity it produces; (G) Recognize the continuing emergence of competitive electricity markets through the development and implementation of flexible regulatory treatment; (H) Ensure effective competition in the provision of retail electric service by avoiding anticompetitive subsidies flowing from a noncompetitive retail electric service to a competitive retail electric service or to a product or service other than retail electric service, and vice versa, including by prohibiting the recovery of any generation?related costs through distribution or transmission rates: (I) Ensure retail electric service consumers protection against unreasonable sales practices, market deficiencies, and market power; 440 441 442 443 444 445 446 447 448 449 450 451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 (J) Provide coherent, transparent means of giving appropriate incentives to technologies that can adapt successfully to potential environmental mandates; (K) Encourage implementation of distributed generation across customer classes through regular review and updating of administrative rules governing critical issues such as, but not limited to, interconnection standards, standby charges, and net metering; (L) Protect aterisk populations, including, but not limited to, when considering the implementation of any new advanced energy or renewable energy resource; (M) Encourage the education of small business owners in this state regarding the use of, and encourage the use of, energy efficiency programs and alternative energy resources in their businesses; (N) Facilitate the state's effectiveness in the global economy.; (0) Ensure the continuing economic viability of historical investments made by electric distribution utilities in national security generation resources and support continued investment to preserve the ongoing benefits associated with such resources. In carrying out this policy, the commission shall consider rules as they apply to the costs of electric distribution infrastructure, including, but not limited to, line extensions, for the purpose of development in this state. Sec. 4928.141. (A) Beginning January 1, 2009, an electric distribution utility shall provide consumers, on a comparable and nondiscriminatory basis within its certified territory, a standard service offer of all competitive retail electric services necessary to maintain essential electric service to consumers, including a firm supply of electric generation service. To that end, the electric distribution utility shall apply to the public utilities commission to 470 471 472 473 474 475 . 476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 501 502 establish the standard service offer in accordance with section 4928.142 or 4928.143 of the Revised Code and, at its discretion, may apply simultaneously under both Only a standard service offer authorized in accordance with section 4928.142 or 4928.143 of the Revised Code, shall serve as the utility?s standard service offer for the purpose of compliance with this section; and that standard service offer shall serve as the utility's default standard service offer for the purpose of section 4928.14 of the Revised Code. under section 4928.142 or 4928.143 of the Revised Code shall include automatic recovery, subject to audit and reconciliation, of all national security generation resource net impacts, but shall exclude any previously authorized allowances for transition costs, with such exclusion being effective on and after the date that the allowance is scheduled to end under the utility?s rate plan. (B) An electric distribution utility with an affiliate that has a contractual commitment related to a national security generation resource may use the affiliate's contractual commitment in its standard service offer and recover the national security generation resource net impact under subsections or of the Revised Code, provided that the affiliate's contractual commitment was previously the contractual commitment of the electric distribution utility. All electric distribution utilities in the same holding company system may jointly use the affiliate's contractual commitment 503 and recover the national security generation resource net impact under 504 subsections or of the Revised Code. 505 (C) The commission shall set the time for hearing of a filing 506 under section 4928.142 or 4928.143 of the Revised Code, send written 507 notice of the hearing to the electric distribution utility, and publish 508 notice in a newspaper of general circulation in each county in the 509 utility's certified territory. The commission shall adopt rules 510 regarding filings under those sections. 511 Sec. 4928-142. (A) For the purpose of complying with section 512 4928.141 of the Revised Code and subject to division (D) of this 513 section 514 leiSiu? ?ti ?928,111 the Pcvis ?ed an electric 515 distribution utility may establish a standard service offer price for 516 retail electric generation service that is delivered to the utility 517 under a market?rate offer. An electric distribution utility shall have 518 the right within one hundred twenty days of the effective date of 519 of the 132nd general assembly to file an application to reopen, 520 update, or amend its then?current market~rate offer in order to 521 implement the amended version of this section, which proceeding shall 522 not otherwise reopen matters previously decided. 523 The supply and pricing of electric generation service under a 524 market?rate offer shall be determined through a competitive bidding 525 process that provides for all of the following: 526 Open, fair, and transparent competitive solicitation; 527 Clear product definition; 528 Standardized bid evaluation criteria; 529 Oversight by an independent third. party that shall 530 design the solicitation, administer the bidding, and ensure that 531 the criteria specified in divisisn?divisions to of 532 this section are met; 533 534 535 536 537 538 539 540 541 542 543 544 545 546 54? 548 549 550 551 552 553 554 555 556 557 558 559 560 561 562 563 Evaluation of the submitted bids prior to the selection of the least?cost bid winner or winners. No generation supplier shall be prohibited from participating in the bidding process. The marketurate offer shall include provisions for recovery! on a nonbypassable basis, of all national security generation resource net impacts pursuant to section 4928.14? of the Revised Code. (3) The public utilities commission shall modify rules, or adopt new rules as necessary, concerning the conduct of the competitive bidding process and the qualifications of bidders, which rules shall foster supplier participation in the bidding process and shall be consistent with the requirements of division of this section. (B) Prior to initiating a competitive bidding process for a marketwrate offer under division of this section, the electric distribution utility shall file an application with the commission. An electric distribution utility may file its application with the commission prior to the effective date of the commission rules required under division (Aji2) of this section, and, as the commission determines necessary, the utility shall immediately conform its filing to the rules upon their taking effect. An application under this division shall detail the electric distribution utility's proposed compliance with the requirements of division of this section and with commission rules under division of this section and demonstrate that all of the following requirements are met: The electric distribution utility or its transmission service affiliate belongs to at least one regional transmission organization that has been approved by the federal energy regulatory commission; or there otherwise is comparable and nondiscriminatory access to the electric transmission grid. 564 565 566 567 568 569 570 571 572 573 574 575 576 577 578 579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 Any such regional transmission organization has a market? monitor function and the ability to take actions to identify and mitigate market power or the electric distribution utility?s market conduct; or a similar market monitoring function exists with commensurate ability to identify and monitor market conditions and mitigate conduct associated with the exercise of market power. A published source of information is available publicly or through subscription that identifies pricing information for traded electricity on? and off?peak energy products that are contracts for delivery beginning at least two years from the date of the publication and is updated on a regular basis. The commission shall initiate a proceeding and, within ninety days after the application's filing date, shall determine by order whether the electric distribution utility and its market?rate offer meet all of the foregoing requirements. If the finding is positive, the electric distribution utility may initiate its competitive bidding process. If the finding is negative as to one or more requirements in division or of this section, the commission in the order shall direct the electric distribution utility regarding how any deficiency may be remedied in a timely manner to the commission's satisfaction; otherwise, the electric distribution utility shall withdraw the application. However, if such remedy is made and the subsequent finding is positive and also if the electric distribution utility made a simultaneous filing under this section and section 4928.143 of the Revised Code, the utility shall not initiate its competitive bid until at least one hundred fifty days after the filing date of those applications. If the electric distribution utility withdraws the application, the commission shall issue an order as is necessary to ensure automatic recovery of all national security generation resource net impacts. (C) Upon the completion of the competitive bidding process authorized by divisions (A) and of this section, including for the purpose of division of this section, the commission shall select- 597 598 599 600 601 602 603 604 605 606 608 609 610 611 612 613 614 615 616 617 618 619 620 621 622 623 624 625 626 627 the least-cost bid winner or winners of that process, and such selected bid or bids, as prescribed as retail rates by the commission, shall be the electric distribution utility's standard service offer unless the commission, by order issued before the third calendar day following the conclusion of the competitive bidding process for the market rate offer, determines that one or more of the following criteria were not met: (1) Each portion of the bidding process was oversubscribed, such that the amount of supply bid upon was greater than the amount of the load bid out. There were four or more bidders. At least twentyefive per cent of the load is bid upon by one or more persons other than the electric distribution utility. All costs incurred by the electric distribution utility as a result of or related to the competitive bidding process or to procuring generation service to provide the standard service offer, including the costs of energy and capacity and the costs of all other products and services procured as a result of the competitive bidding process, shall be timely recovered through the standard service offer price, and, for that purpose, the commission shall approve a reconciliation mechanism, other recovery mechanism, or a combination of such mechanisms for the utility. (D) The first application filed under this section by an electric distribution utility that, as of July 31, 2008, directly owns, in whole or in part, operating electric generating facilities that had been used and useful in this state shall require that a portion of that utility's standard service offer load for the first five years of the market rate offer be competitively bid under division (A) of this section as follows: ten per cent of the load in year one, not more than twenty per cent in year two, thirty per cent in year three, forty per cent in year four, and fifty per cent in year five. Consistent 628 629 630 631 632 633 634 635 636 637 638 639 640 641 642 643 644 645 646 647 648 649 650 651 652 653 654 655 656 657 658 with those percentages, the commission shall determine the actual percentages for each year of years one through five. The standard service offer price for retail electric generation service under this first application shall be a proportionate blend of the bid price and the generation service price for the remaining standard service offer load, which latter price shall be equal to the electric distribution utility?s most recent standard service offer price, adjusted upward or downward as the commission determines reasonable, relative to the jurisdictional portion of any known and measurable changes from the level of any one or more of the following costs as reflected in that most recent standard service offer price: (1) The electric distribution utility's prudently incurred cost of fuel used to produce electricity: (2) Its prudently incurred purchased power costs; (3) Its prudently incurred costs of satisfying the supply and demand portfolio requirements of this state, including, but not limited to, renewable energy resource and energy efficiency requirements; (4) Its costs prudently incurred to comply with environmental laws and regulations, with consideration of the derating of any facility associated with those costs. In making any adjustment to the most recent standard service offer price on the basis of costs described in division (D) of this section, the commission shall include the benefits that may become available to the electric distribution utility as a result of or in connection with the costs included in the adjustment, including, but not limited to, the utility's receipt of emissions credits or its receipt of tax benefits or of other benefits, and, accordingly, the commission may impose such conditions on the adjustment to ensure that any such benefits are properly aligned with the associated cost responsibility. The commission shall also determine how such 659 668 661 662 663 664 665 666 667 668 669 670 671 672 673 674 675 676 677 678 679 680 681 682 683 684 685 686 687 688 689 690 691 adjustments will affect the electric distribution utility's return on common equity that may be achieved by those adjustments. The commission shall not apply its consideration of the return on common equity to reduce any adjustments authorized under this division unless the adjustments will cause the electric distribution utility to earn a return on common equity that is significantly in excess of the return on common equity that is earned by publicly traded companies, including utilities, that face comparable business and financial risk, with such adjustments for capital structure as may be appropriate. The burden of proof for demonstrating that significantly excessive earnings will not occur shall be on the electric distribution utility. Additionally, the commission may adjust the electric distribution utility's most recent standard service offer price by such just and reasonable amount that the commission determines necessary to address any emergency that threatens the utility*s financial integrity or to ensure that the resulting revenue available to the utility for providing the standard service offer is not so inadequate as to result, directly or indirectly, in a taking of property without compensation pursuant to Section 19 of Article I, Ohio Constitution. The electric distribution utility has the burden of demonstrating that any adjustment to its most recent standard service offer price is proper in accordance with this division. (E) Beginning in the second year of a blended price under division of this section and notwithstanding any other requirement of this section, the commission may alter prospectively the proportions specified in that division to mitigate any effect of an abrupt or significant change in the electric distribution utility's standard service offer price that would otherwise result in general or with respect to any rate group or rate schedule but for such alteration. Any such alteration shall be made not more often than annually, and the commission shall not, by altering those proportions and in any event, including because of the length of time, as authorized under division (C) of this section, taken to approve the 692 693 694 695 696 697 698 699 700 701 702 703 704 705 706 707 708 709 710 711 712 713 714 715 716 717 718 719 720 market rate offer, cause the duration of the blending period to exceed ten years as counted from the effective date of the approved market rate offer. Additionally, any such alteration shall be limited to an alteration affecting the prospective proportions used during the blending period and shall not affect any blending proportion previously approved and applied by the commission under this division. (F) An electric distribution utility that has received commission approval of its first application under division (C) of this section shall not, nor ever shall be authorized or required by the commission to, file an application under section 4928.143 of the Revised Code. Sec. 4928.143. (A) For the purpose of complying with section 4928-141 of the Revised Code, an electric distribution utility may file an application for public utilities commission approval of an electric security plan as prescribed under division (B) of this section. The utility may file that application prior to the effective date of any rules the commission may adopt for the purpose of this section, and, as the commission determines necessary, the utility immediately shall conform its filing to those rules upon their taking effect. ?n electric distribution utility shall have the right within one hundred twenty days of the effective date of of the l32nd general assembly to file an application to reopen, update, or amend its theme current standard service offer or initiate a separate proceeding in order to implement the amended version of this section, which proceeding shall not otherwise reopen matters previously decided. Upon approval of an update or amendment to implement the change in law, any terms and conditions of the prior electric security plan relating to a national security generation resource shall no longer be in effect. (B) Notwithstanding any other provision of Title XLIX of the Revised Code to the contrary except division (D) of this section, 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741 742 743 744 745 746 747 748 749 750 751 752 divisions (I), (J), and (K) of section 4928.20, division (E) of section 4928.64, and section 4928.69 of the Revised Code: An electric security plan shall include provisions relating to the supply and pricing of electric generation service and shall include provisions for recovery, on a nonbypassable basis, of all national security generation resource net impacts pursuant to section 4928.147 of the Revised Code. In addition, if the proposed electric security plan has a term longer than three years, it may include provisions in the plan to permit the commission to test the plan pursuant to division (E) of this section and any transitional conditions that should be adopted by the commission if the commission terminates the plan as authorized under that division. (2) The plan may provide for or include, without limitation, any. of the following: Automatic recovery of any of the following costs of the electric distribution utility, provided the cost is prudently incurred: the cost of fuel used to generate the electricity supplied under the offer; the cost of purchased power supplied under the offer, including the cost of energy and capacity, and including purchased power acquired from.an affiliate; the cost of emission allowances; and the cost of federally mandated carbon or energy taxes; A reasonable allowance for construction work in progress for any of the electric distribution utility?s cost of constructing an electric generating facility or for an environmental expenditure for any electric generating facility of the electric distribution utility, provided the cost is incurred or the expenditure occurs on or after January 1, 2009. Any such allowance shall be subject to the construction work in progress allowance limitations of division of section 4909.15 of the Revised Code, except that the commission may authorize such an allowance upon the incurrence of the cost or occurrence of the expenditure. No such allowance for generating facility construction shall be authorized, however, unless the 753 754 755 756 757 758 759 760 761 762 763 764 765 766 767 768 769 770 771 772 773 774 775 776 777 778 779 780 781 782 783 784 commission first determines in the proceeding that there is need for the facility based on resource planning projections submitted by the electric distribution utility. Further, no such allowance shall be authorized unless the facility's construction was sourced through a competitive bid process, regarding which process the commission may adopt rules. An allowance approved under division of this section shall be established as a nonbypassable surcharge for the life of the facility. The establishment of a nonbypassable surcharge for the life of an electric generating facility that is owned or operated by the electric distribution utility, was sourced through a competitive bid process subject to any such rules as the commission adopts under division of this section, and is newly used and useful on or after January 1, 2009, which surcharge shall cover all costs of the utility specified in the application, excluding costs recovered through a surcharge under division of this section. However, no surcharge shall be authorized unless the commission first determines in the proceeding that there is need for the facility based on resource planning projections submitted by the electric distribution utility. Additionally, if a surcharge is authorized for a facility pursuant to plan approval under division of this section and as a condition of the continuation of the surcharge, the electric distribution utility shall dedicate to Ohio consumers the capacity and energy and the rate associated with the cost of that facility. Before the commission authorizes any surcharge pursuant to this division, it may consider, as applicable, the effects of any decommissioning, deratings, and retirements. Terms, conditions, or charges relating to limitations on customer shopping for retail electric generation service, bypassability, standby, back?up, or supplemental power service, default service, carrying costs, amortization periods, and accounting or deferrals, including future recovery of such deferrals, as would 785 786 787 788 789 790 791 792 793 794 795 796 797 798 799 800 801 802 803 804 805 806 807 808 809 810 811 812 813 814 815 have the effect of stabilizing or providing certainty regarding retail electric service; Automatic increases or decreases in any component of the standard service offer price; Consistent with sections 4928.23 to 4928.2318 of the Revised Code, both of the following: Provisions for the electric distribution utility to securitize any phasewin, inclusive of carrying charges, of the utility's standard service offer price, which phase?in is authorized in accordance with section 4928.144 of the Revised Code; {ii} Provisions for the recovery of the utility's cost of securitization- Provisions relating to transmission, ancillary, congestion, or any related service required for the standard service offer, including provisions for the recovery of any cost of such service that the electric distribution utility incurs on or after that date pursuant to the standard service offer; Provisions regarding the utility's distribution service, including, without limitation and notwithstanding any provision of Title XLIX of the Revised Code to the contrary, provisions regarding single issue ratemaking, a revenue decoupling mechanism or any other incentive ratemaking, and provisions regarding distribution infrastructure and modernization incentives for the electric distribution utility. The latter may include a long?term energy delivery infrastructure modernization plan for that utility or any plan providing for the utility's recovery of costs, including lost revenue, shared savings, and avoided costs, and a just and reasonable rate of return on such infrastructure modernization. As part of its determination as to whether to allow in an electric distribution utility's electric security plan inclusion of any provision described 816 817 818 819 820 821 822 823 824 825 826 827 828 829 830 831 832 833 834 835 836 837 838 839 840 841 842 843 844 845 846 847 848 in division of this section, the commission shall examine the reliability of the electric distribution utility's distribution system and ensure that customers? and the electric distribution utility?s expectations are aligned and that the electric distribution utility is placing sufficient emphasis on and dedicating sufficient resources to the reliability of its distribution system. Provisions under which the electric distribution utility may implement economic development, job retention, and energy efficiency programs, which provisions may allocate program costs across all classes of customers of the utility and those of electric distribution utilities in the same holding company system. The burden of proof in the proceeding shall be on the electric distribution utility, provided that the public utilities commission must approve automatic cost recovery of all national security generation resource net impact consistent with the prudence review in section 4928.14? of the Revised Code- The commission shall issue an order under this division for an initial application under this section not later than one hundred fifty days after the application?s filing date and, for any subsequent application by the utility under this section, not later than two hundred seventy?five days after the application?s filing date. Subject to division (D) of this section, the commission by order shall approve or modify and approve an application filed under division (A) of this section if it finds that the electric security plan so approved, including its pricing and all other terms and conditions, including any deferrals and any future recovery of deferrals, is more favorable in the aggregate as compared to the expected results that would otherwise apply under section 4928.142 of the Revised Code. Additionally, if the commission so approves an application that contains a surcharge under division or of this section, the commission shall ensure that the benefits derived for any purpose for which the surcharge is established are reserved and made available to those that bear the surcharge. Otherwise, the commission by order shall disapprove the application. 849 850 851 852 853 854 855 856 857 858 859 860 861 862 863 864 865 866 867 868 869 870 871 872 873 874 875 876 877 878 879 880 881 {2J(a) If the commission modifies and approves an application under division of this section, the electric distribution utility may withdraw the application, thereby terminating it, and may file a new standard service offer under this section or a standard service offer under section 4928.142 of the Revised Code. If the utility terminates an application pursuant to division of this section or if the commission disapproves an application under division of this section, the commission shall issue such order as is necessary to ensure automatic cost recovery of all national security generation resource net impacts and to continue the provisions, terms, and conditions of the utility's most recent standard service offer, along with any expected increases or decreases in fuel costs from those contained in that offer, until a subsequent offer is authorized pursuant to this section or section 4928.142 of the Revised Code, respectively. (D) Regarding the rate plan requirement of division (A) of section 4928.141 of the Revised Code, if an electric distribution utility that has a rate plan that extends beyond December 31, 2008, files an application under this section for the purpose of its compliance with division (A) of section 4928.141 of the Revised Code, that rate plan and its terms and conditions are hereby incorporated into its proposed electric security plan and shall continue in effect until the date scheduled under the rate plan for its expiration, and that portion of the electric security plan shall not be subject to commission approval or disapproval under division (C) of this section, land the earnings test provided for in division (F) of this section shall not apply until after the expiration of the rate plan. However, that utility may include in its electric security plan under this section, and the commission may approve, modify and approve, or disapprove subject to division (C) of this section, provisions for the incremental recovery or the deferral of any costs that are not being recovered under the rate plan and that the utility incurs during that continuation period to comply with section 4928.141, division (B) of 882 883 884 885 886 887 888 889 890 891 892 893 894 895 896 897 898 899 900 901 902 903 904 905 906 907 908 909 910 911 912 913 914 915 section 4928.64, or division (A) of section 4928.66 of the Revised Code. If an electric security plan approved under division (C) of this section, except one withdrawn by the utility as authorized under that division, has a term, exclusive of phase?ins or deferrals, that exceeds three years from the effective date of the plan, the commission shall test the plan in the fourth year, and if applicable, every fourth year thereafter, to determine whether the plan, including its then?existing pricing and all other terms and conditions, including any deferrals and any future recovery of deferrals, continues to be more favorable in the aggregate and during the remaining term of the plan as compared to the expected results that would otherwise apply under section 4928.142 of the Revised Code. The commission shall also determine the prospective effect of the electric security plan to determine if that effect is substantially likely to provide the electric distribution utility with a return on common equity that is significantly in excess of the return on common equity that is likely to be earned by publicly traded companies, including utilities, that face comparable business and financial risk, with such adjustments for capital structure as may be appropriate- The burden of proof for demonstrating that significantly excessive earnings will not occur shall be on the electric distribution utility. If the test results are in the negative or the commission finds that continuation of the electric security plan will result in a return on equity that is significantly in excess of the return on common equity that is likely to be earned by publicly traded companies, including utilities, that will face comparable business and financial risk, with such adjustments for capital structure as may be appropriate, during the balance of the plan, the commission may terminate the electric security plan, but not until it shall have provided interested parties with notice and an opportunity to be heard. The commission may impose such conditions on the plan?s termination as it considers reasonable and necessary to accommodate the transition from an approved plan to the more advantageous alternative. In the event of an electric 916 917 918 919 920 921 922 923 924 925 926 927 928 929 930 931 932 933 934 935 936 937 938 939 940 941 942 943 944 945 946 947 948 security plan's termination pursuant to this division, the commission shall permit the continued deferral and phase?in of any amounts that occurred prior to that termination and the recovery of those amounts as contemplated under that electric security plan- (F) With regard to the provisions that are included in an electric security plan under this section, the commission shall consider, following the end of each annual period of the plan, if any such adjustments resulted in excessive earnings as measured by whether the earned return on common equity of the electric distribution utility is significantly in excess of the return on common equity that was earned during the same period by publicly traded companies, including utilities, that face comparable business and financial risk, with such adjustments for capital structure as may be appropriate. Consideration also shall be given to the capital requirements of future committed investments in this state. The burden of proof for demonstrating that significantly excessive earnings did not occur shall be on the electric distribution utility. If the commission finds that such adjustments, in the aggregate, did result in significantly excessive earnings, it shall require the electric distribution utility to return to consumers the amount of the excess by prospective adjustments; provided that, upon making such prospective adjustments, the electric distribution utility shall have the right to terminate the plan and immediately file an application pursuant to section 4928.142 of the Revised Code. Upon termination of a plan under this division, rates shall be set on the same basis as specified in division of this section, and the commission shall permit the continued deferral and phase?in of any amounts that occurred prior to that termination and the recovery of those amounts as contemplated under that electric security plan. In making its determination of significantly excessive earnings under this division, the commission shall not consider, directly or indirectly, the revenue, expenses, or earnings of any affiliate or parent company. Sec. 4928.147. 949 (A) In granting nonbypassable recovery of national security 950 generation resource net impacts under subsection or 951 subsection the public utilities commission shall: 952 (1) Determine, every three years, the prudence and 953 reasonableness of the electric distribution utility?s actions 954 related to the national security generation resource, including 955 its decisions related to offering the contractual commitment into 956 the wholesale markets. 957 Determine the proper rate design for recovering the 958- national security generation resource net impact, provided, 959 however, that the charge or credit recovering such 960 impact, including any deferrals or credits, shall not exceed 961 $2.50 per customer per month for residential customers and $2,500 962 per customer per month for all other customers, with the public 963 utilities commission establishing comparable caps for 964 each non?residential customer class at or below the $2,500 per 965 customer level. Insofar as the national security generation 966 resource net impact exceeds these limits, the electric 967 distribution utility shall defer the remaining net impact as a 68 regulatory asset or liability that shall be recovered,?s 69 determined by the public utilities commission subject to the I 70 rate caps set forth herein. 971 The public utilities commission shall conduct an inquiry in 972 2029 to determine whether it is in the public interest to discontinue 973 recovery of national security generation resource net impacts after 974 2030, subject to final reconciliation, and report its findings to the 975 general assembly. 976 Section 2. That existing sections 4928.01, 4928.02, 4928.141, 977 4928.142, and 4928.143 of the Revised Code are hereby repealed- Rep93 From: Gentil, Ryan Sent: Wednesday, June 14, 2017 9:41 AM To: Rep30; Lehman, Ryan; Rep93; Rep68; Rep04 Subject: OVEC Draft Language Attachments: AEP Ohio Revisions 6?12?17 (redline of deferral clarification).pdf Please find attached the draft OVEC language that was sent from the utilities to the industrial groups This is still a work in progress, and we expect to receive feedback today. 113-Introduced 132nd General Assembly Regular Session H. B. No. 239 2017-2018 Representatives Smith, R., Carfagna A BILL To amend sections 4928.01, 4928.02, 4928.141, 4928.142, and 4928.143 of the Revised Code to allow electric distribution utilities to recover costs for a national security generation resource. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: Section 1. That sections 4928.01, 4928.02, 4928.141, 4928.142, and 4928.143 of the Revised Code be amended, and section 4928.14? enacted, to read as follows: Sec. 4928.01. (A) As used in this chapter: (1) "Ancillary service" means any function necessary to the provision of electric transmission or distribution service to a retail customer and includes, but is not limited to, scheduling, system control, and dispatch services; reactive supply from generation resources and voltage control service; reactive supply from transmission resources service; regulation service; frequency response service; energy imbalance service; operating reserve-spinning reserve service; operating reserveusupplemental reserve service; load following; back?up supply service; real-power loss replacement service; dynamic scheduling; system black start capability; and network stability service. (2) "Billing and collection agent" means a fully independent agent, not affiliated with or otherwise controlled by an electric utility, electric services company, electric cooperative, or governmental aggregator subject to certification under section 4928.08 of the Revised Code, to the extent that the agent is under contract with such utility, company, cooperative, or aggregator solely to provide billing and collection for retail electric service on behalf of the utility company, cooperative, or aggregator. "Certified territory" means the certified territory established for an electric supplier under sections 4933.81 to 4933.90 of the Revised Code. "Competitive retail electric service? means a component of retail electric service that is competitive as provided under division (B) of this section. (5) "Electric cooperative" means a not?for?profit electric light company that both is or has been financed in whole or in part under the "Rural Electrification Act of 1936," 49 Stat. 1363, 7 U.S.C. 901, and owns or operates facilities in this state to generate, transmit, or distribute electricity, or a notwfor-profit successor of such company. (6) "Electric distribution utility" means an electric utility that supplies at least retail electric distribution service. (7) "Electric light company" has the same meaning as in section 4905.03 of the Revised Code and includes an electric services company, but excludes any self-generator to the extent that it consumes electricity it so produces, sells that electricity for resale, or obtains electricity from a generating facility it hosts on its premises. (8) "Electric load center" has the same meaning as in section 4933.81 of the Revised Code. (9) "Electric services company" means an electric light company that is engaged on a for?profit or notwforeprofit basis in the business of supplying or arranging for the supply of only a competitive retail electric service in this state. "Electric services company" includes a power marketer, power broker, aggregator, or independent power producer but excludes an electric cooperative, municipal electric utility, governmental aggregator, or billing and collection agent. (10} "Electric supplier" has the same meaning as in section 4933.81 of the Revised Code. {ll} "Electric utility" means an electric light company that has a certified territory and is engaged on a for?profit basis either in the business of supplying a noncompetitive retail electric service in this state or in the businesses of supplying both a noncompetitive and a competitive retail electric service in this state. "Electric utility" excludes a municipal electric utility or a billing and collection agent. (12) "Firm electric service" means electric service other than nonfirm electric service. (13) "Governmental aggregator" means a legislative authority of a municipal corporation, a board of township trustees, or a board of county commissioners acting as an aggregator for the provision of a competitive retail electric service under authority conferred under section 4928.20 of the Revised Code. {14} A person acts "knowingly," regardless of the person's purpose, when the person is aware that the person?s conduct will probably cause a certain result or will probably be of a certain nature. A person has knowledge of circumstances when the person is aware that such circumstances probably exist. {15} "Level of funding for low?income customer energy efficiency programs provided through electric utility rates" means the level of 100 101 102 103 104 105 106 107 108 109 110 111 funds specifically included in an electric utility's rates on October 5, 1999, pursuant to an order of the public utilities commission issued under Chapter 4905. or 4909. of the Revised Code and in effect on October 4, 1999, for the purpose of improving the energy efficiency of housing for the utility?s low?income customers. The term excludes the level of any such funds committed to a specific nonprofit organization or organizations pursuant to a stipulation or contract. {16} "Low~income customer assistance programs" means the percentage of income payment plan program, the home energy assistance program, the home weatherization assistance program, and the targeted energy efficiency and weatherizaticn program. (17) "Market development period" for an electric utility means the period of time beginning on the starting date of competitive retail electric service and ending on the applicable date for that utility as specified in section 4928.40 of the Revised Code, irrespective of whether the utility applies to receive transition revenues under this chapter. (18) "Market power" means the ability to impose on customers a sustained price for a product or service above the price that would prevail in a competitive market. (19) "Mercantile customer" means a commercial or industrial customer if the electricity consumed is for nonresidential use and the customer consumes more than seven hundred thousand kilowatt hours per year or is part of a national account involving multiple facilities in one or more states. (20] "Municipal electric utility" means a municipal corporation that owns or operates facilities to generate, transmit, or distribute electricity- (21) "Noncompetitive retail electric service" means a component of retail electric service that is noncompetitive as provided under division of this section. 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 (22} "Nonfirm electric service" means electric service provided pursuant to a schedule filed under section 4905.30 of the Revised Code or pursuant to an arrangement under section 4905.31 of the Revised Code, which schedule or arrangement includes conditions that may require the customer to curtail or interrupt electric usage during nonemergency circumstances upon notification by an electric utility. (23) "Percentage of income payment plan arrears" means funds eligible for collection through the percentage of income payment plan rider, but uncollected as of July 1, 2000. (24) "Person" has the same meaning as in section 1.59 of the Revised Code. (25) "Advanced energy project" means any technologies, products, activities, or management practices or strategies that facilitate the generation or use of electricity or energy and that reduce or support the reduction of energy consumption or support the production of clean, renewable energy for industrial,_distribution, commercial, institutional, governmental, research, notwfor?profit, or residential energy users, including, but not limited to, advanced energy resources and renewable energy resources. "Advanced energy project" also includes any project described in division (A), (B), or (C) of section 4928.621 of the Revised Code. (26) "Regulatory assets" means the unamortized net regulatory assets that are capitalized or deferred on the regulatory books of the electric utility, pursuant to an order or practice of the public utilities commission or pursuant to generally accepted accounting principles as a result of a prior commission rate?making decision, and that would otherwise have been charged to expense as incurred or would not have been capitalized or otherwise deferred for future regulatory consideration absent commission action. "Regulatory assets" includes, but is not limited to, all deferred demandwside management costs; all deferred percentage of income payment plan arrears; post-in-service capitalized charges and assets recognized in connection with statement 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 of financial accounting standards no. 109 (receivables from customers for income taxes); future nuclear decommissioning costs and fuel disposal costs as those costs have been determined by the commission in the electric utility*s most recent rate or accounting application proceeding addressing such costs; the undepreciated costs of safety and radiation control equipment on nuclear generating plants owned or leased by an electric utility; and fuel costs currently deferred pursuant to the terms of one or more settlement agreements approved by the commission. (27) "Retail electric service" means any service involved in supplying or arranging for the supply of electricity to ultimate consumers in this state, from the point of generation to the point of consumption. For the purposes of this chapter, retail electric service includes one or more of the following "service components": generation service, aggregation service, power marketing service, power brokerage service, transmission service, distribution service, ancillary service, metering service, and billing and collection service. (28) "Starting date of competitive retail electric service" means January 1, 2001. {29} "Customer?generator" means a user of a net metering system. {30) "Net metering" means measuring the difference in an applicable billing period between the electricity supplied by an electric service provider and the electricity generated by a customer? generator that is fed back to the electric service provider. (31) "Net metering system" means a facility for the production of electrical energy that does all of the following: Uses as_its fuel either solar, wind, biomass, landfill gas, or hydropower, or uses a microturbine or a fuel cell; Is located on a customermgenerator's premises; 113 114 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 Operates in parallel with the electric utility's transmission and distribution facilities: Is intended primarily to offset part or all of the customer?generator?s requirements for electricity. (32) "Self?generator" means an entity in this state that owns or hosts on its premises an electric generation facility that produces electricity primarily for the owner?s consumption and that may provide any such excess electricity to another entity, whether the facility is installed or operated by the owner or by an agent under a contract. (33) "Rate plan" means the standard service offer in effect on the effective date of the amendment of this section by S.B. 221 of the 127th general assembly, July 31, 2008. {34) "Advanced energy resource" means any of the following: Any method or any modification or replacement of any property, process, device, structure, or equipment that increases the generation output of an electric generating facility to the extent such efficiency is achieved without additional carbon dioxide emissions by that facility; Any distributed generation system consisting of customer cogeneration technology; Clean coal technology that includes a carbon?based product that is chemically altered before combustion to demonstrate a reduction, as expressed as ash, in emissions of nitrous oxide, mercury, arsenic, chlorine, sulfur dioxide, or sulfur trioxide in accordance with the American society of testing and materials standard D1757A or a reduction of metal oxide emissions in accordance with standard D5142 of that society, or clean coal technology that includes the design capability to control or prevent the emission of carbon dioxide, which design capability the commission shall adopt by rule and 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 22? 228 229 230 231 232 shall be based on economically feasible best available technology or, in the absence of a determined best available technology, shall be of the highest level of economically feasible design capability for which there exists generally accepted scientific opinion; Advanced nuclear energy technology consisting of generation technology as defined by the nuclear regulatory commission; other, later technology; or significant improvements to existing facilities; Any fuel cell used in the generation of electricity, including, but not limited to, a proton exchange membrane fuel cell, phosphoric acid fuel cell, molten carbonate fuel cell, or solid oxide fuel cell; Advanced solid waste or construction and demolition debris conversion technology, including, but not limited to, advanced stoker technology, and advanced fluidized bed gasification technology, that results in measurable greenhouse gas emissions reductions as calculated pursuant to the United States environmental protection agency?s waste reduction model (WARM) Demand?side management and any energy efficiency improvement; Any new, retrofitted, refueled, or repowered generating facility located in Ohio, including a simple or combined?cycle natural gas generating facility or a generating facility that uses biomass, coal, modular nuclear, or any other fuel as its input; Any uprated capacity of an existing electric generating facility if the uprated capacity results from the deployment of advanced technology. 233 "Advanced energy resource" does not include a waste energy 234 recovery system that is, or has been, included in an energy 235 efficiency program of an electric distribution utility pursuant 236 to requirements under section 4928-66 of the Revised Code. 237 {35) "Air contaminant source" has the same meaning as in section 238 3704.01 of the Revised Code. 239 (36) "Cogeneration technology? means technology that produces 240 electricity and useful thermal output simultaneously. 241 {37) 242 "Renewable energy resource" means any of the following: 243 Solar photovoltaic or solar thermal energy; 244 (ii) Wind energy; 245 Power produced by a hydroelectric facility; 246 (iv) Power produced by a run?ofwthe?river 247 hydroelectric facility placed in service on or after 248 January 1, 1980, that is located within this state, relies 249 upon the Ohio river, and operates, or is rated to operate, 250 at an aggregate capacity of forty or more megawatts; 251 Geothermal energy; 252 (vi) Fuel derived from solid wastes, as defined in 253 section 3734.01 of the Revised Code, through fractionation, 254 biological decomposition, or other process that does not 255 principally involve combustion; 256 (vii) Biomass energy; 257 Energy produced by cogeneration technology that 258 is placed into service on or before December 31, 2015, and 259 for which more than ninety per cent of the total annual 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 energy input is from combustion of a waste or byproduct gas from_an air contaminant source in this state, which source has been in operation since on or before January 1, 1985, provided that the cogeneration technology is a part of a facility located in a county having a population of more than three hundred sixty-five thousand but less than three hundred seventy thousand according to the most recent federal decennial census; (ix) Biologically derived methane gas; Heat captured from_a generator of electricity, boiler, or heat exchanger fueled by biologically derived methane gas; (xi) Energy derived from nontreated by?products of the pulping process or wood manufacturing process, including bark, wood chips, sawdust, and lignin in spent pulping liquors. "Renewable energy resource" includes, but is not limited to, any fuel cell used in the generation of electricity, including, but not limited to, a proton exchange membrane fuel cell, phosphoric acid fuel cell, molten carbonate fuel cell, or solid oxide fuel cell; wind turbine located in the state's territorial waters of Lake Erie; methane gas emitted from an abandoned coal mine; waste energy recovery system placed into service or retrofitted on or after the effective date of the amendment of this section by S.B. 315 of the 129th general assembly, September 10, 2012, except that a waste energy recovery system described in division of this section may be included only if it was placed into service between January 1, 2002, and December 31, 2004; storage facility that will promote the better utilization of a renewable energy resource; or distributed generation system used by a customer to generate electricity from any such energy. 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 "Renewable energy resource" does not include a waste energy recovery system that is, or was, on or after January 1, 2012, included in an energy efficiency program of an electric distribution utility pursuant to requirements under section 4928.66 of the Revised Code. As used in division of this section, "hydroelectric facility" means a hydroelectric generating facility that is located at a dam on a river, or on any water discharged to a river, that is within or bordering this state or within or bordering an adjoining state and meets all of the following standards: (1) The facility provides for river flows that are not detrimental for fish, wildlife, and water quality, including seasonal flow fluctuations as defined by the applicable licensing agency for the facility. {ii} The facility demonstrates that it complies with the water quality standards of this state, which compliance may consist of certification under Section 401 of the "Clean Water Act of 1977," 91 Stat. 1598, 1599, 33 U.S.C. 1341, and demonstrates that it has not contributed to a finding by this state that the river has impaired water quality under Section 303{d} of the "Clean Water Act of 1977," 114 Stat. 870, 33 U.S.C. 1313. The facility complies with mandatory prescriptions regarding fish passage as required by the federal energy regulatory commission license issued for the project, regarding fish protection for riverine, anadromous, and catadromous fish. (iv) The facility complies with the recommendations of the Ohio environmental protection agency and with the terms of its federal energy regulatory commission license 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 (38) following: regarding watershed protection, mitigation, or enhancement, to the extent of each agency?s respective jurisdiction over the facility. The facility complies with provisions of the "Endangered Species Act of 1973," 87 Stat. 884, 16 U.S.C. 1531 to 1544, as amended. {vi} The facility does not harm cultural resources of the area. This can be shown through compliance with the terms of its federal energy regulatory commission license or, if the facility is not regulated by that commission, through development of a plan approved by the Ohio historic preservation office, to the extent it has jurisdiction over the facility. (vii) The facility complies with the terms of its federal energy regulatory commission license or exemption that are related to recreational access, accommodation, and facilities or, if the facility is not regulated by that commission, the facility complies with similar requirements as are recommended by resource agencies, to the extent they have jurisdiction over the facility; and the facility provides access to water to the public without fee or charge. The facility is not recommended for removal by any federal agency or agency of any state, to the extent the particular agency has jurisdiction over the facility. "Waste energy recovery system" means either of the A facility that generates electricity through the conversion of energy from either of the following: 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 Exhaust heat from engines or manufacturing, industrial, commercial, or institutional sites, except for exhaust heat from a facility whose primary purpose is the generation of electricity: {ii} Reduction of pressure in gas pipelines before gas is distributed through the pipeline, provided that the conversion of energy to electricity is achieved without using additional fossil fuels- A facility at a state institution of higher education as defined in section 3345.011 of the Revised Code that recovers waste heat from electricity?producing engines or combustion turbines and that simultaneously uses the recovered heat to produce steam, provided that the facility was placed into service between January 1, 2002, and December 31, 2004. (39) ?Smart grid? means capital improvements to an electric distribution utility's distribution infrastructure that improve reliability, efficiency, resiliency, or reduce energy demand or use, including, but not limited to, advanced metering, and automation of system functions. (40) "Combined heat and power system" means the coproduction of electricity and useful thermal energy from the same fuel source designed to achieve thermal?efficiency levels of at least sixty per cent, with at least twenty per cent of the system's total useful energy in the form of thermal energy. (41) "National security generation resource" means all generating facilities owned directly or indirectly by a corporation that was formed prior to 1960 by investor?owned utilities for the original purpose of providing power to the federal government for use in the nation's defense or in furtherance of national interests, including the Ohio valley electric corporation. 382 383 384 385 386 387 388 389 390 391 392 393 394 395 396 397 398 399 400 401 402 403 404 485 406 407 408 409 410 411 (42) ?Prudently incurred costs related to national security generation resource? means costs, including deferred costs, allocated pursuant to a power agreement approved by the federal energy regulatory commission that relates to a national security generation resource; such costs shall exclude any added return on investment and, in the event of a premature retirement of a national security generation resource, shall exclude any recovery of remaining debt. (43) ?National security generation resource net impact" means retail recovery of prudently incurred costs related to a national security generation resource less any revenues realized from.offering the contractual commitment related to a national security generation resource into the wholesale markets. (B) For the purposes of this chapter, a retail electric service component Shall be deemed a competitive retail electric service if the service component is competitive pursuant to a declaration by a provision of the Revised Code or pursuant to an order of the public utilities commission authorized under division (A) of section 4928.34 of the Revised Code. Otherwise, the service component shall be deemed a noncompetitive retail electric service. Sec. 4928.02. It is the policy of this state to do the following throughout this state: (A) Ensure the availability to consumers of adequate, reliable, safe, efficient, nondiscriminatory, and reasonably priced retail electric service; (B) Ensure the availability of unbundled and comparable retail electric service that provides consumers with the supplier, price, terms, conditions, and quality options they elect to meet their respective needs; (C) Ensure diversity of electricity supplies and suppliers, by giving consumers effedtive choices over the selection of those 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 supplies and suppliers and by encouraging the development of distributed and small generation facilities; Encourage innovation and market access for cost?effective supply? and demand?side retail electric service including, but not limited to, demand?side management, timendifferentiated pricing, waste energy recovery systems, smart grid programs, and implementation of advanced metering infrastructure; (E) Encourage costweffective and efficient access to information regarding the operation of the transmission and distribution systems of electric utilities in order to promote both effective customer choice of retail electric service and the development of performance standards and targets for service quality for all consumers, including annual achievement reports written in plain language; (F) Ensure that an electric utility?s transmission and distribution systems are available to a customer?generator or owner of distributed generation, so that the customer?generator or owner can market and deliver the electricity it produces; (G) Recognize the continuing emergence of competitive electricity markets through the development and implementation of flexible regulatory treatment; (H) Ensure effective competition in the provision of retail electric service by avoiding anticompetitive subsidies flowing from a noncompetitive retail electric service to a competitive retail electric service or to a product or service other than retail electric service, and vice versa, including by prohibiting the recovery of any generation-related costs through distribution or transmission rates; (I) Ensure retail electric service consumers protection against unreasonable sales practices, market deficiencies, and market power; 440 441 442 443 444 445 446 447 448 449 450 451 452 453 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 (J) Provide coherent, transparent means of giving_appropriate incentives to technologies that can adapt successfully to potential environmental mandates; (K) Encourage implementation of distributed generation across customer classes through regular review and updating of administrative rules governing critical issues such as, but not limited to, interconnection standards, standby charges, and net metering; (L) Protect at?risk populations, including, but not limited to, when considering the implementation of any new advanced energy or renewable energy resource; (M) Encourage the education of small business owners in this state regarding the use of, and encourage the use of, energy efficienCy programs and alternative energy resources in their businesses; (N) Facilitate the state?s effectiveness in the global economy.; (0) Ensure the continuing economic viability of historical investments made by electric distribution utilities in national security generation resources and support continued investment to preserve the ongoing benefits associated with such resources. In carrying out this policy, the commission shall consider rules as they apply to the costs of electric distribution infrastructure, including, but not limited to, line extensions, for the purpose of development in this state. See. 4928.141. (A) Beginning January 1, 2009, an electric distribution utility shall provide consumers, on a comparable and nondiscriminatory basis within its certified territory, a standard service offer of all competitive retail electric services necessary to maintain essential electric service to consumers, including a firm supply of electric generation service. To that end, the electric distribution utility shall apply to the public utilities commission to 470 471 472 473 474 475 476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 50l 502 establish the standard service offer in accordance with section 4928.142 or 4928.143 of the Revised Code and, at its discretion, may apply simultaneously under both sections, caccpt thut tn utilityado. Only a standard service offer authorized in accordance with section 4928.142 or 4928.143 of the Revised Code, shall serve as the utility?s standard service offer for the purpose of compliance with this section; and that standard service offer shall serve as the utility's default standard service offer for the purpose-of section 4928.14 of the Revised Code. under section 4928.142 or 4928.143 of the Revised Code shall include automatic recovery, subject to audit and reconciliation, of all national security generation resource net impacts, but shall exclude any previously authorized allowances for transition costs, with such exclusion being effective on and after the date that the allowance is scheduled to end under the utility's rate plan. (B) An electric distribution utility with an affiliate that has a contractual commitment related to a national security generation resource may use the affiliate's contractual commitment in its standard service offer and recover the national security generation resource net impact under subsections or of the Revised Code, provided that the affiliate's contractual commitment was previously the contractual commitment of the electric distribution utility. All electric distribution utilities in the same holding company system may jointly use the affiliate's contractual commitment 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529 530 531 532 and recover the national security generation resource net impact under subsections or of the Revised Code. (C) The commission shall set the time for hearing of a filing under section 4928.142 or 4928.143 of the Revised Code, send written notice of the hearing to the electric distribution utility, and publish notice in a newspaper of general circulation in each county in the utility?s certified territory. The commission shall adopt rules regarding filings under those sections. Sec. 4928.142. (A) For the purpose of complying with section 4928.141 of the Revised Code and subject to division (D) of this section and, as applicable, subject th rate plan quir of . i an electric distribution utility may establish a standard service offer price for retail electric generation service that is delivered to the utility under a marketerate offer. An electric distribution utility shall have the right within one hundred twenty days of the effective date of of the 132nd general assembly to file an application to reopen, update, or amend its then?current market?rate offer in order to implement the amended version of this section, which proceeding shall not otherwise reopen matters previously decided. The supply and pricing of electric generation service under a market?rate offer shall be determined through a competitive bidding process that provides for all of the following: Open, fair, and transparent competitive solicitation: Clear product definition; Standardized bid evaluation criteria; {dj Oversight by an independent third party that shall design the solicitation, administer the bidding, and ensure that the criteria specified in dieisieeudivisions to of this section are met: 533 534 535 536 537 538 539 540 541 '542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 559 560 561 562 563 Evaluation of the submitted bids prior to the selection of the least?cost bid winner or winners. No generation supplier shall be prohibited from participating in the bidding process- (2) The market?rate offer shall include provisions for recovery, on a nonbypassable basis, of all national security generation resource net impacts pursuant to section 4928.14? of the Revised Code. (3) The public utilities commission shall modify rules, or adopt new rules as necessary, concerning the conduct of the competitive bidding process and the qualifications of bidders, which rules shall foster supplier participation in the bidding process and shall be consistent with the requirements of division of this section. Prior to initiating a competitive bidding process for a market?rate offer under division of this section, the electric distribution utility shall file an application with the commission. An electric distribution utility may file its application with the commission prior to the effective date of the commission rules required under division of this section, and, as the commission determines necessary, the utility shall immediately conform its filing to the rules upon their taking effect. An application under this division shall detail the electric distribution utility's proposed compliance with the requirements of division of this section and with commission rules under division of this section and demonstrate that all of the following requirements are met: (1) The electric distribution utility or its transmission service affiliate belongs to at least one regional transmission organization that has been approved by the federal energy regulatory commission; or there otherwise is comparable and nondiscriminatory access to the electric transmission grid. 564 565 566 567 568 569 570 571 572 573 574 575 576 577 578 579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 Any such regional transmission organization has a market? monitor function and the ability to take actions to identify and mitigate market power or the electric distribution utility's market conduct; or a similar market monitoring function exists with commensurate ability to identify and monitor market conditions and mitigate conduct associated with the exercise of market power. A published source of information is available publicly or through subscription that identifies pricing information for traded electricity on? and off?peak energy products that are contracts for delivery beginning at least two years from the date of the publication and is updated on a regular basis. The commission shall initiate a proceeding and, within ninety days after the application's filing date, shall determine by order whether the electric distribution utility and its market?rate offer meet all of the foregoing requirements. If the finding is positive, the electric distribution utility may initiate its competitive bidding process. If the finding is negative as to one or more requirements in division or of this section, the commission in the order shall direct the electric distribution utility regarding how any deficiency may be remedied in a timely manner to the commission?s satisfaction; otherwise, the electric distribution utility shall withdraw the application. However, if such remedy is made and the subsequent finding is positive and also if the electric distribution utility made a simultaneous filing under this section and section 4928.143 of the Revised Code, the utility shall not initiate its competitive bid until at least one hundred fifty days after the filing date of those applications. If the electric distribution utility withdraws the application, the commission shall issue an order as is necessary to ensure automatic recovery of all national security generation resource net impacts. (C) Upon the completion of the competitive bidding process authorized by divisions (A) and (B) of this section, including for the purpose of division (D) of this section, the commission shall select 597 598 599 600 601 602 603 604 605 606 608 609 610 611 612 613 614 615 616 617 618 619 620 621 622 623 624 625 626 627 the least?cost bid winner or winners of that process, and such selected bid or bids, as prescribed as retail rates by the commission, shall be the electric distribution utility's standard service offer unless the commission, by order issued before the third calendar day following the conclusion of the competitive bidding process for the market rate offer, determines that one or more of the following criteria were not met: Each portion of the bidding process was oversubscribed, such that the amount of supply bid upon was greater than the amount of the load bid out. There were four or more bidders. (3) At least twenty?five per cent of the load is bid upon by one or more persons other than the electric distribution utility. All costs incurred by the electric distribution utility as a result of or related to the competitive bidding process or to procuring generation service to provide the standard service offer, including the costs of energy and capacity and the costs of all other products and services procured as a result of the competitive bidding process, shall be timely recovered through the standard service offer price, and, for that purpose, the commission shall approve a reconciliation mechanism, other recovery mechanism, or a combination of such mechanisms for the utility. (DJ The first application filed under this section by an electric distribution utility that, as of July 31, 2008, directly owns, in whole or in part, operating electric generating facilities that had been used and useful in this state shall require that a portion of- that utility's standard service offer load for the first five years of the market rate offer be competitively bid under division of this section as follows: ten per cent of the load in year one, not more than twenty per cent in year two, thirty per cent in year three, forty per cent in year four, and fifty per cent in year five. Consistent 628 629 630 631 632 633 634 635 636 637 638 639 640 641 642 643 644 645 646 647 648 649 650 651 652 653 654 655 656 657 658 with those percentages, the commission shall determine the actual percentages for each year of years one through five. The standard service offer price for retail electric generation service under this first application shall be a proportionate blend of the bid price and the generation service price for the remaining standard service offer load, which latter price shall be equal to the electric distribution utility's most'recent standard service offer price, adjusted upward or downward as the commission determines reasonable, relative to the jurisdictional portion of any known and measurable changes from the level of any one or more of the following costs as reflected in that most recent standard service offer price: The electric distribution utility?s prudently incurred cost of fuel used to produce electricity; (2) Its prudently incurred purchased power costs; Its prudently incurred costs of satisfying the supply and demand portfolio requirements of this state, including, but not limited to, renewable energy resource and energy efficiency requirements; (4) Its costs prudently incurred to comply with environmental laws and regulations, with consideration of the derating of any facility associated with those costs. In making any adjustment to the most recent standard service offer price on the basis of costs described in division of this section, the commission shall include the benefits that may become available to the electric distribution utility as a result of or in connection with the costs included in the adjustment, including, but not limited to, the utility?s receipt of emissions credits or its receipt of tax benefits or of other benefits, and, accordingly, the commission may impose such conditions on the adjustment to ensure that any such benefits are properly aligned with the associated cost responsibility. The commission shall also determine how such 659 668 661 662 663 664 665 666 667 668 669 670 671 672 673 674 675 676 677 678 679 680 681 682 683 684 685 686 687 688 689 690 691 adjustments will affect the electric distribution utility's return on common equity that may be achieved by those adjustments. The commission shall not apply its consideration of the return on common equity to reduce any adjustments authorized under this division unless the adjustments will cause the electric distribution utility to earn a return on common equity that is significantly in excess of the return on common equity that is earned by publicly traded companies, including utilities, that face comparable business and financial risk, with such adjustments for capital structure as may be appropriate. The burden of proof for demonstrating that significantly excessive earnings will not occur shall be on the electric distribution utility. Additionally, the commission may adjust the electric distribution utility?s most recent standard service offer price by such just and reasonable amount that the commission determines necessary to address any emergency that threatens the utility's financial integrity or to ensure that the resulting revenue available to the utility for providing the standard service offer is not so inadequate as to result, directly or indirectly, in a taking of property without compensation pursuant to Section 19 of Article I, Ohio Constitution. The electric distribution utility has the burden of demonstrating that any adjustment to its most recent standard service offer price is proper in accordance with this div;sion. (E) Beginning in the second year of a blended price under division (D) of this section and notwithstanding any other requirement of this section, the commission may alter prospectively the proportions specified in that division to mitigate any effect of an abrupt or significant change in the electric distribution utility's standard service offer price that would otherwise result in general or with respect to any rate group or rate schedule but for such alteration. Any such alteration shall be made not more often than annually, and the commission shall not, by altering those proportions and in any event, including because of the length of time, as authorized under division (C) of this section, taken to approve the 692 693 694 695 696 697 698 699 700 701 702 703 704 705 706 707 708 709 710 711 712 713 714 715 716 717 718 719 720 market rate offer, cause the duration of the blending period to exceed ten years as counted from the effective date of the approved market rate offer. Additionally, any such alteration shall be limited to an alteration affecting the prospective proportions used during the blending period and shall not affect any blending proportion previously approved and applied by the commission under this division- (F) An electric distribution utility that has received commission approval of its first application under division (C) of this section shall not, nor ever shall be authorized or required by the commission to, file an application under section 4928.143 of the Revised Code. Sec. 4928.143. (A) For the purpose of complying with section 4928.141 of the Revised Code, an electric distribution utility may file an application for public utilities commission approval of an electric security plan as prescribed under division (B) of this section. The utility may file that application prior to the effective date of any rules the commission may adopt for the purpose of this section, and, as the commission determines necessary, the utility immediately shall conform its filing to those rules upon their taking effect. ?n electric distribution utility shall have the right within one hundred twenty days of the effective date of of the 132nd general assembly to file an application to reopen, update, or amend its then? current standard service offer or initiate a separate proceeding in order to implement the amended version of this section, which proceeding shall not otherwise reOpen matters previously decided. Upon approval of an update or amendment to implement the change in law, any terms and conditions of the prior electric security plan relating to a national security generation resource shall no longer be in effect. (B) Notwithstanding any other provision of Title XLIX of the Revised Code to the contrary except division of this section, 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741 742 743 744 745 746 747 748 749 750 751 752 divisions (J), and of section 4928.20, division (E) of section 4928.64, and section 4928.69 of the Revised Code: (1) An electric security plan shall include provisions relating to the supply and pricing of electric generation service and shall include provisions for recovery, on a nonbypassable basis, of all national security generation resource net impacts pursuant to section 4928.147 of the Revised Code. In addition, if the proposed electric security plan has a term longer than three years, it may include provisions in the plan to permit the commission to test the plan pursuant to division of this section and any transitional conditions that should be adopted by the commission if the commission terminates the plan as authorized under that division. (2) The plan may provide for or include, without limitation, any of the following: Automatic recovery of any of the following costs of the electric distribution utility, provided the cost is prudently incurred: the cost of fuel used to generate the electricity supplied under the offer; the cost of purchased power supplied under the offer, including the cost of energy and capacity, and including purchased power acquired from_an affiliate; the cost of emission allowances; and the cost of federally mandated carbon or energy taxes; A reasonable allowance for construction work in progress for any of the electric distribution utility's cost of constructing an electric generating facility or for an environmental expenditure for any electric generating facility of the electric distribution utility, provided the cost is incurred or the expenditure occurs on or after January 1, 2009- Any such allowance shall be subject to the construction work in progress allowance limitations of division of section 4909.15 of the Revised Code, except that the commission may authorize such an allowance upon the incurrence of the cost or occurrence of the expenditure. No such allowance for generating facility construction shall be authorized, however, unless the 753 754 755 756 757 758 759 760 761 762 763 764 765 766 767 768 769 770 771 772 773 774 775 776 777 778 779 780 781 782 783 784 commission first determines in the proceeding that there is need for the facility based on resource planning projections submitted by the electric distribution utility. Further, no such allowance shall be authorized unless the facility?s construction was sourced through a competitive bid process, regarding which process the commission may adopt rules. An allowance approved under division (Bt2jtb) of this section shall be established as a nonbypassable surcharge for the life of the facility. The establishment of a nonbypassable surcharge for the life of an electric generating facility that is owned or operated by the electric distribution utility, was sourced through a competitive bid process subject to any such rules as the commission adopts under division of this section, and is newly used and useful on or after January 1, 2009, which surcharge shall cover all costs of the utility specified in the application, excluding costs recovered through a surcharge under division of this section. However, no surcharge shall be authorized unless the commission first determines in the proceeding that there is need for the facility based on resource planning projections submitted by the electric distribution utility. Additionally, if a surcharge is authorized for a facility pursuant to plan approval under division (C) of this section and as a condition of the continuation of the surcharge, the electric distribution utility shall dedicate to Ohio consumers the capacity and energy and the rate associated with the cost of that facility. Before the commission authorizes any surcharge pursuant to this division, it may consider, as applicable, the effects of any decommissioning, deratings, and retirements. Terms, conditions, or charges relating to limitations on customer shopping for retail electric generation service, bypassability, standby, back?up, or supplemental power service, default service, carrying costs, amortization periods, and accounting or deferrals, including future recovery of such deferrals, as would 785 786 787 788 789 790 791 792 793 794 795 796 797 798 799 800 801 802 803 804 805 806 807 808 809 810 811 812 813 814 815 have the effect of stabilizing or providing certainty regarding retail electric service; Automatic increases or decreases in any component of the standard service offer price; Consistent with sections 4928.23 to 4928.2318 of the Revised Code, both of the following: Provisions for the electric distribution utility to securitize any phase?in, inclusive of carrying charges, of the utility's standard service offer price, which phase?in is authorized in accordance with section 4928.144 of the Revised Code; {ii} Provisions for the rec0very of the utility's cost of securitization. Provisions relating to transmission, ancillary, congestion, or any related service required for the standard Service offer, including provisions for the recovery of any cost of such service that the electric distribution utility incurs on or after that date pursuant to the standard service offer; Provisions regarding the utility?s distribution service, including, without limitation and notwithstanding any provision of Title XLIX of the Revised Code to the contrary, provisions regarding single issue ratemaking, a revenue decoupling mechanism or any other incentive ratemaking, and provisions regarding distribution infrastructure and modernization incentives for the electric distribution utility. The latter may include a long?term energy delivery infrastructure modernization plan for that utility or any plan providing for the utility's recovery of costs, including lost revenue, shared savings, and avoided costs, and a just and reasonable rate of return on such infrastructure modernization. As part of its determination as to whether to allow in an electric distribution utility's electric security plan inclusion of any provision described 816 81division of this section, the commission shall examine the reliability of the electric distribution utility's distribution system and ensure that customers? and the electric distribution utility's expectations are aligned and that the electric distribution utility is placing sufficient emphasis on and dedicating sufficient resources to the reliability of its distribution system. Provisions under which the electric distribution utility may implement economic development, job retention, and energy efficiency programs, which provisions may allocate program costs across all classes of customers of the utility and those of electric distribution utilities in the same holding company system. The burden of proof in the proceeding shall be on the electric distribution utility, provided that the public utilities commission must approve automatic cost recovery of all national security generation resource net impact consistent with the prudence review in section 4928.14? of the Revised Code. The commission shall issue an order under this division for an initial application under this section not later than one hundred fifty days after the application's filing date and, for any subsequent application by the utility under this section, not later than two hundred seventy?five days after the application's filing date. Subject to division (D) of this section, the commission by order shall approve or modify and approve an application filed under division (A) of this section if it finds that the electric security plan so approved, including its pricing and all other terms and conditions, including any deferrals and any future recovery of deferrals, is more favorable in the aggregate as compared to the expected results that would otherwise apply under section 4928.142 of the Revised Code. Additionally, if the commission so approves an application that contains a surcharge under division or of this section, the commission shall ensure that the benefits derived for any purpose for which the surcharge is established are reserved and made available to those that bear the surcharge. Otherwise, the commission by order shall disapprove the application. 849 850 851 852 853 854 855 856 857 858 859 860 861 862 863 864 865 866 867 868 869 870 871 872 873 874 875 876 877 878 879 880 881 If the commission modifies and approves an application under division (Cj(lj of this section, the electric distribution utility may withdraw the application, thereby terminating it, and may file a new standard service offer under this section or a standard service offer under section 4928.142 of the Revised Code. If the utility terminates an application pursuant to division of this section or if the commission disapproves an application under division of this section, the commission shall issue such order as is necessary to ensure automatic cost recovery of all national security generation resource net impacts and to continue the provisions, terms, and conditions of the utility's most recent standard service offer, along with any expected increases or decreases in fuel costs from those contained in that offer, until a subsequent offer is authorized pursuant to this section or section 4928.142 of the Revised Code, respectively. (D) Regarding the rate plan requirement of division (A) of section 4928.141 of the Revised Code, if an electric distribution utility that has a rate plan that extends beyond December 31, 2008, files an application under this section for the purpose of its compliance with division of section 4928.141 of the Revised Code, that rate plan and its terms and conditions are hereby incorporated into its proposed electric security plan and shall continue in effect until the date scheduled under the rate plan for its expiration, and that portion of the electric security plan shall not be subject to commission approval or disapproval under division of this section, and the earnings test provided for in division of this section shall not apply until after the expiration of the rate plan. However, that utility may include in its electric security plan under this section, and the commission may approve, modify and approve, or disapprove subject to division of this section, provisions for the incremental recovery or the deferral of any costs that are not being recovered under the rate plan and that the utility incurs during that continuation period to comply with section 4928.141, division (B) of 882 883 884 885 886 887 888 889 890 891 892 893 894 895 896 897 898' 899 900 901 902 903 904 905 908 907 908 909 910 911 912 913 914 915 section 4928.64, or division (A) of section 4928.66 of the Revised Code. (E) If an electric security plan approved under division (C) of this section, except one withdrawn by the utility as authorized under that division, has a term, exclusive of phasewins or deferrals, that exceeds three years from the effective date of the plan, the commission shall test the plan in the fourth year, and if applicable, every fourth year thereafter, to determine whether the plan, including its then?existing pricing and all other terms and conditions, including any deferrals and any future recovery of deferrals, continues to be more favorable in the aggregate and during the remaining term of the plan as compared to the expected results that would otherwise apply under section 4928.142 of the Revised Code. The commission shall also determine the prospective effect of the electric security plan to determine if that effect is substantially likely to provide the electric distribution utility with a return on common equity that is significantly in excess of the return on common equity that is likely to be earned by publicly traded companies, including utilities, that face comparable business and financial risk, with Such adjustments for capital structure as may be appropriate. The burden of proof for demonstrating that significantly excessive earnings will not occur shall be on the electric distribution utility. If the test results are in the negative or the commission finds that continuation of the electric security plan will result in a return on equity that is significantly in excess of the return on common equity that is likely to be earned by publicly traded companies, including utilities, that will face comparable business and financial risk, with such adjustments for capital structure as may be appropriate, during the balance of the plan, the commission may terminate the electric security plan, but not until it shall have provided interested parties with notice and an opportunity to be heard. The commission may impose such conditions on the plan's termination as it considers reasonable and necessary to accommodate the transition from an approved plan to the more advantageous alternative. In the event of an electric 916 917 918 919 920 921 922 923 924 925 926 927 928 929 930 931 932 933 934 935 936 93? 938 939 940 941 942 943 944 945 946 947 948 security plan's termination pursuant to this division, the commission shall permit the continued deferral and phase?in of any amounts that occurred prior to that termination and the recovery of those amounts as contemplated under that electric security plan. With regard to the provisions that are included in an electric security plan under this section, the commission shall consider, following the end of each annual period of the plan, if any such adjustments resulted in excessive earnings as measured by whether the earned return on common equity of the electric distribution utility is significantly in excess of the return on common equity that was earned during the same period by publicly traded companies, including utilities, that face comparable business and financial risk, with such adjustments for capital structure as may be appropriate. Consideration also shall be given to the capital requirements of future committed investments in this state. The burden of proof for demonstrating that significantly excessive earnings did not occur shall be on the electric distribution utility. If the commission finds that such adjustments, in the aggregate, did result in significantly excessive earnings, it shall require the electric distribution utility to return to consumers the amount of the excess by prospective adjustments; provided that, upon making such prospective adjustments, the electric distribution utility shall have the right to terminate the plan and immediately file an application pursuant to section 4928.142 of the Revised Code. Upon termination of a plan under this division, rates shall be set on the same basis as specified in division of this section, and the commission shall permit the continued deferral and phase?in of any amounts that occurred prior to that termination and the recovery of those amounts as contemplated under that electric security plan- In making its determination of significantly excessive earnings under this division, the commission shall not consider, directly or indirectly, the revenue, expenses, or earnings of any affiliate or parent company. Sec. 4928.147. 949 950 951 952 953 954 955 956 957 958 959 960 961 962 963 964 965 966 967 68 69 70 971 972 973 974 975 976' 977 (A) In granting nonbypassable recovery of national security generation resource net impacts under subsection or subsection the public utilities commission shall: (1) Determine, every three years, the prudence and reasonableness of the electric distribution utility?s actions related to the national security generation resource, including its decisions related to offering the contractual commitment into the wholesale markets- Determine the proper rate design for recovering the national security generation resource net impact, provided, however, that the charge or credit recovering such impact, including any deferrals or credits, shall not exceed $2.50 per customer per month for residential customers and $2,500 per customer per month for all other customers, with the public utilities commission establishing comparable caps for each non?residential customer class at or below the $2,500 per customer level. Insofar as the national security generation resource net impact exceeds these limits, the electric distribution utility shall defer the remaining net impact as a Deleted: in a manner determined regulatory asset or liability that shall be recovered as determined by the public utilities commission subject to the rate caps set forth herein. The Public utilities commission shall conduct an inquiry in 2029 to determine whether it is in the public interest to discontinue recovery of national security generation resource net impacts after 2030, subject to final reconciliation, and report its findings to the general assembly. Section 2. That existing sections 4928.01, 4928.02, 4928.141, 4928.142, and 4928.143 of the Revised Code are hereby repealed. . . .. Rep93 From: James Brister Sent: Wednesday, June ?14, 2017 9:01 AM To: Rep93 Subject: NO to Ohioans should not have to pay for Ohio Valley Electric Corporation's bad business decisions. Rep. Ryan Smith, As a hardworking Ohioan, I go to great to budget and make prudent ?nancial decisions for myself and my family. Why should we not expect the same behavior from corporate utilities in Ohio? If I were to make a bad choice to invest in fax machines at a time when everyone else was moving towards cloud computing, how could I reasonably ask you - as an Ohio policymaker - to bail me out when I lose a ton of money on my fax machine investment? Senate Bill 155 and House Bill 239 essentially propose such a scenario - awarding money to entities that have made a poor choice. The joint utility shareholders of the Ohio Valley Electric Corporation (OVEC) which are AEP, FirstEnergy, Duke and Dayton Power Light stand to receive a huge windfall if these bills become law, but at the expense of all their customers. And for what? To prop up two jointly?owned coal ?red power plants Kyger Creek in Cheshire, Ohio and Clifty Creek in Madison, Indiana. How does it makes sense that an Ohioan would pay to prop up a plant not even located in Ohio? Senate Bill 155 and House Bill 239 comes at a huge cost: $256 million per year for the next 23 years! That?s approximately $420 that I will have to pay, eating into my budget for all the other household expenses. Senate Bill 155 and House Bill 239 prevents Ohio from moving forward, and locks Ohio electric consumers paying for coal-?red power plants that should be headed for retirement by now. If these-bills become law, Ohio electric consumers would be bailing out these uncompetitive coal plants until these plants are 85 years old! These bills keep us stuck in an energy past, would increase my electric bill but provide no additional bene?ts to me as a customer, and would reward corporate utilities for bad business decisions they made on their own. As their customer, I should not be responsible for propping up failing investments of Ohio utilities. For these reasons, I urge you to VOTE NO on Senate Bill 155 or House Bill 239. James Brister 113 Private drive 220 Proctorville, OH 45669 Rep93 From: Rep93 Sent: Wednesday, June 14, 2017 8:14 AM To: Snider, Grace Subject: FW: Joint Letter in Opposition to H8. 239 193814} Attachments: Joint Letter in Opposition to HB. 239 8 SB. 155.pdf From: Koppitch, Matthew Sent: Tuesday, June 13, 2017 4:47 PM To: Koppitch, Matthew Subject: Joint Letter in Opposition to H.B. 239 Good afternoon, Please find attached a joint letter from Northeast Ohio Public Energy Council, Ohio Consumers? Counsel and the Ohio Manufacturers? Association regarding opposition to H.B. 239. Sincerely, Matt Koppitch were at misses-zest "test? Matthew R. Koppitch Bricker 82 Eckler LLP 100 South Third Street 1 Columbus, OH 43215 Direct Dial 614.227.8824 mkoppitch@bricker.com v-card This electronic transmission contains information from the law ?rm of Bricker 81 Eckler LLP which is privileged, confidential or otherwise the exclusive property of the intended recipient or Bricker Eckler LLP. This information is intended for the use of the individual or entity that is the intended recipient. If you have received this electronic transmission in error, please notify us by telephone at 614-227?8899, or by electronic mail at webmaster@ bricker.com. Please prom ptiy destroy the original transmission. Thank you for your assistance. June 13, 2017 Honorable Clifford A. Rosenberger Honorable Larry Obhof Speaker of the House Senate President Honorable William Seitz Honorable Bill Beagle Chair, House Public Utilities Committee Chair, Senate Public Utilities Committee State Representatives and Senators RE: Ohio Electric Consumers? Opposition to OVEC Subsidy Legislation H.B. 239 and SB. 155 Dear Speaker Rosenberger, President Obhof, Chairmen Seitz and Beagle, and Members of the Ohio General Assembly: We represent Northeast Ohio Public Energy Council, Ohio Consumers? Counsel and Ohio Manufacturers? Association. Our organizations advocate on behalf of senior citizens, businesses that make products, and families in Ohio that will pay at least $104 million, and as much as $256 million (or more), per year in rate increases for decades if this legislation is passed. For the reasons stated below, we respectfully request the members of the General Assembly to table the House and Senate legislation. 1. This legislation that the utilities seek would be bad public policy for Ohio. It has been Ohio?s energy policy since 1999 that risks from deregulated power plants were to be borne by Ohio?s electric utilities. Those utilities were paid by consumers about $9.6 billion from 1999 to 2010 in transition charges to assume those market risks. Importantly, against free market economics, the present bills pick winners and losers in Ohio?s electric generation market. These bills favor keeping 65-year old uneconomic power plants in operation for decades to come. At the same time, tens of billions of dollars are being invested in Ohio to build new ef?cient natural gas plants in the state. Consistent with the 1999 policy, these natural gas plants are privately financed without customer?funded subsidies. The free markets envisioned by the General Assembly are working. But the bills would enable unnecessary governmental interference in those markets. 2. Consumers should not have to write a blank check to Ohio utilities. The language in the bills permits collection of ?all costs? from consumers, including ?deferred costs.? It is not known how much this will cost consumers. Consumers could pay for OVEC power plants for decades no matter how expensive it becomes to operate the units. The Legislative Service Commission estimates the cost to Ohioans could be as high as $256 million per year, and this ?gure does not include deferred costs. Not only are the Cold War?era OVEC power plants inefficient, but they are saddled with over $1.4 billion in debt. This legislation incents the OVEC owners to Operate the plants well beyond their useful life, and could even include consumer payment of the costs of decommissioning the plants when they close. 3. There should not be a costly Ohio approach to what is a regional or national issue. The issue of aging baseload coal and nuclear plants in the country is being studied currently by the Department of Energy. There is also the possibility that incentives being considered by FERC might ultimately be implemented 1n some form by grid operators such as PM. If the subject of these bills is an issue to be addressed it is a national lssue, and costs are appropriately borne by all customers, not just customers in one state (such as Ohio) where a particular plant is located. This is particularly the case for OVEC, which has two plants (in Ohio and in Indiana) that would receive customer?funded subsidies from only Ohioans under these bills. In sum, the Legislature should table the discussion of these bills which as introduced can harm Ohio businesses and consumers. If the Legislature wishes to revisit this issue in the future, there is plenty of time to consider this issue. The OVEC Operating agreement runs until 2040 and there are no announced plans to shut the plants down or not bid the plants into the PJM regional market. Thank you for your consideration of our request. Respectfully submitted, AARP Northeast Ohio Public Energy Council Of?ce of Ohio Consumers? Counsel Ohio Manufacturers? Association cc: Hon. John Kasich, Governor Rep93 From: Koppitch, Matthew Sent: Tuesday, June 13, 2017 4:47 PM To: Koppitch, Matthew Subject: Joint Letter in Opposition to HB. 239 Attachments: Joint Letter in Opposition to H8. 239 SB. 155.pdf Good afternoon, Please find attached a joint letter from Northeast Ohio Public Energy Council, Ohio Consumers? Counsel and the Ohio Manufacturers? Association regarding opposition to H.B. 239. Sincerely, Matt Koppitch "at tote-2E that? Matthew R. Koppitch Bricker Eokler LLP 100 South Third Street 1 Columbus, OH 43215 Direct Dial 614.227.8824 mkoppitch@bricker.com v?card This electronic transmission contains information from the law ?rm of Bricker 3L Eckler LLP which is privileged, confidential or otherwise the exclusive property of the intended recipient or Bricker Eckler LLP. This information is intended for the use of the individual or entity that is the intended recipient. If you have received this electronic transmission in error, please notify us by telephone at 614?227?8899, or by electronic mail at webmasterQbrickercom. Please destroy the original transmission. Thank you for your assistance. June 13, 2017 Honorable Clifford A. Rosenberger Honorable Larry Obhof Speaker of the House Senate President Honorable William Seitz Honorable Bill Beagle Chair, House Public Utilities Committee Chair, Senate Public Utilities Committee State Representatives and Senators RE: Ohio Electric Consumers? Opposition to OVEC Subsidy Legislation H.B. 239 and SB. 155 Dear Speaker Rosenberger, President Obhof, Chairmen Seitz and Beagle, and Members of the Ohio General Assembly: .We represent Northeast Ohio Public Energy Council, Ohio Consumers? Counsel and Ohio Manufacturers? Association. Our organizations advocate on behalf of senior citizens, businesses that make products, and families in Ohio that will pay at least $104 million, and as much as $256 million (or more), per year in rate increases for decades if this legislation is passed. For the reasons stated below, we respect?illy request the members of the General Assembly to table the House and Senate legislation. 1. This legislation that the utilities seek would be bad public policy for Ohio. It has been Ohio?s energy policy since 1999 that risks from deregulated power plants were to be borne by Ohio?s electric utilities. Those utilities were paid by consumers about $9.6 billion from 1999 to 2010 in transition charges to assume those market risks. lmportantly, against free market economics, the present bills pick winners and losers in Ohio?s electric generation market. These bills favor keeping 65-year old uneconomic power plants in operation for decades to come. At the same time, tens of billions of dollars are being invested in Ohio to build new ef?cient natural gas plants in the state. Consistent with the 1999 policy, these natural gas plants are privately financed without customer?funded subsidies. The free markets envisioned by the General Assembly are working. But the bills would enable unnecessary governmental interference in these markets. 2. Consumers should not have to write a blank check to Ohio utilities. The language in the bills permits collection of ?all costs? from consumers, including ?deferred costs.? it is not known how much this will cost consumers. Consumers could pay for OVEC power plants for decades no matter how expensive it becomes to operate the units. The Legislative Service Commission estimates the cost to Ohioans could be as high as $256 million per year, and this ?gure does not include deferred costs. Not only are the Cold War-era OVEC power plants inef?cient, but they are saddled with over $1.4 billion in debt. This legislation incents the OVEC owners to operate the plants well beyond their useful life, and could even include consumer payment of the costs of decommissioning the plants when they close. 3. There should not be a costly Ohio approach to What is a regional or national issue. The issue of aging baseload coal and nuclear plants in the country is being studied currently by the Department of Energy. There is also the possibility that incentives being considered by FERC might ultimately be implemented in some form by grid operators such as PM. If the subject of these bills is an issue to be addressed, it is a national issue, and costs are appropriately borne by all customers, not just customers in one state (such as Ohio) where a particular plant is located. This is particularly the case for OVEC, which has two plants (in Ohio and in Indiana) that would receive customer?funded subsidies from only Ohioans under these bills. In sum, the Legislature should table the discussion of these bills which as introduced can harm Ohio businesses and consumers. If the Legislature wishes to revisit this issue in the future, there is plenty of time to consider this issue. The OVEC operating agreement runs until 2040 and there are no announced plans to shut the plants down or not bid the plants into the PJM regional market. Thank you for your consideration of our request. Respectfully submitted, AARP Northeast Ohio Public Energy Council Of?ce of Ohio Consumers? Counsel Ohio Manufacturers? Association cc: Hon. John Kasich, Governor Rep93 . From: Rep93 Sent: Monday, June 12, 2017 3:41 PM To: Snider, Grace Subject: FW: OECAF Scorecard Notice House Bill 114 and House Bill ESQ/Senate Bill 155 Attachments: From: Aryeh Alex Sent: Monday, June 12, 2017 3:37 PM To: Heather Taylor~Miesle Cc: Trish Demeter Sarah Spence Subject: OECAF Scorecard Notice House Bili114 and House Bill 239/Senate Bill 155 To: Ohio General Assembly Members From: Heather Taylor-Miesle, Ohio Environmental Council Action Fund Re: House Bill 114 and House Bill 239/Senate Bill 155 Dear Senators and Representatives: The Ohio Environmental Council Action Fund will be considering the following pieces of proposed legislation as part of our upcoming annual scorecard: a House Bill 114 - Similar to the bill that Governor Kasich vetoed in late 2016, this legislation proposes major rollbacks to clean energy progress in Ohio. By converting Ohio?s renewable portfolio and energy efficiency standards to voluntary goals, creating special exemptions for large energy users, and watering down Ohio?s cost?saving energy efficiency standard, House Bill 114 would entrench Ohio in energy sources of the past, increase air pollution, inflate Ohioans? energy bills and squash technological innovation in the Buckeye State. Additionally, by weakening our clean energy law, House Bill 114 would put Ohio behind neighboring states like Michigan, and make Ohio businesses less competitive because of decreased access to cost~saving efficiency programs. a House Bill 239 Senate Bill 155 - These companion pieces of legislation propose a multi?million-dollar subsidy for electric utilities, paid for by customers of FirstEnergy, Duke, and Dayton Power Light; all of which are shareholders of the Ohio Valley Electric Corporation The cost of the subsidy is approximately $256 million per year for approximately the next 23 years in order for the OVEC owners to continue operating two coal-fired power plants that will be 85 years old by the time the subsidy expires. The plants are Kyger Creek in Cheshire, OH and Clifty Creek in Madison, IN. Together, these plants produce massive amounts of air pollution that harm Ohioans? health. The Kyger Creek-plant alone is responsible for 305 asthma attacks and 29 heart attacks per year. These plants should not be propped up by Ohio consumers, and instead should be subject to the competitive market just as every other power plant operating in the region. If you haVe any questions, please direct them to Trish Demeter, Managing Director of Energy Programs, at tdemeter@theoec.org or (614) 598-8374. Sincerely, Heather Taylor-Miesle President, Ohio Environmental Council Action Fund Aryeh Alex Ohio Environmental Council OEC Action Fund 614.487.5824 direct 513.478.5928 mobile June 12, 2017 To: Ohio General Assembly Members From: Heather Taylor-Miesle, Ohio Environmental Council Action Fund Re: House Bill 114 and House Bill 239/Senate Bill 155 Dear Senators and Representatives: The Ohio Environmental Council Action Fund will be considering the following pieces of proposed legislation as part of our upcoming annual scorecard: 1: House Bill 114 - Similar to the bill that Governor Kasich vetoed in late 2016, this legislation proposes major rollbacks to clean energy progress in Ohio. By converting Ohio?s renewable portfolio and energy efficiency standards to voluntary goals, creating special exemptions for large energy users, and watering down Ohio?s cost-saving energy efficiency standard, House Bill 114 would entrench Ohio in energy sources of the past, increase air pollution, inflate Ohioans? energy bills and squash technological innovation in the Buckeye State. Additionally, by weakening our clean energy law, House Bill 114 would put Ohio behind neighboring states like Michigan, and make Ohio businesses less competitive because of decreased access to cost-saving efficiency programs. a House Bill 239 Senate Bill 155 These companion pieces of legislation propose a multi?million-dollar subsidy for electric utilities, paid for by customers of FirstEnergy, Duke, and Dayton Power Light; all of which are shareholders of the Ohio Valley Electric Corporation (OVEC). The cost of the subsidy is approximately $256 million per year for approximately the next 23 years in order for the OVEC owners to continue operating two coal-fired power plants that will be 85 years old by the time the subsidy expires. The plants are Kyger Creek in Cheshire, OH and Clifty Creek in Madison, IN. Together, these plants produce massive amounts of air pollution that harm Ohioans? health. The Kyger Creek plant alone is responsible for 305 asthma attacks and-29 heart attacks per year. These plants should not be propped up by Ohio consumers, and instead should be subject to the competitive market just as every other power plant operating in the region. If you have any questions, please direct them to Trish Demeter, Managing Director of Energy Programs, at tdemeter@theoec.org or (614) 598-8374. Sincerely, Heather Taylor-Miesle President, Ohio Environmental Council Action Fund Rep93 From: Aryeh Alex Sent: Monday, June 12, 2017 3:37 PM To: Heather Taylor-Miesle Cc: Trish Demeter; Sarah Spence Subject: OECAF Scorecard Notice House Bill 114 and House Bill 239/Senate Bill 155 Attachments: To: Ohio General Assembly Members From: Heather Taylor-Miesle, Ohio Environmental Council Action Fund Re: House Bill 114 and House Bill 239/Senate Bill 155 Dear Senators and Representatives: The Ohio Environmental Council Action Fund will be considering the following pieces of proposed legislation as part of our upcoming annual scorecard: House Bill 114 - Similar to the bill that Governor Kasich vetoed in late 2016, this legislation proposes major rollbacks to clean energy progress in Ohio. By converting Ohio?s renewable portfolio and energy efficiency standards to voluntary goals, creating special exemptions for large energy users, and watering down Ohio?s cost~saving energy efficiency standard, House Bill 114 would entrench Ohio in energy sources of the past, increase air pollution, inflate Ohioans? energy bills and squash technological innovation in the Buckeye State. Additionally, by weakening our clean energy law, House Bill 114 would put Ohio behind neighboring states like Michigan, and make Ohio businesses less competitive because of decreased access to cost-saving efficiency programs. House Bill 239 Senate Bill 155 - These companion pieces of legislation propose a multi-million-dollar subsidy for electric utilities, paid for by customers of FirstEnergy, Duke, and Dayton Power Light; all of which are shareholders of the Ohio Valley Electric Corporation (OVEC). The cost of the subsidy is approximately $256 million per year for approximately the next 23 years in order for the OVEC owners to continue operating two coal-fired power plants that will be 85 years old by the time the subsidy expires. The plants are Kyger Creek in Cheshire, OH and Clifty Creek in Madison, 1N. Together, these plants produce massive amounts of air pollution that harm Ohioans? health. The Kyger Creek plant alone is responsible for 305 asthma attacks and 29 heart attacks per year. These plants should not be propped up by Ohio consumers, and instead should be subject to the competitive market just as every other power plant operating in the region. if you have any questions, please direct them' to Trish Demeter, Managing Director of Energy Programs, at tdemeter@theoec.org or (614) 598-8374. Sincerely, Heather Taylor-Miesle President, Ohio Environmental Council Action Fund Aryeh Alex Ohio Environmental Council OEC Action Fund 614.487.5824 direct 513.478.5928 mobile June 12, 2017 To: Ohio General Assembly Members From: Heather Taylor-Miesle, Ohio Environmental Council Action Fund Re: House Bill 114 and House Bill 239/Senate Bill 155 Dear Senators and Representatives: The Ohio Environmental Council Action Fund will be considering the following pieces of proposed legislation as part of our upcoming annual scorecard: a House Bill 114 - Similar to the bill that Governor Kasich vetoed in late 2016, this legislation proposes major rollbacks to clean energy progress in Ohio. By converting Ohio?s renewable portfolio and energy efficiency standards to voluntary goals, creating special exemptions for large energy users, and watering down Ohio?s cost-saving energy efficiency standard, House Bill 114 would entrench Ohio in energy sources of the past, increase air pollution, inflate Ohioans? energy bills and squash technological innovation in the Buckeye State. Additionally, by weakening our clean energy law, House Bill 114 would put Ohio behind neighboring states like Michigan, and make Ohio businesses less competitive because of decreased access to cost-saving efficiency programs. a House Bill 239 Senate Bill 155 - These companion pieces of legislation propose a multimillion-dollar subsidy for electric utilities, paid for by customers of FirstEnergy, Duke, and Dayton Power Et Light; all of which are shareholders of the Ohio Valley Electric Corporation (OVEC). The cost of the subsidy is approximately $256 million per year for approximately the next 23 years in order for the OVEC owners to continue operating two coal-fired power plants that will be 85 years old by the time the subsidy expires. The plants are Kyger Creek in Cheshire, OH and Clifty Creek in Madison, IN. Together, these plants produce massive amounts of air pollution that harm Ohioans? health. The Kyger Creek plant alone is responsible for 305 asthma attacks and 29 heart attacks per year. These plants should not be propped up by Ohio consumers, and instead should be subject to the competitive market just as every other power plant operating in the region. If you have any questions, please direct them to Trish Demeter, Managing Director of Energy Programs, at tdemeter@theoec.org or (614) 598?8374. Sincerely, Heather Taylor-Miesle President, Ohio Environmental Council Action Fund Rep93 From: Gentil, Ryan Sent: Friday, May 19, 2017 5:51 AM To: Rep93 Subject: OVEC details/history Attachments: OVEC Talking Points Testimonydocx; Rep. Smith, Here are talking points and some history of Ovec. Let us know if you?d like to sit down and discuss. Thanks. OVEC Talking Points Key Points 0 OVEC was created in 1952 by 10 investor?owned utilities in response to the nation?s then~critical cold war demands for enriched uranium There is no other arrangement like this in the country 0 Utilities stepped up to form a corporation that would expeditiously I lsslof the OVEC situation has created an uncertain environment for the Sponsoring Companies in Ohio 0 Cost recovery for OVEC will not impact the competitive markets, nor will it impact customers? right to shop The History of OVEC Implications of the Cold War a The United States of America needed to deveIOp its nuclear war program a The ABC looked to private industry to assist in the development and support of urar?um enrichment facilities a The AEC turned to investor-owned utilities in the Ohio River Valley area for one such project OVEC is Organized in Response to the Needs of the Organized 111 1952 by 10 investor? owned utilities I 8 Commitment to construct two massive generatingstations with degree of reliability each with multiple units I 0 Power requirements of the uranium entich'i?. could not be met with then? existing resources 0 Estimated power requirements of 1 800. MWs tates of America ever built in the United States 0 At the time, these were the most a Accelerated schedule 1955 an Additional security provided byl? initial Sponsoring Companies 0 Provide power prior to full scale operation of the OVEC generating stations - Halftime supplemental power as needed in maintenance or emergency ?193mg Sponsormg Companies Power Agreement Between OVEC and the United States of America 0 Agreement authorized by the Atomic Energy Act of 1946 Entered into between OVEC and the United States, acting through the ABC 0 Initially approved by the PUCO in January 1952, just three months after it had been signed 0 Uniqueness of the OVEC situation is long-since appreciated by the PUCO OVEC is an Ohio public utility OVEC does not have a certified territory iigl?t AChange In Circumstance a The need for power from the OVEC generatinwas Sponsoring Companies 100 percent of the costs ass?g; The Sponsoring?! situated ?gag Rep93 From: Bill Siderewicz Sent: Wednesday, March 08, 2017 5:49 PM To: Rep30 Cc: Rep50@ohiohouse.com; Rep97@ohiohouse.com; Smith, Ryan; Rob McColley_CLE; Haavisto, Elizabeth; Klaber, Gretchen; Rep93; Rep81; Snider, Grace; Osborne, Markee Subject: RESOLUTION Against Utility Change in Law Bill, We agree . . . . a Civil War is in the making. .and rightfully so ill Most Ohioans l?ve met want to iive in a free-market future, and not in the economic shackles ofthe utilities? past. . .pre~1999 economic socialism. No one should be surprised when multitudes of anti?re-reg and anti-ZEC Show up in Columbus. . .since there are only 2 communities that host nukes but there are far more communities who are hosting modern non?utility gas-fired plants having far more significant positive impacts on Ohio?s future. We are quite confident that the true facts and common sense are firmly in the corner of cost~saving and environmentally-superior non?utility gas?tired projects. .. .. and when un?biased, thoughtful individuals see these same merits they will agree that ?re?reg? coal subsidies (OVEC) and ZEC Bailouts are nothing more than dead anchors dragging down Ohio?s citizens and its economy. Results of the recent analysis by The Ohio State Univ. shows Ohioans saving 3 Billion/yr on their electric bills by lay-passing bioated utility costs for power. The very engine that drives these ?Customer Choice? savings are the iow wholesale power prices made available by Clean Energy Future, and other non- utility companies. Sincereiy, Bill S. From: Rep30@ohiohouse.gov [mailtozRepSO@ohiohouse.gov] Sent: Wednesday, March 08, 2017 3:07 PM To: Bill Siderewicz Cc: Rep50@ohiohouse.com; Rep97@ohiohouse.com; rmccolley@gmail.com; Gretchen.Klaber@ohiohouse.gov; Rep. Ryan Smith Rep81@ohiohouse.gov; Grace.Snider@ohiohouse.gov; Markee.Osborne@ohiohouse.gov Subject: RE: RESOLUTION Against Utility Change in Law Bill - Thanks for sharing the Lordstown resolution. Looks like Ohio may be headed for a civil wan?enclosed is the resolution of the Ottawa County Board of Commissioners expressing just the opposite sentiment! From: Bill Siderewicz [mailto:biils@oerpowercom] Sent: Wednesday, March 08, 2017 10:51 AM To: Rep30 Cc: Rep50@ohiohouse.com; Reb97@ohiohouse.com; Smith, Ryan Rob Subject: RESOLUTION Against Utility Change in Law Dear Bill, In case there was any doubt (following our visit) about the electorate?s absolute disdain for more multi- Billion dollar Utility Bailouts (Re?structuring or ZEC (Nuclear) that are nothing more that Ohio?job killers, the attached RESOLUTION speaks for itself. Sincerely, Bill S. Ryan Smith FW: OVEC details/history 2 messages Grace.Snider@ohiohouse.gov I Fri, May 19, 2017 at 9:52 AM To: "krsmith223@gmaii.com" . OVEC talking points From: Gentil, Ryan Sent: Friday, May 19, 2017 5:51 AM To: Rep93 Subject: OVEC details/ history Rep. Smith, Here are talking points and some history of Ovec. Let us know if you'd like to sit down and discuss. Thanks. OVEC Talking Points - Testimony.docx 25K Ryan Smith Fri, May 19, 2017 at 10:02 AM To: krsmith@hilliard.com Thanks, Ryan Sent from my iPhone Begin forwarded message: From: Date: May 19, 2017 at 9:52:02 AM EDT To: Subject: FW: OVEC detailsihistory {Quoted text hidden} OVEC Talking Points - Testimonydocx 26K OVEC Talking Points Key Points - OVEC was created in 1952 by 10 investor-owned utilities in response to the nation?s then-critical cold war demands for enriched uranium I There is no other arrangement like this in the country 0 Utilities stepped up to form a corporation that wouldex {mpedltiously construct own and operate two generating stations (2 OMMW) that a When OVEC was formed, the Sponsoring Co? in vertically integrated state 0 The unrqueness/of the OVEC situation has created an uncertain environment for the Sponsoring Companies in Ohio I Cost recovery for OVEC will not impact the competitive markets, nor Will it impact customers? right to shOp The History of OVEC Implications of the Cold War I The United States of America needed to develop its nuclear war program a The ABC looked to private industry to assist in the development and support of uranium enrichment facilities a The ABC turned to investor?owned utilities in the Ohio River Valley area for one such project OVEC is Organized in Response to the Needs of the Unite??i - Organized in 1952 by 10 investor?owned utilities 0 Commitment to construct two massive generating: degree of reliability each with multiple units 0 Power requirements of the uranium enric could not be met with then~existing resources i 0 Estimated power requ1re1nents of 1 800. MWs I Load was the large 0 ?Necessary, associated tran ever built in the United States 0 At the time, these were the most a Accelerated schedule States of America :gstations 0 Additional security provided by 1155 initial Sponsoring Companies 0 Provide power prior to full scale operation of the OVEC generating .e supplemental power as needed 111 maintenance or emergency . outages situanons Mrovrde an outlet for supplemental power not needed 1n the operation of 3 enrichment facilities via transmission interconnections with Sponsoring Companies Power Agreement Between OVEC and the United States of America 0 Agreement authorized by the Atomic Energy Act of 1946 - Entered into between OVEC and the United States, acting through the ABC 0 Initially approved by the PUCO in January 1952, just three months after it had been signed 0 Uniqueness of the OVEC situation is long-since appreciated by the PUCO OVEC is an Ohio public utility OVEC does not have a certified territory "a OVEC had one customer the United States governmen A Change 1n Circumstance The need for power from the OVEC aa?xistmg disparity 1n terms of cost recovery In recognition of the unique circumstances that brought about OVEC and the rotracted obligations that Ohio investor-?owned utilities quickly accepted and Ryan Smith FW: AEP Ohio OVEC Rider 1 message Taylor.Stepp@ohiohouse.gov Mon, May 22, 2017 at 12:57 PM To: "krsmith223@gmail.com" "Ryan.Smith@ohiohouse.gov" "Grace.Snider@ohiohouse.gov" i believe this is the email you are referring to. Taylor Stepp Legislative Aide Of?ce of Chairman Ryan Smith 77 South High Street, 1 31?h Floor (614) 4664366 From: Christine Wright Sent: Tuesday, May 16, 2017 1:11 PM To: Snider, Grace Stepp, Taylor Jacob, Abe Subject: AEP Ohio OVEC Rider All Attached is a summary document of the current AEP Ohio OVEC Rider that was approved by the PUCO last year. Also attached are current and future projected rider costs by customer class. Please let me know if you have any questions or would like additional details. Thank you, Chrisy 3 attachments OVEC Rider Summary.doc 22K CSP Typical Bills Current OVEC PPA Rider.pdf 20K Copy of CSP Typical Bills futurepdf 20K Summary of Power Purchase Agreement Rider The Power Purchase agreement was approved as a non-bypassabie charge. The rider is updated quarterly The current rider includes deferred costs from June 2016 through December 2016 that are being collected over a 12 month period ending December 2017 At the expiration of the deferred costs, the rider will only contain the quarterly values (the rider rate will decrease) One attachment shows the typical bilis for the current PPA rider rate. The second attachment shows the current rate excluding the June 2016 to December 2016 deferred balance to represent the bill impact estimate at the beginning of 2018. The Commission has approved a cap mechanism for the PPA rider to assure that no customer bills will increase by more than 5% due to the PPA rider. Tariff Residential RR1 Annual RR Annual GS-1 Secondary Primary GS-3 Secondary Current Power Purchase Agreement Rider Columbus Southern Power Rate Zone 1 00 250 500 750 1,000 1,500 2,000 375 1 ,000 750 2,000 1 ,500 4,000 6,000 10,000 10,000 14,000 12,500 18,000 15,000 30,000 60,000 100,000 100,000 30,000 50,000 30,000 36,000 60,000 Ohio Power Company Typical Bill Comparison (33030300 150 300 500 1,000 75 75 100 100 150 Current $23.38 $40.12 $88.02 $95.93 $123.81 $179.60 $235.40 51 .98 1 14.69 89.62 215.00 $241.74 $417.48 $740.48 $1,021.30 $1,122.73 $1,403.57 $1,399.89 $1,784.14 $1,828.81 $3,834.24 $7,245.15 $12,059.71 $16,089.70 $2,873.51 $4,266.45 $3,127.08 $3,544.96 $5,723.66 Progosed $23.63 $40.74 $69.27 $97.80 $128.31 $183.35 $240.40 52.53 1 16.15 90.71 217.92 $244.22 $424.10 $750.41 $1 ,037.86 $1,139.29 $1,426.75 $1,420.39 $1,813.94 $1 ,853.65 $3,683.91 $7,344.49 $12,225.28 $16,228.15 $2,923.18 $4,349.24 $3,178.75 $3,804.57 $5,823.00 Page 1 of 2 35 Difference . Difference $0.25 1.1% $0.82 1.8% $1.25 1.8% $1.87 2.0% $2.50 2.0% $3.75 2.1% $5.00 2.1% $0.55 1.1% $1.48 1.3% $1.09 1.2% $2.92 1.4% $2.48 1.0% $8.82 1.8% $9.93 1.3% $18.58 1.8% $18.58 1.5% $23.18 1.7% $20.70 1.5% $29.80 1.7% $24.84 1.4% $49.87 1.4% $99.34 1.4% $185.57 1.4% $138.45 0.9% $49.87 1.7% $82.79 1.9% $49.87 1.8% $59.81 1.7% $99.34 1.7% Tariff GS-3 Primary (38?4 Columbus Southern Power Rate Zone 100,000 90,000 120,000 150,000 200,000 150,000 180,000 200,000 325,000 300,000 360,000 400,000 650,000 1 ,500,000 2,500,000 3,250,000 3,000,000 5,000,000 6,500,000 6,000,000 10,000,000 13,000,000 15,000,000 25,000,000 32,500,000 Ohio Power Company Typical Bill Comparison Current Power Purchase Agreement Rider 150 300 300 300 300 500 500 500 500 1,000 1,000 1,000 1,000 5,000 5,000 5,000 10,000 10,000 10,000 20,000 20,000 20,000 Current $8,509.56 $9,334.58 $11 ,423.99 $13,513.42 $16,995.80 $15,542.08 $17,631.52 $19,024.46 $27,730.40 $29,320.62 $33,289.89 $35,936.08 $52,474.73 $1 12,947.36 $169,485.56 $21 1,889.20 $218,954.66 $332,031 .06 $416,838.36 $430,969.26 $657,122.06 $826,736.66 Proposed $8,675.13 $9,483.59 $11,622.67 $13,761.78 $17,326.94 $15,790.44 $17,929.55 $19,355.60 $28,268.50 $29,735.97 $33,788.31 $36,489.88 $53,374.66 $114,644.91 $172,314.81 $215,567.23 $222,349.76 $337,689.56 $424,194.41 $437,759.46 $668,439.06 $841,448.76 50,000 $1,067,013.06 $1 ,083,988.56 50,000 $1,632,395.06 $1,660,687.56 50,000 $2,056,431.56 $2,093,211.81 Typical bills assume 100% Power Factor - Page 2 of 2 Difference Difference $165.57 2.0% $149.01 1.6% $198.68 1.7% $248.36 1.8% $331.14 2.0% $248.36 . 1.6% $298.03 1 7% $331.14 1.7% $538.10 1.9% $41 5.35 1 $498.42 1 5% $553.80 1.5% $899.93 1 $1,697.55 15% $2,829.25 1.7% $3,678.03 1.7% $3,395.10 1.6% $5,658.50 1.7% $7,356.05 1.8% $6,790.20 1.6% $11,317.00 1.7% $14,712.10 1.8% $16,975.50 1.6% $28,292.50 1.7% $36,780.25 1.8% Tariff Residential R81 Annual RR Annual GS-1 Secondary Primary Secondary Future Power Purchase Agreement Rider Columbus Southern Power Rate Zone 1 00 250 500 750 1 ,000 1 ,500 2,000 375 1 ,000 750 2,000 1 ,500 4,000 6,000 10,000 10,000 14,000 12,500 18,000 15,000 30,000 60,000 100,000 100,000 30,000 50,000 30,000 36,000 60,000 Ohio Power Company Typical Bill Comparison KW. 03030000 150 300 500 1,000 75 75 100 100 150 Current $23.38 $40.12 $88.02 $95.93 $123.81 $179.80 $235.40 51.98 1 14.69 89.62 215.00 $241.74 $417.48 $740.48 $1,021.30 $1,122.73 $1,403.57 $1,399.69 $1,784.14 $1,828.81 $3,634.24 $7,245.15 $12,059.71 $16,089.70 $2,873.51 $4,266.45 $3,127.08 $3,544.96 $5,723.66 Proposed $23.56 $40.58 $68.93 $97.30 $125.84 $182.34 $239.08 52.36 1 15.72 90.39 217.05 $243.48 $422.13 $747.45 $1,032.92 $1,134.35 $1,419.83 $1,414.21 $1,805.05 $1,848.23 $3,669.09 $7,314.84 $12,175.86 $16,186.41 $2,908.36 $4,324.53 $3,161 .93 $3,586.77 $5,793.35 Page 1 of 2 Difference Difference $0.18 0.8% $0.46 1.2% $0.91 1.3% $1.37 1.4% $1.83 1.5% $2.74 1.5% $3.66 1.6% $0.38 0.7% $1.03 0.9% $0.77 0.9% $2.05 1.0% $1.74 0.7% $4.65 1.1% $6.97 0.$16.26 1.2% $14.52 1.0% $20.91 1.2% $17.42 1.0% $34.85 1.0% $69.69 1.0% $1 1615 1 $96.71 0.6% $34.85 1.2% $58.08 1.4% $34.85 1 .1 $41.81 1.2% $69.69 1.2% Tariff G883 Primary Columbus Southern Power Rate Zone 100,000 90,000 120,000 150,000 200,000 150,000 180,000 200,000 325,000 300,000 360,000 400,000 650,000 1 ,500,000 2,500,000 3,250,000 3,000,000 5,000,000 6,500,000 6,000,000 10,000,000 13,000,000 15,000,000 25,000,000 32,500,000 Ohio Power Company Typical Bill Comparison Future Power Purchase Agreement Rider 1% 150 300 300 300 300 500 500 500 500 1,000 1,000 1,000 1,000 5,000 5,000 5,000 10,000 10,000 10,000 20,000 20,000 20,000 Current $8,509.56 $9,334.58 $11,423.99 $13,513.42 $18,995.80 $15,542.08 $17,631.52 $19,024.48 $27,730.40 $29,320.62 $33,289.89 $35,936.08 $52,474.73 $1 12,947.36 $169,485.56 $21 1 ,889.20 $218,954.66 $332,031 .06 $416,838.36 $430,969.26 $657,122.06 $826,736.66 Progosed $8,625.71 $9,439.12 $1 1,563.37 $13,687.65 $17,228.10 $15,716.31 $17,840.59 $19,256.76 $28,107.89 $29,810.75 $33,638.05 $38,322.92 $53,103.35 $1 14,129.21 $171 ,455.31 $214,449.88 $221 ,318.36 $335,970.56 $421,959.71 $435,696.66 $665,001 .06 $836,979.36 50,000 $1,067,013.06 $1,078,831.56 50,000 $1,632,395.06 $1,652,092.56 50,000 $2,056,431.56 $2,082,038.31 Typical biils assume 100% Power Factor Page 2 012 Difference Difference $116.15 1.4% $104.54 1 .1 $139.38 1.2% $174.23 1.3% $232.30 1.4% $174.23 1 .1 $209.07 1.2% $232.30 1.2% $377.49 1.4% $290.13 1.0% $348.16 1.1% $386.84 1.1% $628.62 1.2% $1,181.85 1.1% $1,969.75 1.2% $2,560.68 1.2% $2,363.70 1.1% $3,939.50 1.2% $5,121.35 1.2% $4,727.40 1.1% $7,879.00 1.2% $10,242.70 1.2% $11,818.50 1.1% $19,697.50 1.2% $25,606.75 1.3% Ryan Smith Comp doc 1 message Ryan Smith To: krsmith@hiliiard.com Sent from my iPad H0239-6-132.pdf 153K Mon, Jun 19, 2017 at 10:32 AM OHIO LEGISLATIVE SERVICE COMMISSION Sub. Bill Comparative Synopsis Kathleen A. Luikart Sub. HE. 239 132nd General Assembly (H. Public Utilities) This table sUmmarizes how the latest substitute version of the bill differs from the immediately preceding version. it addresses only the topics on which the two versions differ substantively. it does not list topics on which the two bills are substantively the same. (A I: I Competitive retail electric Adds to the state policy, ensuring the continuing Adds to the state policy, providing clarity in cost service policy regarding a economic viability of historical investments recovery for Ohio-based electric utilities in "National security made by EDUs in and supporting conjunction with and encouraging EDU generation resource" continued investment to preserve the ongoing and affiliate divestiture of ownership interest in (NSGR) (RC. benefits associated with such resources. any NSGR. Change to original purpose Provides that the corporation owning the NSGR Changes the original purpose to providing of an NSGR (RC. was formed for the original purpose of providing "capacity and electricity. "power" to the federal government for use in the nation's defense or in furtherance of national interests, including the Ohio Valley Electric Corporation (OVEC). roduced); - 2'7 Provides for recovery through an electric Provides for recovery through an 880 of distribution utility's (EDU) standard service offer the NSGR net impacts that are calculated and (880) of all costs, including any deferred costs, recovered through the nonbypassable rate associated with the EDU's contractual mechanism1 through a prudency and commitments related to an NSGR (RC. reasonableness review as required by the bill 4928.141, and (B), and (see below), and defines the net impacts to mean and retail recovery of prudently incurred costs related to an NSGR less any revenues realized from offering the contractual commitment related to an NSGR into the wholesale markets, provided, where, the net revenues exceed net costs, such excess revenues shall be credited to customers (RC. 4928.141, and (B), and and Prudently incurred costs No provision requiring NSGR costs to be Defines prudentiyincurred costs related to an related to an NSGR prudently incurred. NSGR, for purposes of NSGR net impact, as costs, including deferred costs, allocated pursuant to a power agreement approved by the Federal Energy Regulatory Commission that relates to an NSGR, excluding (1) any added return on investment and (2) in the event of a premature retirement of an NSGR, any recovery of remaining debt (RC. Contractual commitment Provides that an EDU with an affiliate with 3 Provides for the affiliated EDU and the EDUs in output use in 380 (RC. contractual commitment related to an NSGR the same holding company to use the contractual may use the output from that commitment in its commitment in their 8803 with no reference to 880. Provides that all EDUs in the same the "output? of the commitment. holding company may jointly use the output of the commitment in their 8803 Cost recovery of NSGR 1 The bill only refers to a "rate mechanism." But, the cross reference is speci?cally to the bill's requirements regarding the "nonbypassable rate mechanism" in RC. 4928.147. Legislative Service Commission Sub. H.B. 239 Affiliate NSGR contractual commitment belonged to EDU (RC. related to an NSGR to previously have been the commitment in order to be used in the SSO. Requires the commitment to previously have been the EDU's commitment as of the effective date of the bill in order to be used in the SSO. Recovery of affiliate share Provides for an EDU to recover any and all costs, including any deferred costs, of the a?iliate's share of the NSGR (RC. 4928. ?l 41 No provision. Severability clause No provision. Specifies that the provisions regarding the use of the contractual commitment by an affiliated EDU and EDUs in the same holding company are severable and if held invalid do not affect other provisions of the bill (Section 3). Separate electric security plan 880 proceeding No provision. Permits an EDU to initiate a separate proceeding in order to implement the changes permitted by the bill regarding as part of the EDU's electric security plan 880 (RC. Nonbypassability Provides that, if an EDU agrees to offer the contractual commitment related to the NSGR into wholesale markets with any resulting revenues being credited to the benefit of retail customers, PUCO must grant recovery, as part of a market~rate offer 830 or electric security plan 880, on a nonbypassable basis (RC. and Requires an EDU's market-rate offer 880 or electric security plan 880 to provide for recovery of NSGR net impacts through a nonbypassable rate mechanism established through a prudency and reasonableness review as required by the bill (see below) (RC. and Legislative Service Commission Sub. H.B. 239 Prudency and reasonableness review No provision. Requires PUCO, in establishing a nonbypassable rate mechanism for recovery of NSGR net impacts, to determine the prudence and reasonableness of the actions related to an NSGR every three years and requires PUCO to include a determination of the prudence and reasonableness ofthe EDU's decisions related to offering the contractual commitment into the wholesale markets (RC. Cost recovery rate design No provision. Requires PUCO to determine the proper rate design for recovering or remitting the NSGR net impact, but specifies that the charge or credit for the recovery must not exceed $2.50 per customer per month for residential customers and $2,500 per customer per month for all other customers (RC. Establishment of caps for nonresidential customer classes No provision. Specifies that PUCO establish comparable caps for each nonresidential customer class at or below the $2,500 per customer level (RC. Deferral of NSGR net impact No provision. Specifies that insofar as the NSGR net impact exceeds the customer charges, the EDU must defer the remaining net impact as a regulatory asset or liability that must be recovered as determined by PUCO and subject to the rate caps (RC. Legislative Service Commission Sub. H.B. 239 9! Termination date of cost recovery mechanism No provision. Requires the PUCO to provide for discontinuation of the nonbypassable recovery mechanism on December 31, 2030, unless extended as provided under the bill.2 Specifies that discontinuation is subject to final reconciliation (RC. Inquiry regarding continuation of cost recovery mechanism No provision. Requires PUCO to conduct an inquiry in 2029 to determine whether it is in the public interest to continue recovery of NSGR net impacts after 2030 (RC PUCO report No provision. Requires PUCO to report its findings regarding the inquiry to the General Assembly (RC 2 The nonbypassabie recovery mechanism is not subject to retroactive repeal under the biil. Thus the law will remain in effect with its actual application dependent on PUCO determination after 2030. In addition, the bill does not provide for the mechanism to be extended-only that PUCO inquire about whether it should continue and to report its findings to the General Assembly. RC. 4928.147. Legislative Service Commission -5- Sub. HB. 239