Fritz, Shayna From: Jacob, Abe Sent: - Wednesday, May 10, 2017 5:21 PM To: Carfagna, Rick Subject: Fwd: document Attachments: Updated EDU proposal (May 10 OVEC only).pdf; ATT00001.htm Sent from my iPhone Begin forwarded message: From: Christine Wright Date: May 10, 2017 at 5:14:43 PM EDT To: "Abe Jacob Subject: document Abe Attached is the utility draft. Please let me know if you have any questions or need additional details. Thank you, Ch risy Con?dential Draft of 10 May 2017 132nd General Assembiy Regular Session H.BJS.B. No. 2017-2018 Representatives A BILL BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: That sections 4928.01, 4928.02, 4928.141, 4928.142, and 4928.143 of the Revised Code be amended to read as follows: Sec. 4928.01 Competitive retail electric service definitions. (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; back?up supply service; real?power loss replacement service; dynamic scheduling; system black start capability; and network stability service. (2) "Billing and coilection 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 suppiier under sections 4933.81 to 4933.90 of the Revised Code. (4) ?Competitive retail electric service" means a component of retail electric service that is competitive as provided under division (B) of this section. 1 Con?dential Draft of 10 May 2017 (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 not?for?pro?t 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 cf 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 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 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 Con?dential Draft of 10 May 2017 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 ef?ciency programs provided through electric utility rates" means the level of 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 ef?ciency 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. 100 101 102 103 104 105 108 107 108 109 110 111 112 113 114 115 116 Con?dential Draft of 10 May 2017 (21) "Noncompetitive retail electric service" means a component of retail electric service that is noncompetitive as provided under division (B) of this section. (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 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 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 reguiatory consideration absent commission action. ?Regulatory assets" inciudes, 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 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 4 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 Con?dential Draft of 10 May 2017 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. Forthe 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 customengenerator 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; Operates in parallel with the electric utility's transmission and distribution facilities; Is intended primarily to offset part or all of the customer?generators 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. 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 Con?dential Draft of 10 May 2017 (33) "Rate plan" means the standard service offer in effect on the effective date of the amendment of this section by 8.8. 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, I 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; (0) 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 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 173 174 175 178 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 198 197 198 Con?dential Draft of 10 May 2017 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. ?Advanced energy resource" does not include a waste energy recovery system that is, or has been, included in an energy ef?ciency 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; 199 200 201 202 203 204 205 206 207 208 209 210 211 2?12 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 Con?dential Draft of 10 May 2017 Geothermal energy; (vi) Fuel derived from solid wastes, as de?ned 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 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 inspent 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 8.8. 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 8 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 Con?dential Draft of 10 May 2017 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. "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 forthe 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. 134i, 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 forthe 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 regarding watershed protection, mitigation, or enhancement, to the extent of each agency's respective jurisdiction over the facility. Con?dential Draft of 10 May 2017 258 The facility complies with provisions of the "Endangered Species Act 259 of 1973," 87 Stat. 884, 16 U.S-C. 1531 to 1544, as amended. 260 (vi) The facility does not harm cultural resources of the area. This can be 261 shown through compliance with the terms of its federal energy regulatory 262 commission license or, if the facility is not regulated by that commission, 263 through development of a plan approved by the Ohio historic preservation 264 office, to the extent it has jurisdiction over the facility. 265 (vii) The facility complies with the terms of its federal energy regulatory 266 commission license or exemption that are related to recreational-access, 267 accommodation, and facilities or, if the facility is not regulated by that 268 commission, the facility complies with similar requirements as are 269 recommended by resource agencies, to the extent they have jurisdiction 270 over the facility; and the facility provides access to water to the public 271 without fee or charge. 272 The facility is not recommended for removal by any federal agency 273 or agency of any state, to the extent the particular agency has jurisdiction 274 over the facility. 275 (38) "Waste energy recovery system" means either of the following: 276 A facility that generates electricity through the conversion of energy from 277 either of the following: 278 Exhaust heat from engines or manufacturing, industrial, commercial, or 279 institutionat sites, except for exhaust heat from a facility whose primary 280 purpose is the generation of electricity; 281 (ii) Reduction of pressure in gas pipelines before gas is distributed 282 through the pipeline, provided that the conversion of energy to electricity 283 is achieved without using additional fossit fuels. 284 A facility at a state institution of higher education as de?ned in section 285 3345.011 of the Revised Code that recovers waste heat from electricity? 286 producing engines or combustion turbines and that simultaneously uses the 10 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 Con?dential Draft of 10 May 2017 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 reiiability, 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 ieast 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 ail generating 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. (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 State policy. It is the policy of this state to do the following throughout this state: (A) Ensure the availability to consumers of adequate, reiiable, safe, efficient, nondiscriminatory, and reasonably priced retaii 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; 11 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 Con?dential Draft of 10 May 2017 (C) Ensure diversity of electricity supplies and suppliers, by giving consumers effective choices over the selection of those 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; (E) 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 deveiopment and implementation of ?exible 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; Ensure retail electric service consumers protection against unreasonabie sales practices, market deficiencies, and market power; (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 ciasses through regular review and updating of administrative rules governing critical issues such as, but not iimited to, interconnection standards, standby charges, and net metering; 12 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 372 Con?dential Draft of 10 May 2017 (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 generating 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 Distribution utility to provide standard service offer. (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 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 .- Cede: 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. Nehvithstanding 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 393 394 395 396 397 398 399 400 401 402 403 Con?dential Draft of 10 May 2017 A standard service offer under section 4928.142 or 4928.143 ofthe Revised Code shall include automatic recovery, subiect to audit and reconciliation, of all costs, including any deferred costs, associated with an electric distribution utility?s contractual commitments related to a national security generation resource 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 output from the affiliates contractual commitment in its standard service offer provided under sections 4928.142 or 4928.143 of the Revised Code, provided that the affiliates contractual commitment was previously the contractual commitment of the electric distribution utility. The utility shall recover any and all costs. including any deferred costs. of the affiliate?s share of the resource. All electric distribution utilities in the same holding company system may iointly use the output of the affiliate?s contractual commitment in their standard service offer. (BC) The commission shall set the time for hearing of a filing under section 4928.142 or 4928.143 ofthe 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 Standard generation service offer price competitive bidding. (A) For the purpose of complying with section 4928.141 of the Revised Code and subject to division (D) ofthis section . -, -- . - .- an electric distribution utility may establish a standard service offer price for retail electric generation service that is delivered to the utility under a market-rate 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. (1) The-market?Fate?effer 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: 14 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426 427 428 429 430 431 432 Con?dential Draft of 10 May 2017 Open, fair, and transparent competitive solicitation; Clear product definition; Standardized bid evaluation criteria; Oversight by an independent third party that shall design the solicitation, administer the bidding, and ensure that the criteria specified in division to of this section are met; 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 of all costs, including any deferred costs, associated with an electric distribution utility?s contractual commitments related to a national security generation resource. If the electric distribution utility agrees to offer the contractuai commitment related to the national security generation resource into wholesaie markets with any resulting revenues being credited to the benefit of retail customers, such recovery shall be granted by the commission on a nonbypassabie basis. 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 market?rate offer under division (A) of this section, the electric distribution utility shall file an appiication 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 shaii immediately conform its tiling to the rules upon their taking effect. An application under this division shall detail the electric distribution proposed compiiance 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: 15 433 434 435 436 437 438 439 440 441 442 443 444 445 445 447 448 449 450 4.51 452 453 454 455 458 457 458 459 460 461 462 463 464 Con?dential Draft of 10 May 2017 The eiectric 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. (2) 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. (3) A published source of information is avaiiable 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 divisions or or this section, the commission in the order shall direct the electric distribution 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 appiication, the commission shall issue an order as is necessary to ensure automatic recovery of all costs. including any deferred costs, associated with a national security generation resource. (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 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 16 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 Con?dential Draft ot10 May 2017 conclusion of the competitive bidding process for the market rate offer, determines that one or more of the foilowing 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. (2) 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. (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 ?fty per cent in year ?ve. Consistent with those percentages, the commission shali determine the actual percentages for each year of years one through five. The standard service offer price for retail electric generation service under this ?rst application shall be a proportionate blend of the bid price and the generation service price for the remaining standard service offer toad, 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 measurabie changes from the level of any one or more of the following costs as re?ected 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; 17 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 51 1 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 Con?dential Draft of 10 May 2017 (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 ef?ciency 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 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 forr 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 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 (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 18 528 529 530 531 532 533 534 535 536 537 538 539 540 541 542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 Con?dential Draft of 10 May 2017 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 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 Application for approval of electric security plan testing. (A) For the purpose of complying with section 4928.141 of the Revised Code, an electric distribution utility may ?le 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 tiling to those rules upon their taking effect. An electric distribution utility shall have the right within one hundred twenty days of the effective date of of the 132rid general assembly to file an application to reopen, update, or amend its then?current standard service offer in order to implement the amended version of this section which proceeding shall not otherwise recpen 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, divisions (1), (J), and (K) 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 relating to recovery of all costs, including any deferred costs, associated with an electric distribution utility?s contractual commitments related to a national security generation resource. It the electric distribution utility agrees to offer ?19 Con?dential Draft of 10 May 2017 559 the contractual commitment related to the national security deneration resource into 560 whoiesale markets with any resulting revenues beinq credited to the benefit of retail 561 customers, such recovery shall be granted by the commission on a nonbypassable 562 bas? In addition, if the proposed electric security plan has a term longer than three 563 years, it may include provisions in the plan to permit the commission to test the plan 564 pursuant to division (E) of this section and any transitional conditions that should be 565 adopted by the commission if the commission terminates the plan as authorized under 566 that division. 567 (2) The plan may provide for or include, without limitation, any of the following: 568 Automatic recovery of any of the following costs of the electric distribution 569 utility, provided the cost is prudently incurred: the cost of fuel used to generate 570 the electricity supplied under the offer; the cost of purchased power supplied 571 under the offer, including the cost of energy and capacity, and including 572 purchased power acquired from an af?liate; the cost of emission allowances; and 573 the cost of federally mandated carbon or energy taxes; 574 A reasonable allowance for construction work in progress for any of the - 575 electric distribution utility's cost of constructing an electric generating facility or for 576 an environmental expenditure for any electric generating facility of the electric 577 distribution utility, provided the cost is incurred or the expenditure occurs on or 578 after January 1, 2009. Any such allowance shalt be subject to the construction 579 work in progress allowance limitations of division (A) of section 4909.15 of the 580 Revised Code, except that the'commission may authorize such an allowance 581 upon the incurrence of the cost or occurrence of the expenditure. No such 582 allowance for generating facility construction shall be authorized, however, 588 unless the commission first determines in the proceeding that there is need for . 584 the facility based on resource planning projections submitted by the electric 585 distribution utility. Further, no such allowance shall be authorized unless the 586 facility's construction was sourced through a competitive bid process, regarding 587 which process the commissionmay adopt rules. An allowance approved under 588 division of this section shall be established as a nonbypassabie 589 surcharge for the life of the facility. 20 590 591 592 593 594 595 596 597 598 599 600 601 602 603 604 605 606 607 608 609 610 61 1 612 613. 614 615 616 617 618 619 620 Con?dential Draft of 10 May 2017 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 ?rst 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 shalt 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 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 49282318 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 recovery of the utility's cost of securitization. 21 Con?dential Draft of 10 May 2017 621 Provisions relating to transmission, ancillary, congestion, or any related 622 service required for the standard service offer, including provisions for the 623 recovery of any cost-of such service that the electric distribution utility incurs on 624 or after that date pursuant to the standard service offer; 625 Provisions regarding the utility's distribution service, including, without 626 limitation and notWithstanding any provision of Title of the Revised Code to 627 the contrary, provisions regarding single issue ratemaking, a revenue decoupling 628 mechanism or any other incentive ratemaking, and provisions regarding 629 distribution infrastructure and modernization incentives for the electric distribution- 630 - utility. The latter may include a long-term energy delivery infrastructure 631 modernization plan for that utility or any plan providing for the utility's recovery of 632 costs, including lost revenue, shared savings, and avoided costs, and a just and 633 reasonable rate of return on such infrastructure modernization. As part of its 634 determination as to whether to allow in an electric distribution utility's electric 635 security plan inclusion of any provision described in division of this 636 section, the commission shall examine the reliability of the electric distribution 637 utility's distribution system and ensure that customers? and the electric 638 distribution utility's expectations are aligned and that the electric distribution utility 639 is placing sufficient emphasis on and dedicating sufficient resources to the 640 reliability of its distribution system. 641 Provisions under which the electric distribution utility may implement economic 642 development, job retention, and energy efficiency programs, which provisions 643 may allocate program costs across all classes of customers of the utility and 644 those of electric distribution utilities in the same holding company system. 645 (C) 646 (1) The burden of proof in the proceeding shall be on the electric distribution utility: 847 except that the public utilities commission must approve automatic cost recovery of all 648 costs, including any deferred costs, associated with a national security generation 649 resource. The commission shall issue an order under this division for an initial 650 application under this section not later than one hundred fifty days after the application's 651 filing date and, for any subsequent application by the utility under this section, not later 22 652 653 654 655 656 657 658 659 660 661 662 663' 664 665 666 667 668 669 670 671 672 673 674 675 676 677 678 679 680 681 682 Con?dential Draft of 10 May 2017 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 ?led 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. (2) 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 underthis section or a standard service offer under section 4928.142 of the Revised Code. lfthe 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 costs, including any deferred costs, associated with a national security generation resource 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, ?les 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 23 683 684 685 686 687 688 689 690 691 692 693 694 695 696 697 696 699 700 701 702 703 704 705 706 707 708 709 710 71 1 712 713 714 Con?dential Draft of 10 May 2017 not be subject to commission approval or disapproval under division (C) of this section, and 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 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 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 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 24 715 716 717 718 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 Con?dential Draft of 10 May 2017 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 signi?cantly 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. 25 Fritz, Shayna From: Jacob, Abe Sent: . Tuesday, May 16, 2017 1:11 PM To: Carfagna, Rick Subject: FW: AEP Ohio OVEC Rider Attachments: OVEC Rider Su'mmarydoc; CSP Typical Bills Current Rider. pdf; Copy of CSP Typical Bills future. From: Christine Wright [mailtoz com} 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 Summary of Power Purchase Agreement Rider The Power Purchase agreement was approved as a non?bypassable 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 bills for the current PPA rider rate. The second attachment shows the current rateexcluding the June 2016 to December 2016 deferred balance to represent the bill impatt estimate at the beginning of 2018. The Commission has approveda 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 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 ,000 75 75 100 100 150 Current $23.38 $40.12 $68.02 $95.93 $123.81 $179.60 $235.40 51.98 114.69 89.62 215.00 $241.74 $417.46 $740.48 $1,021.30 $1,122.73 $1,403.57 $1,399.69 $1,784.14 $1,628.61 $3,534.24 $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 $23.63 $40.74 $69.27 $97.80 $126.31 $183.35 $240.40 52.53 116.15 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 $3,176.75 $3,604.57 $5,823.00 Page 1 of 2 Difference Difference $0.25 1.1% $0.62 1.6% $1.25 1.8% $1.87 2.0% $2.50 2.0% $3.75 2.1% $5.00 2.1% $0.55 1.1% $1.46 1.3% $1.09 1.2% $2.92 1.4% $2.48 1.0% $6.62 1.6% $9.93 1.3% $16.56 1.6% $16.56 1.5% $23.18 1.7% $20.70 1.5% $29.80 1.7% $24.84 1.4% $49.67 1.4% $99.34 1.4% $165.57 1.4% $138.45 0.9% $49.67 1.7% $82.79 1.9% $49.67 1.6% $59.61 1.7% $99.34 1.7% Primary G854 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 M. 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 $112,947.36 $169,485.56 $211,889.20 $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 $1 1,622.67 $13,761.78 $17,326.94 $15,790.44 $17,929.55 $19,355.60 - $28,268.50 $29,735.97 $33,766.31 $36,489.88 $53,374.66 $1 14,644.91 $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 2 012 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 $415.35 1.4% $498.42 1.5% $553.80 1.5% $899.93 1.7% $1,697.55 1.5% $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 $36,780.25 1 Tariff Residential RR1 Annual RR Annual (38?1 (38?2 Secondary Primary Secondary Future Power Purchase Agreement Rider Columbus Southern Power Rate Zone 100 250 500 750 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 . 0303000150 300 500 1,000 75 75 100 100 150 Current $23.38 $40.12 $68.02 $95.93 $123.81 $179.60 $235.40 51.98 114.69 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 Progosed $23.56 $40.58 $68.93 $97.30 $125.64 $182.34 $239.06 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 $1,846.23 $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 33 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 1.8% $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 0.9% $1 1.62 1.1% $1 1.62 1.0% $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 16.15 1.0% $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 (388 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 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 $1 1,423.99 $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 $211,889.20 $218,954.66 $332,031.06 $416,838.36 $430,969.26 $657,122.06 $826,736.66 Progosed $6,625.71 $9,439.12 $11,563.37 $13,667.65 $17,226.10 $15,716.31 $17,640.59 $19,256.76 $26,107.69 $29,610.75 $33,638.05 $36,322.92 $53,103.35 $114,129.21 $171,455.31 $214,449.66 $221,318.36 $335,970.56 $421,959.71 $435,696.66 $665,001.06 $636,979.36 50,000 $1,067,013.06 $1,078,831.56 50,000 $1,632,395.06 50,000 $2,056,431.56 $2,082,038.31 Typical bills assume 100% Power Factor $1,652,092.56 Page 2 of 2 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 $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% Fritz, Shayna From: Sent: To: Cc: Subject: Attachments: Per our conversation Rep30 Tuesday, May 16, 2017 11:47 AM Rep68; Carfagna, Rick Jacob, Abe Draft OVEC Bill Reviewed As To Form By Legislative Service. Commission l__132__1270 REVIEWED FOR FORM ONLY 132nd General Assembly Regular Session . B. No. 2017-2018 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 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 zkc? 9qak brwuwk (fish-LUMP 10 11 12 l3 14 15 Page2 32_1 270 service; frequency response service; energy imbalance service; operating reservewspinning reserve service; operating reserve? supplemental 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, net 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. (4) "Competitive retail electric service" means a component of retail electric service that is competitive as previded 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 not?for?profit successor of such company. "Electric distribution utility" means an electric utility that supplies at least retail electric distribution . B. No. Page 3 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. 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 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 . B. No. Page 4 __132_1270 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 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 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 chapter100 101 102 103 . B. No. - - - Page 5 __132__1270 (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. (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 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 . B. No. 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 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 demand?side management costs; all deferred percentage of income payment plan arrears; postwin?service capitalized charges and assets_ recognized in connection with statement 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 con:rol 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. Page 6 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 (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'I 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 customerwgenerator 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; 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 Page? 164 165 166 167 168 169 170 171 172 173 174 175 176 '177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 . B. No. l_132_1270 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; (0) 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 shall be based on economically feasible best available technology or, in the absence of a determined best available Pages 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 PageQ L132_127o 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. "Advanced energy resource" does not include a waste energy 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 Page10 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. "Renewable energy resource" means any of the following: (1) 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 energy input is from combustion of a waste or byproduct gas from an air 250 251 252 253 254 255 256 257 258 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 .B.N0. Page11 32__1 270 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, I 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 8.8. 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; stdrage 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. "Renewable energy resource" does not include a waste 277 228 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 . B. No. Page 12 !_132_1270 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 regarding watershed 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 . B. No. Page 13 l_132_1270 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. (38) "Waste energy recovery system" means either of the following: A_facility that generates electricity through the conversion of energy from either of the following: Exhaust heat from engines or manufacturing, industrial, commercial, or institutional sites, except for exhaust heat from a facility whose primary purpose is the 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 Page14 l_1 32__1 270 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. (B) For the purposes of this chapter, a retail electric 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 Page15 32_1 270 . 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; (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 effective choices over the selection of those 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; (E) Encourage cost?effective and efficient access to information regarding the operation of the transmission and distribution systems of electric utilities in order to promote 393 394 395 396 397 398 399 400 401 402' 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 Page16 32.31270 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; (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; 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 440 44l 442 443 444 445 446 447 448 449 450 . B. No. - Page 17 l_132_1270 (L) Protect at?risk populations, including, but not 451 limited to, when considering the implementation of any new I 452 advanced energy or renewable energy resource; 453 (M) Encourage the education of small business owners in 454 this state regarding the use of, and encourage the use of, 455 energy efficiency programs and alternative energy resources in 456 their businesses; 457 (N) Facilitate the state's effectiveness in the global 458 economy; 459 Ensure the continuing economic viability of historical 460 investments made by electric distribution utilities in national 461 security generation resources and support continued investment 462 to preserve the ongoing?benefits associated with such resources. 463 In carrying out this policy, the commission shall consider 464 rules as they apply to the costs of electric distribution 465 infrastructure, including, but not limited to, line extensions, 466 for the purpose of development in this state. 467 Sec._4928.141. (A) Beginning January 1, 2009, an electric 468 distribution utility shall provide consumers, on a comparable 469 and nondiscriminatory basis within its certified territory, a 470 standard service offer of all competitive retail electric 471 services necessary to maintain essential electric service to 472 consumers, including a firm supply of electric generation 473 service. To that end, the electric distribution utility shall 474 apply to the public utilities cemmission to establish the 475 standard service offer in accordance with section 4928.142 or 476 4928.143 of the Revised Code and, at its discretion, may apply 477 simultaneously under both sections, except that utility's 478 first standard schicc offcr application L.t minimum shall 479 Page18 l_132_1270 480 Only a standard service offer authorized in accordance with 481 section 4928.142 or 4928.143 of the Revised Code, shall serve as 482 the utility's standard service offer for the purpose of 483 compliance with this section; and that standard service offer 484 shall serve as the utility's default standard service offer for 485 the purpose of section 4928.14 of the Revised Code. 486 487 488 489 490 491 492 493 494 duration of plan's term. A standard service offer under 495 section 4928.142 or 4928.143 of the Revised Code shall include 496 automatic recoverv, subiect to audit and reconciliation, of all 497 costs, includinq anv deferred costs, associated with an electric 498 distribution utilitv's contractual commitments related to a 499 national security qeneration resource, but shall exclude any 500 previously authorized allowances for transition costs, with such 501 exclusion being effective on and after the date that the 502 allowance is scheduled to end under the utility?s rate plan. 503 (B) An electric distribution utilitv with an affiliate 504 that has a contractual commitment related to a national securitv 505 generation resource mav use the output from the affiliate's 506 contractual commitment in its standard service offer provided 507 under section 4928.142 or 4928.143 of the Revised Code, Drovided 508 that the affiliate's contractual commitment was oreviouslv the 509 contractual commitment of the electric distribution utilitv. The 510 Page19 ln132_1270 utilitv shall recover any and all costs, includinc anv deferred costs, of the affiliate's share of the resource. All electric distribution utilities in the same holding company svstem.mav jointly use the output of the affiliate's contractual commitment in their standard service offer. 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, subjee (H- v?w-I? w?I ELL: a) 928 eede, an electric distribution utility may establish a standard service offer price for retail electric generation service that is delivered to the utility under a marketwrate electric distribution utilitv shall have the right within one hundred twenty days of the effective date of of the l32nd general assemblv to file an application to reopen, update, or amend its then~current market?rate offer in order to I implement the amended version of this section, which proceeding shall not otherwise reopen matters previouslv decided. (1) 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; 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529 530 531 532 533 534 535 536 537 538 539 540 Page20 l_132_1270 Clear product definition; Standardized bid evaluation criteria; Oversight by an independent third party that shall design the solicitation, administer the bidding, and ensure that the criteria specified in?divisiee divisions to of this section are met; 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 recoverv of all costs, including anv deferred costs, associated with an electric distribution utilitv's contractual commitments related to a national securitv generation resource. If the electric distribution utilitv agrees to offer the contractual commitment related to the national securitv generation resource into wholesale markets with anv resulting revenues being credited to the benefit of retail customers, such recoverv shall be granted bv the public utilities commission on a nonbvpassable basis. i?l_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 market?rate offer under division (A) of this section, the electric distribution utility shall file an application with the 541 542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 559 560 561 562 563 564 565 566 567 568 569 . B. No. Page 21 commission. An electric distribution utility may file its I 570 application with the commission prior to the effective date of 571 the commission rules required under division of this 572 section, and, as the commission determines necessary, the 573 2 utility shall immediately conform_its filing to the rules upon 574 i their taking effect. 575 An application under this division shall detail the 576 electric distribution utility's proposed compliance with the 577 requirements of division of this section and with 578 commission rules under division of this section and 579 2 demonstrate that all of the following requirements are met: 580 (1) The electric distribution utility or its transmission 581 1 service affiliate belongs to at least one regional transmission 582 i organization that has been approved by the federal energy 583 regulatory commission; or there otherwise is comparable and 584 nondiscriminatory access to the electric transmission grid. 585 (2) Any such regional transmission organization has a 586 market?monitor function and the ability to take actions to 587 identify and mitigate market power or the electric distribution 588 utility's market conduct; or a similar market monitoring 589 function exists with commensurate ability to identify and' 590 monitor market conditions and mitigate conduct associated with 591 the exercise of market power. 592 (3) A published source of information is available 593 publicly or through subscription that identifies pricing 594 information for traded electricity on~ and ofpreak energy 595 products that are contracts for delivery beginning at least two 596 years from the date of the publication and is updated on a 597 regular basis. 598 PageZZ 32_1 270 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 marketwrate 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 costs, including any deferred costs, associated with a national security generation resource. (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 the leastwcost 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 599 600 601 602 603 604 605 606 607 608 609 610 611 612 613 614 615 616 617 618 619 620 621 622 623 624 625 626 627 628 629 Page23 ?132_1270 met: 630 (1) Each portion of the bidding process was 631 oversubscribed, such that the amount of supply bid upon was 632 greater than the amount of the load bid out. 633 (2) There were four or more bidders. 634 (3) At least twenty?five per cent of the load is bid upon 635 by one or more persons other than the electric distribution 636 utility. 637 All costs incurred by the electric distribution utility as 638 a result of or related to the competitive bidding process or to 639 procuring generation service to provide the standard service 640 offer, including the cos:s of energy and capacity and the costs 641 of all other products and services procured as a result of the 642 competitive bidding process, shall be timely recovered through 643 the standard service offer price, and, for that purpose, the 644 commission shall approve a reconciliation mechanism, other 645 recovery mechanism, or a combination of such mechanisms for the 646 utility. 647 (D) The first application filed under this section by an 648 electric distribution utility that, as of July 31, 2668, 649 directly owns, in whole or in part, operating electric . 650 generating facilities that had been used and useful in this 651 state shall require that a portion of that utility's standard 652 service offer load for the first five years of the market rate 653 offer be competitively bid under division (A) of this section as 654 follows: ten per cent of the load in year one, not more than 655 twenty per cent in year two, thirty per cent in year three, 656 forty per cent in year four, and fifty per cent in year five. 657 Consistent with those percentages, the commission shall - 658 Page24 l_j32_1270 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 utilityls 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: (I) 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 659 660 661 662 663 664 665 666 667 668 669 670 671 672 673 674 675 676 677 678 679 680 681 682 683 684 685 686 687 Page25 i_132__1270 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 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 l9 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 (D) of this seation and notwithstanding any other requirement of this section, the commission may alter 688 689 690 691 692 693 694 695 696 697 698 699 700 701 702 703 704 705 706 707 708 709 710 711 712 713 714 715 716 717 718 _132_1270 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 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. An electric distribution utility shall have the right PageZG 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741 742 743 744 745 746 747 748 749 . B. No. I Page 27 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 then?current standard service offer 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, divisions (I), (J), and (K) 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 relating to recovery of all costs, including any deferred costs, associated with an electric distribution utility's contractual commitments related to a national security generation resource. If the electric distribution utility agrees to offer the contractual COmmitment related to the national security generation resource into wholesale markets with any resulting revenues being credited to the benefit of retail customers, such recovery shall be granted by the commission on a nonbvpassable basis. 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. 750 751 752 753 754 755 756 757 758 759 760 761 762 763 764 765 766 767 768 769 770 771 772 773 774 775 776 777 778 779 780 . B. No. Page 28 32_1270 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 (A) of section 4909.15 of the Revised Code, except that the commission may authorize such an allowance upon the incurrence of the cost oroccurrence of the expenditure. No such allowance for generating facility construction shall be authorized, however, 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. '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. 781 782 .783 784 785 786 787 788 789 790 791 792 793 794 795 796 797 798 799 800 801 802 803 804 805 808 807 808 809 810 811 . B. No. l_j32_1270 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 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; Page 29 812 813 814 815 816 817 818 819 820 821' 822 823 824 825 826 827 828 828 830 831 832 833 834 835 836 837 838 839 848 841 Page30 _132_1270 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 lest 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 in division of this 842 843 844 845 846 847 848 849 850 851 852 853 854 855 856 857 858 859 860 861 862 863 864 865 866 867 868 -869 870 Page31 l_132_1270 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, except that the public utilities commission mus: approve automatic cost recovery of all costs, including any deferred costs, associated with a national security generation resource. 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 871 872 873 874 875 876 877 878 879 880 881 882 883 884 885 886 887 888 889 890 891 892 893 894 895 896 897 898 899 900 901 P39932 _132_1270 commission so approves an application that contains a surcharge 902 under division or of this section, the commission 903 shall ensure that the benefits derived for any purpose for which 904 the surcharge is established are reserved and made available to 905 those that bear the surcharge. Otherwise, the commission by 906 order shall disapprove the application. 907 If the commission modifies and approves an 908 application under division of this section, the electric 909 distribution utility may withdraw the application, thereby 910 terminating it, and may file a new standard service offer under 911 this section or a standard service offer under section 4928.142 912 of the Revised Code. 913 If the utility terminates an application pursuant to 914 division of this section or if the commission 915 disapproves an application under division of this 916 section, the commission shall issue such order as is necessary 917 to ensure automatic cost recovery of all costs, including any 918 deferred costs, associated with a national securitv generation 919 resource and to continue the provisions, terms, and conditions 920 of the utility's most recent standard service offer, along with 921 any expected increases or decreases in fuel costs from those 922 contained in that offer, until a subsequent offer is authorized 923 pursuant to this section or section 4928.142 of the Revised 924 Code, respectively. I 925 (D) Regarding the rate plan requirement of division (A) of 926 section 4928.141 of the Revised Code, if an electric 927 3 distribution utility that has a rate plan that extends beyond 928 December 31, 2008, files an application under this section for 929 the purpose of its compliance with division (A) of section 930 4928.141 of the Revised Code, that rate plan and its terms and 931 . B. No. Page 33 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, and 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 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 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 932 933 934 935 936 937 938 939 940 941 942 943 944 945 946 947 948 949 950 951 952 953 954 955 956 957 958 959 960 961 962 I_132_j270 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 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 Page34. 963 964 -965 966 967 968 969 970 971 972 973 974 975 976 977 978 979 980 981 982 983 984 985 986 987 988 989 990 991 992 993 . Page35 l_132_1270. 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. Section 2. That existing sections 4928.01, 4928.02, 4928.141, 4928.142, and 4928.143 of the Revised Code are hereby repealed. 994 995 996 997 998 999 1000 1001 1002 1003 1004 1005 1006 1007 1008 1009 1010 1011 1012 1013 1014 1015 1016 1017 1018 1019 Fritz, Shayna From: Carfagna, Rick Sent: Thursday, May 18, 2017 7:09 PM To: Lehman, Ryan . 5 Subject: Fwd: New OVEC Language Attachments: ATT00001.htm Sent from my iPhone Begin forwarded message: From: Rep30 Date: May 18, 2017 at 1:07:28 PM EDT To: "Carfagna, Rick" Cc: "Jacob, Abe" ?Subject: New OVEC Language Please find attached new OVEC language thatjust came back from LSC. The utilities have also received this language and are reviewing. This is based on small changes requested by the utilities. Thanks, Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmv.wolf@ohiohouse.gov ReviewedAs To Form By? Legislative Service. Commission _132_1270-1 REVIEWED FOR FORM ONLY 132nd General Assembly Regular Session . . . B. No. 2017-2018 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 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 . B. No. - I Page 2' service; frequency response service; energy imbalance service; operating reserve-spinning reserve service; operating reserve? supplemental 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. (3) "Certified territory" means the certified territory established for an electric supplier under sections 4933.81 to 4933.90 of the Revised Code. (4) "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 not?for?profit successor of such company. (6) "Electric distribution utility" means an electric utility that supplies at least retail electric distribution _432_4270-1 service. "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 forwprofit or not?foreprofit 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 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 Page3 Page4 32_1 270-1 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 lowwincome customer energy efficiency programs provided through electric utility rates" means the level of 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 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 chapter100 101 102 103 . B. No. Page 5 _132_1270-1 (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. (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 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128'" 129 130 131 132 PageS l__1 32?1270?1 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 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 demand?side management costs; all deferred percentage of income payment plan arrears; post?in?service capitalized charges and assets recognized in connection with statement 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. 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 . B. No. Page 7 __132_1270?1 (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 customerwgenerator's premises; 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 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 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 05142 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 shall be based on economically feasible best available technology or, in the absence of a determined best available Page8 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218" 219 220 [_132_1270-1 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. "Advanced energy resource" does not include a waste energy PageQ 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 _132_1270-1 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. "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?ofmthe?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, 20l5, and for which more than ninety per cent of the total annual energy input is from combustion of a waste or byproduct gas from an air Page10 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 . B. No. Page 11 I_132_127o-1 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 l, 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. "Renewable energy resource" does not include a waste 277 _278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 {_132_1270-1 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 regarding watershed Page12 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 Page13 l_132_1270~1 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. (38) "Waste energy recovery system? means either of the following: A facility that generates electricity through the conversion of energy from either of the following: Exhaust heat from engines or manufacturing, industrial, commercial, or institutional sites, except for exhaust heat from a facility whose primary purpose is the 335 336 337 338 339 340 34l 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 . B. No. 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 systemis 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 investorwowned 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. (B) For the purposes of this chapter, a retail electric Page 14 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 .390 391 392 Page15 l_132_12704 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. See. 4928.02. It is the policy of this state to do the following throughout this state: (Al 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 effective choices over the selection of those 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; (E) Encourage cost?effective and efficient access to information regarding the operation of the transmission and distribution systems of electric utilities in order to promote 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 Page16 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 generationmrelated costs through distribution or transmission rates; (I) Ensure retail electric service consumers protection against unreasonable sales practices, market deficiencies, and market power; (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; 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 440 441 442 443 444 445 446 447 448 449 450 Page17 (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. 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 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, except that utility451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 Lj32_12704 .4 4.44.4 r44?: 44 Ando J. Mil.? 8?3 -.J 454?1? :4 Alr? LL. up 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. term. A standard service offer under section 4928.142 or 4928.143 of the Revised Code shall include automatic recovery, subiect to audit and reconciliation, of all costs, includinq anv deferred costs, associated with an electric distribution utility's contractual commitments related to a national securitv Generation resource, 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 utilitv with an affiliate that has a contractual commitment related to a national securitv qeneration resource mav use the output from the affiliate's contractual commitment in its standard service offer provided under section 4928.142 or 4928.143 of the Revised Code, provided that the affiliate's contractual commitment was previouslv the contractual commitment of the electric distribution utilitv. The Page18 480 481 482 483 484 -485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 Page19 utility shall recover any and all costs, including any deferred costs, of the affiliate's share of the resource. All electric distribution utilities in the same holding company system may jointly use the output of the affiliate's contractual commitment in their standard service offer. iQL_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) J?k Hawk?1 nn L..J.J. of this section and, L. J. $244.14. 4n in L1 w. 4: A4w' 444fl"! pl u. p.123. Fuhr?l VJ. 1.4 ?ede, an electric distribution utility may establish a standard service offer price for retail electric generation service that is delivered to the utility under a market?rate offer._gnw 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. (1) The supply and pricing of electric generation service under a marketmrate offer shall be determined through a competitive bidding process that provides for all of the following: Open, fair, and transparent competitive solicitation; 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529 530 531 532 533 534 535 536 537 538 539 540 . B. No. Page 20 Clear product definition; 541 Standardized bid evaluation criteria; 542 Oversight by an independent third party that shall 543 design the solicitation, administer the bidding, and ensure that 544 the criteria specified in?divisien divisions to of 545 this section are met; 546 Evaluation of the submitted bids prior to the 547 selection of the least?cost bid winner or winners. 548 No generation supplier shall be prohibited from 549 participating in the bidding process. 550 (2) The market?rate offer shall include provisions for 551 recoverv of all costs, including anv deferred costs, associated 552 with an electric distribution utilitv's contractual commitments 553 related to a national securitv generation resource. If the 554 electric distribution utilitv agrees to offer the contractual 555 commitment related to the national securitv generation resource 556 into wholesale markets with anv resulting revenues being 557 credited to the benefit of retail customers, such recoverv shall 558 be granted bv the public utilities commission on a nonbvpassable 559 basis. 560 (3) The public utilities commission shall modify rules, or 561 adopt new rules as necessary, concerning the conduct of the 562 competitive bidding process and the qualifications of bidders, 563 which rules shall foster supplier participation in the bidding 564 process and shall be consistent with the requirements of 565 division of this section. 566 (B) Prior to initiating a competitive bidding process for 567 a market?rate offer under division (A) of this section, the 568 electric distribution utility shall file an application with the 569 Page21 commission; An electric distribution utility may file its application with the commission prior to the effective date of the commission rules required under division 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 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. (2) 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. (3) A published source of information is available publicly or through subscription that identifies pricing information for traded electricity on" and offmpeak 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. 570 571 572 573 574 575 576 577 578 579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 597 598 Page22 __132_1270-1 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 (B) 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 costs, including any deferred costs, associated with a national security generation resource. (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 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 599 600 601 602 603 604 605 606 607 608 609 610 611 612 613 614 615 616 617 618 619 . B. No. [_132_12704 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. (2) There were four or more bidders. 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. (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 with those percentages, the commission shall Page 23 630 631 632 633 634 635 636 637 644 645 646 .647 648 649 650 651 652 653 654 655 656 657 658 Page24 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 659 660 661' 662 663 664 665 666 667 668 669 670 674 675 676 677 678 679 680 681 682 683 684 685 686 687 Page25 I_132_127o-1 benefits, and, accordingly, the commission may impose such 688 conditions on the adjustment to ensure that any such benefits 689 are properly aligned with the associated cost responsibility. 690 The commission shall also determine how such adjustments will 691 affect the electric distribution utility's return on common 692 equity that may be achieved by those adjustments. The commission 693 shall not apply its consideration of the return on common equity 694 to reduce any adjustments authorized under this division unless 695 the adjustments will cause the electric distribution utility to 696 earn a return on common equity that is significantly in excess 697 of the return on common equity that is earned by publicly traded 698 companies, including utilities, that face comparable business 699 and financial risk, with such adjustments for capital structure 700 as may be appropriate. The burden of proof for demonstrating 701 that significantly excessive earnings will not occur shall be on 702 the electric distribution utility. 703 Additionally, the commission may adjust the electric 704 distribution utility's most recent standard service offer price 705 by such just and reasonable amount that the commission 706 determines necessary to address any emergency that threatens the 707 utility's financial integrity or to ensure that the resulting 708 revenue available to the utility for providing the standard 709 service offer is not so inadequate as to result, directly or 710 indirectly, in a taking of property without compensation 711 pursuant to Section 19 of Article I, Ohio Constitution. The 712 electric distribution utility has the burden of demonstrating 713 that any adjustment to its most recent standard service offer 714 price is proper in accordance with this division. 715 (E) Beginning in the second year of a blended price under 716 division (D) of this section and notwithstanding any other 717 requirement of this section, the commission may alter 718 . B. No. Page 26 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 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. An electric distribution utility shall have the right 719- 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741 742 743 744 745 746 747 748 749 . B. No. Page 27 Within one hundred twentv 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 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 securitv plan relating to a national securitv 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, divisions (I), (J), and (K) 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 relating to recovery of all costs, including any deferred costs, associated with an electric distribution utilitv?s contractual commitments related to a national securitv generation resource. If the electric distribution utility agrees to offer the contractual commitment related to the national securitv generation resource into wholesale markets with any resulting revenues being credited to the benefit of retail customers, such recoverv shall be granted by the commission on a nonbvpassable basis. 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. 750 751 752 . 753 754 755 756 757 758 759 760 761 762 763 764 765 766 767 768 769 770 77l 772 773 774 775 776 777 778 779 780 . B. No. 1_132_1270-1 (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 (A) of section 4909.15 of the Revised Code, except that the commission may authorize such an allowance upon the incurrence of the cost oroccurrence of the expenditure. No such allowance for generating facility cons:ruction shall be authorized, however, 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. 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. Page 28 781 782 783 784 785 786 787 788 789 790 791 792 793 794 795 796 797 798 799 800 801 802 803 804 805 806 807 808 809 810 8l1 . B. No. Page 29 l_132_1270-1 - 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 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; 812 813 814 815 816 817 818 819 820 821 822 823 824 825 826 827 828 829 830 831 832 833 834 835 836 837 838 839 840 841 l_1 32__1270-1 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 in division of this PageSO 842 843 844 845 846 847 848 849 850 851 852 ?53 854 855 856 857 858 859 860 861 862 863 864 865 866 867 868 869 870 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, except that the public utilities commission must approve automatic cost recovery of all costs, including any deferred costs, associated with a national securitv generation resource. 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 Page31 87l 872 873 874 875 876 877 878 879 880 881 882 883 884 885 886 887 888 889 890 891 892 893 894 895 896 897 898 899 900 901 . B. No. Page 32 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. 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 costs, including any deferred costs, associated with a national security generation resource 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. (0) 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 (AJ of section 4928.141 of the Revised Code, that rate plan and its terms and 902 903 904 905 906 907 908 909 910 911 912 913 914 915 916 917 918 919 920 921 922 923 924 925 926 927 928 929 930 931 [_132_1270-1 . 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, and 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 section 4928.64, or division (A) of section 4928.66 of the Revised Code. (B) 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 Page33 932 933 934 935 936 937 938 939 940 941 942 943 944 945 946 947 948 949 950 951 952 953 954 955 956 957 958 959 960 961 962 Page34 l_132_1270-1 - 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 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 963 964 965 966 967 968 969 970 971 972 973 974 975 976 977 978 979 980 981 982 983 984 985 986 987 988 989 990 991 992 993 . B. No. Page 35 l__132__1270?1 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. Section 2. That existing sections 4928.01, 4928.02, 4928.141, 4928.142, and 4928.143 of the Revised Code are hereby repealed. 994 995 996 997 998 999 1000 1001 1002 1003 1004 1005 1006 1007 1008 1009 1010 1011 1012 1013 1014 1015 1016 1017 1018 1019 Fritz, Shayna- From: Rep30 Sent: Thursday, May 18, 2017 1:07 PM To: Carfagna, Rick Cc: Jacob, Abe Subject: New OVEC Language Attachments: Please find attached new OVEC language that just came back from LSC. The utilities have also received this language and are reviewing. This is based on small changes requested by the utilities. Thanks Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmy.wolf@ohiohouse.gov Reviewed As To Form .By Legislative. Service Commissim l_132_1270-1 REVIEWED FOR FORM ONLY 132nd General Assembly Regular Session . B. No. 2017-2018 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 IESOUJCCG . 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 to read as follows: Sec. 4928.01. (Al 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 LUMP 10 ll 12 13 14 15 . B. No. Page 2 l_132_1270?1 service; frequency response service; energy imbalance service; 16 operating reserve?spinning reserve service; operating reserve? 1? supplemental reserve service; load following; back?up supply 18 service; realwpower loss replacement service; dynamic 19 scheduling; system black start capability; and network stability 20 service. 21 (2) "Billing and collection agent" means a fully 22 independent agent, not affiliated with or otherwise controlled 23 by an electric utility, electric services company, electric 24 cooperative, or governmental aggregator subject to certification 25 i under section 4928.08 of the Revised Code, to the extent that 26 1 the agent is under contract with such utility, company, 27 cooperative, or aggregator solely to provide billing and 28 collection for retail electric service on behalf of the utility 29 company, cooperative, or aggregator. 30 (3) "Certified territory" means the certified territory 31 established for an electric supplier under sections 4933.81 to 32 4933.90 of the Revised Code. 33 (4) "Competitive retail electric service" means a 34 . component of retail electric service that is competitive as 35 2 provided under division (B) of this section. - 36 i (5) "Electric cooperative" means a not?for?profit_electric 37 light company that both is or has been financed in whole or in 38 part under the "Rural Electrification Act of 1936," 49 Stat. 39 1363, 7 U.S.C. 901, and owns or operates facilities in this 40 state to generate, transmit, or distribute electricity, or a 41 not?for?profit successor of such company. 42 (6) "Electric distribution utility" means an electric 43 utility that supplies at least retail electric distribution 44 . B. No. 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 notmforwprofit 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. (l2) "Firm electric service" means electric service other than nonfirm.electric service. (13) "Governmental aggregator" means a legislative Page . B. No. . Page 4 i_132_1270?1 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 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 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 chapter100 101 102 103 Page5 (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 eleCZric service that is noncompetitive as provided under division (B) of this section. (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 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132' . B. No. Page 6 i_132__1270-1 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 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 demand~side management costs; all deferred percentage of income payment plan arrears; post?in?service capitalized charges and assets recognized in connection with statement 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. 133 134 135 136 137 138 139 140 141 142' 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 Page? (27) "Retail electric service" means any service involved 164 in supplying or arranging for the supply of electricity to 165 ultimate consumers in this state, from the point of generation 166 to the point of consumption. For the purposes of this chapter, - 167 retail electric service includes one or more of the following 168 "service components": generation service, aggregation service, . 169 power marketing service, power brokerage service, transmission 170 service, distribution service, ancillary service, metering 171 service, and billing and collection service. - 172 (28) "Starting date of competitive retail electric 173 service" means January 1, 2001. 174 (29) "Customer?generator" means a user of a net metering 175 system. 176 (30) "Net metering" means measuring the difference in an 177 applicable billing period between the electricity supplied by an 178 electric service provider and the electricity generated by a 179 customer?generator that is fed back to the electric service 180 provider. 181 (31) "Net metering system" means a facility for the 182 production of electrical energy that does all of the following: 183 Uses as its fuel either solar, wind, biomass, landfill 184 gas, or hydropower, or uses a microturbine or a fuel cell; 185 Is located on a customer?generator's premises; 186 Operates in parallel with the electric utility's 187 transmission and distribution facilities; 188 Is intended primarily to offset part or all of the 189 customer?generator's requirements for electricity. 190 (32) "Self?generator" means an entity in this state that 191 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 shall be based on economically feasible best available technology or, in the absence of a determined best available Pages 192 193 194 195 196 19? 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 . B. No. Page 9 !__132_1270-1 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 Demandeside 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. "Advanced energy resource" does not include a waste energy 221 222 223 224 225 - 226 227 228 229 230 23l 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 Page10 _132_12704 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. "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 energy input is from combustion of a waste or byproduct gas from an air 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 I_j32_1270-1 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 8.8. 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. "Renewable energy resource" does not include a waste Page11 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 Page12 Im132_12704 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 regarding watershed 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 Page13 l_132_1270-1 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. (38) "Waste energy recovery system" means either of the following: A facility that generates electricity through the conversion of energy from either of the following: Exhaust heat from engines or manufacturing, industrial, cemmercial, or institutional sites, except for exhaust heat from.a facility whose primary purpose is the 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359' 360 361 362 363 Page14 i_132_1270-1 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 thermalnefficiency 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. (B) For the purposes of this chapter, a retail electric 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 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; (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 censumers effective choices over the -selection of those 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; (E) Encourage cost?effective and efficient access to information regarding the operation of the transmission and distribution systems of electric utilities in order to promote Page15 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 !_132_12704 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; (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; Page16 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 440 441 442 443 444 445 446 447 448 449 450 . B. No. Page 17 _132_1270-1 (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 economyi (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 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, except that th: utility451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 mm?mOnly 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. uration of the plan's terms A standard service offer under section 4928.142 or 4928.143 of the Revised Code shall include automatic recovery, subject to audit and reconciliation, of all costs, includinq anv deferred costs, associated with an electric distribution utilitv's contractual commitments related to a national securitv Generation resource, 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 utilitv with an affiliate that has a contractual commitment related to a national security Generation resource mav use the output from the affiliate's contractual commitment in its standard service offer provided under section 4928.142 or 4928.143 of the Revised Code, provided that the affiliate's contractual commitment was previouslv the contractual commitment of the electric distribution utilitv. The Page18 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 . B. No. Page 19 utility shall recover any and all costs, including any deferred 511 costs, of the affiliate's share of the resource. All electric 512 distribution utilities in the same holding company system may 513 iointlv use the output of the affiliate's contractual commitment 514 in their standard service offer. - 515 i?L_The commission Shall set the time for hearing of a 516 filing under section 4928.142 or 4928.143 of the Revised Code, 51? send written notice of the hearing to the electric distribution 518 utility, and publish notice in a newspaper of general 519 circulation in each county in the utility's certified territory. 520 The commission shall adopt rules regarding filings under those 521 sections. I 522 Sec. 4928.142. (AJ For the purpose of complying with 523 section 4928.141 of the Revised Code and subject to division (D) 524 525 526 Gede, an electric distribution utility may establish a standard 527 service offer price for retail electric generation service that 528 is delivered to the utility under a market?rate offer.m?nn 529 eleCtric distribution utility shall have the right within one 530 hundred twenty days of the effective date of of the 531 132nd general assembly to file an application to reopen, update, 532 or amend its then-current market?rate offer in order to 533 implement the amended version of this section, which proceeding 534 shall not otherwise reopen matters previously decided. 535 The supply and pricing of electric generation service 536 under a marketwrate offer shall be determined through a .537 competitive bidding process that provides for all of the 538 following: 539 Open, fair, and transparent competitive solicitation; 540 . s. No. I Page 20 l_132__1270-1 Clear product definition; Standardized bid evaluation criteria; Oversight by an independent third party that shall design the solicitation, administer the bidding, and ensure that the criteria specified in?divisien divisions to of this section are met; 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 recoverv of all costs, including anv deferred costs, associated with an electric distribution utilitv's contractual commitments related to a national securitv generation resource. If the electric distribution utilitv agrees to offer the contractual commitment related to the national securitv generation resource into wholesale markets with anv resulting revenues being credited to the benefit of retail customers, such recoverv shall be granted bv the public utilities commission on a nonbvpassable basis. i?l_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 market-rate offer under division (A) of this section, the electric distribution utility shall file an application with the 541 542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 559 560 56l 562 563 564 565 566 567 568 569 Page21 commission. An electric distribution utility may file its application with the commission prior to the effective date of the commission rules required under division 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 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. (2) 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. (3) 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. 570 571 572 573 574 575 576 577 578 579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 597 598 Page22 32.3 270-1 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 (B) 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 costs, including any deferred costs, associated with a national security generation resource. (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 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 599 600 601 602 603 604 605 606 607 608 609 610 611 612 613 614 615 616 617 618 619 620 621 622 623 624 625 626 627 628 629 l_132_1270-1 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. (2) 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. (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 with those percentages, the commission shall Page23 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 [_132_1270-1 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 jurisdic:ional 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 Page 24 659 660 661 662 663 664 665 666 667 668 669 670 671 672 673 674 675 676 677 678 679 680 681 682 683 684 685 686 687 PageZS 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 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 cemmission 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 (D) of this section and notwithstanding any other requirement of this section, the commission may alter 688 689 690 691 692 693 694 695 696 697 698 699 700 701 702 703 704 705 706 707 708 709 710 711 712 713 714 715 716 717 718 Page26 32_1 270-1 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 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. An electric distribution utility shall have the right 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 .739 740 741 742 743 744 745 746 747 748 749 . B. No. Page 27 l_132_1270-1 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 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, 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 relating to recovery of all costs, including any deferred costs, associated with an electric distribution utility's contractual commitments related to a national security generation resource. If the electric distribution utility agrees to offer the contractual commitment related to the national security generation resource into wholesale markets with any resulting revenues being credited to the benefit of retail customers, such recovery shall be granted by the commission on a nonbvpassable basis. 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. 750 751 752 .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 . B. No. Page 28 L1 32.} 270-1 (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_rea50nable 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 (A) of section 4909.15 of the Revised Code, except that the commission may authorize such an allowance upon the incurrence of the cost oroccurrence of the expenditure. No such allowance for generating facility construction shall be authorized, however, unless the commission first determines in the proceeding that there is need for the facility based en 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. 781 782 783 784 785 786 787 788 789 790 791 792 793 794 795 796 797 798 799 800 801 .802 803 804 805 806 807 808 809 810 8ll . B. No. Page 29 l_j32_1270-1 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 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; 812 813 814 815 816 817 818 819 820 821 822 823 824 825 826 82? 828 829 830 831 832 833 834 835 836 837 838 839 840 841 Page30 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 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 longwterm_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 in division of this 842 843 844 845 846 847 848 849 850 851 852 853 854 855 856 857 858 859 860 861 862 863 864 865 866 867 868 869 870 . B. No. Page 31 l_132_1270-1 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, except that the public utilities commission must approve automatic cost recovery of all costs, including any deferred costs, associated with a national security generation resource. 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 seventwaive 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 871 872 873 874 875 876 877 878 879 880 881 882 883 884 885 886 887 888 889 890 891 892 893 894 895 896 897 898 899 900 901 [_132_1270-1 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. 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 recoverv of all costs, including anv deferred costs, associated with a national security generation resource 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 Page32 902 903 904 905 906 907 908 909 910 911 912 913 914 915 916 917 918 919 920 921 922 923 924 925 926 927 928 929 930 931 . B. No. . Page 33 l_132_1270?1 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, and 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 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 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 932 933 934 935 936 937 938 939 940 941 942 943 944 945 946 947 948 949 950 951 952 953 954 955 956 957 958 959 960 96l 962 . Page 34 . "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 security plan's termination pursuant to this division, the commission shall permit the continued deferral and phaseuin 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 963 964 965 966 967 968 969 970 971 972 973 974 975 976 977 978 979 980 981 982 983 984 985 986 987 988 989' 990 991 992 993 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 sha11.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 phasewin 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. Section 2. That existing sections 4928.01, 4928.02, 4928.141, 4928.142, and 4928.143 of the Revised Code are hereby repealed. PageSS 994 995 996 997 998 999 1000 1001 1002 1003 1004 1005 1006 1007 1008 1009 1010 1011 1012 1013 1014 1015 1016 1017 1018 1019