Wolf, Jimmy From: Christina Polesovsky Sent: Monday, June 19, 2017 2:49 PM To: Wolf, Jimmy Cc: . Christian 8. Zeigier; Claire M. Linkhart; Mitch Given; Christina Poiesovsky Subject: RE: House Public: Utilities Committee Meeting 6/20/2017 Attachments: HB Ohio opponent testimony FINAL 6.20.17.pdf Importancere High Jimmy: Please find our written testimony on HB 239 attached. Per your conversation with Chris, thank you for including in the members materials for tomorrow?s hearing. Thank you in advance for confirming receipt of this communication. Sincerely, Christina Poiesovsky Ohio From: Jimmy.Wolf@ohiohouse.gov Sent: Thursday, June 15, 2017 1:18 PM To: Subject: House Public Utilities Committee Meeting 6/20/2017 ANNOUNCEMENT OF MEETING COMMITTEE: Public Utilities CHAIR: Bill Seitz DATE: Tuesday, June 20, 2017 TIME: 3:00 PM ROOM: Room 1 6 AGENDA BILL SPONSOR TITLE STATUS H. B. No. Rep. Smith, R., Allow recovery of national security 4th Hearing 239 Rep. Carfagna generation resource cost Poss. Vote Poss. Am. Poss. Sub. Bill H. B. No. Rep. Ryan Exempt out?of?state disaster relief 3rd Hearing 133 persons from taxes and laws . Poss. Vote Poss. Am. Poss. Sub. Bill H. B. No. Rep. Romanchuk Regards utility refunds, market rate 1st Hearing 247 service, corporate being Sponsor have a? amendments and testimony submitted to Chairman Seitz?s - office by 3 PM, Monday, June Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 PETROLEUM mm?m ?m Ohio House Public Utilities Committee The Honorable William Seitz, Chairman Written Testimony in Opposition of House Bill 239 Submitted By: Chris Zeigler, Executive Director American Petroleum institute Ohio June 20, 2017 Chairman Seitz, Vice Chairman Carfagna, Ranking Member Ashford and distinguished members of'lthe committee, thank you for the opportunity to provide written testimony in opposition of House Bill 239 as introduced. The American Petroleum Institute (API) is the only national trade association representing all facets of the oil and natural gas industry, which supports 9.8 million U.S. jobs and 8 percent of the US. economy. The traces its beginning to World War l, when Congress asked the domestic oil and gas-industry to work with the government to ensure that vital petroleum. supplies were rapidly and efficiently deployed to the armed forces. Today, the more than 625 corporate members include major oil companies to the smaliest of independent organizations. They are producers, refiners, suppliers, marketers, pipeline operators, and marine transporters, as well as service and supply companies that support all segments of the industry. They provide most of the nation?s energy and are backed by a growing grassroots movement of more than 40 million Americans. Several factors have compelled the in Ohio to oppose House Bill 239 in its current form; however, the inability for our member companies to determine the cost this legislation will have on their Ohio- based operations, particularly those in the refining sector which are heavy industrial energy users, is of utmost concern. While we appreciate attempts over the last few days by the bill sponsors to address this issue, we are still unable to ascertain the impact on API Ohio?s members given the time constraints. Guaranteeing cost recovery for Ohio?s investor?owned electric distribution utilities (EDUS), or their affiliates, of costs which aren?t effectively controlled, would ensure a blank check subsidy for uneconomic power generation plants at the expense and disadvantage of API Ohio member companies competing with similar businesses in other states with lower eiectricity costs. Consistent with our position on other current legislative proposals (HB 128, SB 128, at HB 114), Ohio is opposed to subsidies and mandates of any kind. We believe that markets work best when driven by competition. Government intervention through mandates, riders and subsidies skews markets and discourages investment in newer, more efficient and cost-effective technology. House Bill 239 1 subsidizes the operation of the OVEC plants regardless of costs, management decisions and even if the eiectric power is generated in Ohio. Competitive electricity generation markets are working by driving down costs for consumers, improving technology, and reducing air emissions. As more natural gas~fired power generation comes online, both energy costs and emissions will continue to decrease. The US. Energy information Administration reports that by the year 2030, C02 emissions from U.S.- power generatiOn will be 30 percent lower than in 2005, if market forces determine our generation portfolio.l Natural gas?fired power plants are the cheapest form of generation to build and operate. Burdening ratepayers with riders to further subsidize inefficient and uneconomic forms of electric power generation will discourage continued investment in new gas?fired generation throughout our state. API Ohio recognizes the national circumstances surrounding the formation of however, those circumstances ended in 2003 following a notice of termination issued in 2000 by the federal government. As noted in other opponent testimony, Ohio?s EDUs voluntarily extended their contract with OVEC twice?in 2004 and again in 201l?the latter well after the shale gas revolution commenced in neighboring in 2008 and following the issuance of Ohio?s first shale gas driliing permit in 2010. The legislature should-not be asked to burden ratepayers with additional costs for imprudent business decisions. API Ohio stands by our position that markets work best without the government picking winners and losers. As introduced House Biil 239, will effectively allow utilities to charge back unspecified costs to ratepayers, while potentially displacing new natural gas?fired power generation and skewing competitive markets. API Ohio beiievesthat House Bill 239 ensures that additional, unquantifiable costs will be passed on to Ohio ratepayers while discouraging efficient operation of the OVEC plants. 1 EiA--Tab e 12.6 Carbon Dioxide Emissions From Energy Consumption: Electric Power Sector 9.pdf Wolf, Jimmy From: Maria Haberman Sent: Monday, June 19, 2017 1:53 PM To: Wolf, Jimmy Cc: Christine Wright Subject: AEP HB 239 Testimony Attachments: AEP Ohio - Steven T. Nourse Sub. HB 239 Proponent ATT00001.htm Hi Jimmy, Attached is Steve Nourse?s written testimony for House PU Committee tomorrow. Steve will be in Committee tomorrow if there are any questions. I will send a witness slip later this afternoon as I'm out for meetings and wanted to get this to you. If you need anything let us know. Thank you! Maria Sent from my iPhone Sub. HB 239 PrOponent Testimony Steven T. Nourse, Chief Ohio Regulatory Counsel American "Electric Power Service Corporation June 20, 2017 Chairman Seitz, Vice Chair Carfagna, Ranking Member Ashford, and members of the House . Public Utilities Committee, thank you for the opportunity to present testimony in support of Sub. House Bill 239. I have represented HEP Ohio on regulatory issues in Ohio for more than a decade and worked with the Ohio Attorney General?s of?ce and the Public Utilities Commission of Ohio (Commission) for more than 15 years prior to that. AEP Ohio controls approximately 20% of the Ohio Valley Electric Corporation (OVEC) output, through a purchase power agreement known as the Inter?Company Power Agreement (ICPA). The proposed legislation has no effect on retail shopping and is consistent with the hybrid form of deregulation adopted in Ohio through passage of SB 3 and SB 221. In fact, every iteration of the Public Utilities Commission of Ohio (Commission) A led by every Chairman since SB 221 was passed has permitted OVEC cost recovery through the Electric Security Plans (ESPs) of AEP Ohio: ESP ESP 11(2012?2015) and ESP In its most recent decision on this topic in the ESP HI case, the Commission found that OVEC cost recovery would provide a valuable cost?based hedge against volatile market prices and approved recovery of the net OVEC cost impacts (tie. costs under the purchase contract less market revenues from liquidating the output into wholesale markets); the Commission found that it would have rigorous oversight of the costs through full information sharing and a robust audit process to ensure that only prudently?incurred costs are recovered in retail rates. The. approach reflected in Sub. HB 239 would convey value to Ohio utility customers by providing a stable cost?based hedge against volatile market prices and would over time provide the potential for sustaining a ?nancial bene?t to customers during future periods where market prices exceed the ICPA purchase price. And that is the very same approach that would be codi?ed upon passage of Sub. HB 239 for each of the electric distribution utilities. Contrary to the assertions made by some opponents of Sub. HB 239, recovery of OVEC costs cannot be considered as additional stranded costs under SB 3?s transition to deregulation. OVEC was never in utility rate base and the subject power purchase agreement (ta, the ICPA) was re? executed in 2011 well after SB 3?s transition period. Further, OVEC has been exempted from corporate separation out of necessity because AEP Ohio has been unable to divest the OVEC contract. In short, this proposed legislation would recognize the highly unique nature of the OVEC assets and codify a long-term solution for this legacy asset given that it was not part of SB 3?s stranded cost recovery and corporate separation has not been achievable. AEP Ohio supports amendments being considered in Version 6 of Sub. HB 239. While a number of changes have been made to address concerns raised by some opponents to the legislation, I would like to brie?y address four of the more signi?cant amendments. First, a cap has been included that guarantees customer rate impacts will be modest (lines 1036-1050). Second, the cost recovery Will expire at the end of 2030 absent extension by the General Assembly (line51051?1054). Third, there will be a triennial audit to help ensure that only prudently-incurred costs are recovered (lines 1031?1035). Fourth, added return on investment and debt costs remaining upon premature retirement are both excluded from cost recovery (lines 396?399). The amended version of the legislation includes each of these pro-consumer changes and is reasonably responsive to concerns voiced by opponents. The OVEC plants were originally built to serve vital national security interests and OVEC continues to serve the ongoing decommissioning operations at the Piketon plant in order to meet rigorous service reliability standards needed to avoid a power interruption that could present serious safety concerns. Operation of OVEC has provided substantial bene?ts to Ohio retail customers in the past and adOpting this legislation will enable future bene?ts. Annually, OVEC provides over $39 million of economic bene?t in its six county region and over $62 million of economic bene?t in Ohio (see attached study). Sub. HB 239 should be adopted as a fair?minded solution to follow through on the long?term decisions made when the OVEC plants were built to serve the national security of the United States. I am happy to respond to any questions you may have. Wolf, Jimmy From: MolincGuire@occ.ohio.gov Sent: Tuesday, June 06, 2017 12:03 PM To: Wolf, Jimmy Cc: Bruce.Weston@occ.ohiogov Subject: RE: HB 239 Testimony and Witness Slip Attachments: OCC Testimony Revised HB 239.pdf Hello, Here is a corrected version of the Consumers? Counsel?s testimony that we will be using for testimony presentation today. Please kindly substitute this corrected version for the original version. I apologize for any inconvenience. Thank you. Molly McGuire PublicAffoirs Coordinator Office of Ohio Consumers? Counsel 10 West Broad Street, Suite 1800 Columbus, Ohio 43215 614466-9495 From: McGuire, Molly Sent: Monday, June 05, 2017 4:59 PM To: ?Jimmy.Wolf@ohiohouse.gov? Cc: ?Weston, Bruce Subject: HB 239 Testimony and Witness Slip Jimmy: Here is the testimony and witness slip of the Office of the Ohio Consumers? Counsel. Thank you, Chairman Seitz, and the Committee for this opportunity to testify. Molly McGuire Public A?oirs Coordinator Of?ce of Ohio Consumers? Counsel 10 West Broad Street, Suite 1800 Columbus, Ohio 43215 614?466-9495 Molly.McGuire@occehiogov Of?ce of the Ohio Consumers? Counsel Before The Ohio House Public Utilities Committee Testimony on House Bill 239 Presented by Michael Haugh Orr Behalf of the. Office of the Ohio Consumers? Counsel June 6, 2017 Hello Chair Seitz, Vice Chair Carfagna, Ranking Minority Member Ashford, and members of the Committee. Thank you for this opportunity to testify. My name is Michael Haugh. I am the Assistant Director of Analytical Services for the Office of the Ohio Consumers? Counsel. The Ohio Consumers? Counsel is the state?s representative of four million residential utility consumers. My background is over 20 years of experience in the energy industry, including work for several deregulated energy suppliers. I am testifying in opposition to H.B. 239, to protect Ohio consumers from each paying subsidies for power plants. There are four Ohio electric distribution utilities systems that have an ownership interest in the Ohio Valley Electric Corporation and they would charge Ohio consumers for the subsides. Consumers and the competitive market should be spared having to pay utilities for the anti?competitive subsidies. As background, the Ohio utilities or utility affiliates that have an ownership interest in OVEC are: Ohio Power Dayton Power and Light Duke Energy Ohio and FirstEnergy Solutions for a total ownership of In October 1952, OVEC was formed by utilities that provided electric service to uranium enrichment facilities being constructed by the Atomic Energy Commission in Southern Ohio through an Inter? Company Power Agreement two generating plants began operations in 1955. The power agreement with the AEC was signed through December 31, 2005. On December. 29, 2000, the US. Department of Energy gave notice to OVEC that it would be cancelling the power agreement on April 30, 2003. Since April 30, 2003, the generating capacity from OVEC has been sold into the wholesale electric markets. On August 11, 2011, the owners extended the term to June 30, 2040. The plants included in OVEC have almost 2,400 MW of nameplate capacity and are connected to the PJM wholesaie markets. Of the 50 states and the District of Columbia, Ohio has the 18th highest average residential rate for electricity??meaning 33 states have tower residential rates. (See Attachment 1) Of the restructured states?mthose that have moved towards the free market-?Ohio has the second highest residential price increases from 2008 to 2016. (See Attachment 2) Ohio has these higher electricity costs for consumers despite being awash in shale natural gas that has given us historically low gas prices. The US. Energy Information Administration has projected that natural gas prices will be relatively stable for a couple 1 OVEC 2015 Annuai Report at page 1 decades or more. Given deregulation and low natural gas prices, Ohio has a growing number of new gas-fired power plants under planning or construction. (See Attachment 3) Competition is working in the electricgeneration market. A recent study by Ohio State University and Cleveland State University researchers found that Ohio consumers had saved about $12 billion from the utilities? competitively bid standard service offers during 2011 to 2015. And the researchers project another $12 billion to be saved for consumers in the next five years because of having the market-based standard service offer. We thank the Ohio General Assembly for giving consumers those benefits of the competitive electric generation market in the 1999 law. But there are at least a couple problems preventing Ohio families and businesses from realizing the full benefits of lower prices in the market. One probiem is the continuing requests by Ohio electric utilities for consumers to pay subsidies above the market price of electricity. Consumers already have paid billions of dollars in subsidies to electric utilities since the enactment of Senate Bill 3 in 1999. We are new years beyond the 1999 deregulation law?s allowance of charges for the transition to competition. But the utilities are continuing their efforts to increase the cost of electricity for Ohioans. The owners of OVEC are asking for passage of a bill that would make millions of Ohio customers pay more subsidies. For several reasons I will now discuss, I recommend that you protect Ohio consumers from paying these subsidies and reject this legislation. One reason to reject this legislation is because the utilities had the opportunity to withdraw from the Inter-Company Power Agreement in 2011. in 2011, the OVEC plants? revenue was nearly $700 million2 and the utilities were reaping profits-?but not sharing all of those profits with customers. In 2011, all four Ohio utilities were obtaining all or a portion of their generation through competitive wholesale auctions and did not have a need to own generation to serve customers.? The utilities? extension of the OVEC agreement allowed them to pro?t from these plants in the wholesale markets. But now that the revenues for the plants have declined ($586 millions) as a result of declining wholesale electric prices, the utilities want to be protected from their own decisions to continue operations at OVEC. And that means seeking to charge consumers for a subsidy. The utilities are seeking to shift the investor risk for OVEC to their customers. That is unfair to Ohio families and businesses who would pay this subsidy. Another matter is that the legislation is described as for national security. But the plants have not been shown to be needed for national security at this time. Moreover, regardless of a past national security connection, the Ohio utilities had an extended opportunity over sixty years for charging consumers for profits and for the costs of the plants. Consumers do not owe the utilities anything more at this point. will also discuss the reliability of generation service, which is more than adequate for Ohio consumers with or without these plants. In 2017, reliability is a regional issue and managed by PJM, the regional authority (not by Ohio). There is plenty of generation provided through the PJM wholesale markets, and the reliability index (reserve margin) exceeds PJM standards. 2 203.0 OVEC FERC Form 1 Statement of income Operating Revenue. 3 2016 OVEC FERC Form 1 Statement of Income Operating Revenue 4 And there are at least five new state-of?the?art natural gas?fired power plants that are in different stages of planning and construction in Ohio. The plants will bene?t from the plentiful shale gas as a fuel resource in Ohio. And that will mean the plants can be expected to provide lower priced power for consumers in the region including Ohio. It would be bad for competition and bad for consumers for these new Ohio power plants to have to compete against subsidized utility power plants in the market. According to the Fiscal Analysis of the Ohio Legislative Service Commission (LSC), this bill will cost Ohio utility customers over $256 million per year. I understand there was a mention in this Committee last week that LSC may issue a revised Fiscal Analysis. If the Fiscal Analysis is revised regarding the cost to consumers, then I will write to this Committee with any updated cost calculations for my testimony, if needed. Otherwise, the $256 million would cost an average residential customer $1.60 per month, about $20 per year and $420 over the 22?year term of the Inter?Company Power Agreement. That calculation assumes the Inter?Company Power Agreement is cancelled in 2040, when the plants are 85 years old. But with this legislation?s subsidy, there would be less incentive to close these plants. The bill does allow for the subsidy to be reduced with revenues earned .by the OVEC plants if the power is sold in the wholesale market. (Lines 769 t0774) However, there appears not to be a requirement for the plants to participate in the wholesale markets. Also on the topic of revenues offsetting the costs of the subsidy, the bill allows for utilities to collect OVEC costs from consumers through the standard service offers. But this approach would not result in there being the offsetting wholesale revenues. (Lines 496 to 500) The bill provides that if an EDU offers the generation into the wholesale market, any revenues will be credited to customers. This process can lead to incorrect signals in the market by removing key factors a plant should consider when participating in the wholesale 5 markets. This legislation can be harmful to both the competitive. markets and to consumers. It can be harmful to the competitive wholesale markets by allowing an inefficient, expensive generating plant to run while a more efficient, less expensive plant will be diSplaced. It can harm customers if these plants? costs are too high and they are never called upon to run. in this instance the plants will sit idle and customers will be saddled with paying the subsidy for a plant that is not even running. There is another issue in the legislation. That is, who will pay for the charges to subsidize these power plants? The legislation appears to make the subsidy charges bypassable. (Lines 496 to 500) It would be unfair to make the charges bypassable, which means the full burden would fall to standard service offer customers alone to pay all the subsidy charges, with many other customers not paying. All customers should share in the burden of paying the charges that are said to be related to national security. I emphasize that making the charges non?bypassable would not justify enacting this bill far from it. A related issue is that the bill allows any revenues collected through the wholesale markets to be given to all customers through a non-bypassable credit. (Lines 769 toT74) This approach denies consumers who paid for the costs of the plants the full credit that should be associated with their payments of plant costs. In the event of enactment of the legislation, the fair approach for consumers is to make the subsidy charges and revenues non?bypassable and shared by all consumers. Ohio Revised Code Section 4928.38 states that at the end of the market development period a utility ?shall be fully on its own in the competitive market.? This bill does not put the utilities ?on their own? but instead once again would enable them to be subsidized by customers. Therefore, I respectfully urge you to protect over four million Ohio businesses and families, by rejecting House Bill 239. Thank you. ATTACHMENT 1 -U..S. Energy Shim-mafia!) Adm?inii?ratiozm ?ats: fab-{Es 5.16.8. Awerage Retaii Price (if EBay-tricky ta Uitima?e {Sustainem by End-U512 Seaman, by State in. Year tar Hate ?rm-ugh December 2815 {Cents per kWh} 1 Washing-?323 2 :muisiama Nam-"tin Dakataa ?1 ?rkansas 5 :E-dmim 5 West Virgimia 3r? ?3163 hama 3 Kentucky- ?3 Tennessee 13 Nebraska: 11 magma- 12 Man-tame '13 Elizaih 1.21 Wyuemi'ng ?15 Sum?! Bahama 16- M?-isasnuh? 1? Miasisgippi' .18 Marti"? ?amiin-a .19: Virginia 20 {Semgfa 21 Texas 2'2 Endiama 23 Fits ride: 2&1 Enwa 25 ?iiabama 28. Minna-mm 2? {I?icxrad-Q State Banana-beer 2016 W9 9.439 3.33 9.62 93.2 9.93: 10,08 19.14 10.24 18,130. 10.66 18.662 1338 16.3.8 18.9? 11.98 11.21 11.2? 1.1.23 3.1.37 1.1.54 121.55 11.57 111.518 11.53- 1.1.743 12.12 12.12. 38- i-eiiawam 2.8 ?rm-?nes 29. Kangm 39 New Mexico 3'3. 3'2 Eta-nth Catalina 33 Nevada 35 .Diatrict as? CG'Eumb-ia 328- Marylan? 39 Wismnsi-n 402 Michigan :41 "Maine 1&2 New Jersey- 43 {ZaeiifD-mia 44 ?German-t :45 New Hamyshim 418 New Rhoda Esi-and ?8 Masks 4-9. Massacihusetm 5G Cannectimt 2% 36% ?g .. ATTACHMENT 2 ?asgd?mmi waning: 5"?ng gamma U.S. Energy Information Admlnistration awe-ME mm @123. ?m @385 mag?; ATFACHMENT 3 Oregon Energy Center Clean Energy Future Oregon, LLC Oregon, Lucas County 955 MW, $880 million . Clean Energy Future-Trumbull I Clean Energy Future? Lordstown LLC Lords?town, Trumbull County 940 MW, $865 miliion Carroll County Energy Advanced Power Washington Township, Carroll County 742 Commercial Operation: Q4 Harrison County Power Plant . EmberClear Corp. Cadiz, Harrison County H300 Combined, $938 million Guernsey Power Station Apex Power Company Valley Township, Guernsey County HOG MW, -- $980 million ,1 Hannibal Power Project (subject to change) Hannibal Development LLC Hennibai, Monroe County 485 MW, $590 Approved by OPSB and/or under construction Application filed at OPSB a development Compiled by Bricker 8: Eckler LLP Wolf, Jimmy From: Molly.McGuire@occ.ohio.gov Sent: Monday, June 05, 2017 5:00 PM To: Wolf, Jimmy Cc: Bruce.Weston@occohiogov Subject: HB 239 Testimony and Witness Slip Attachments: HB 239 Mike Haugh Witness Slip.pdf; OCC Testimony HB 239.pdf Jimmy:- Here is the testimony and witness slip of the Office of the Ohio Consumers' Counsel. Thank you, Chairman Seitz, and the Committee for this opportunity to testify. Molly McGuire Public A?airs Coordinator Of?ce of Ohio Consumers? Counsel 10 West Broad Street, Suite 1800 Columbus, Ohio 43215 614-466?9495 M011V.McGuire@occ.ohio.eov WITNESS INFORMATION FORM PLEASE EOMPLETE THE WITNESS INFORMATION FORM BEFORE TESTIFYING DATE: June 6, 2017 AME: Michael Haugh Of the Ohio Consumers' Counsel (IF APPLICABLE) POSETIONZTITLE: Assistant Director of Analytical Services 10 W. Broad 812., Suite 1800 CITY: COIumb?is STATEOH ZIP: 43215 TELEPHONE: 614*466-9495 ARE YOU REPRESENTING: YOURSELF DO YOU TO TESTIFY 0N HB 239 SPECIFIC ISSUE: SUBJECT MATTER: DO YOU FAVOR 0R OPPOSE THE ENACTTVIENT OF LEGISLATION THIS PLEASE GWE A BRIEF STATEMENT OF THE GROUNDS ON WHICH YOU FAVOR OR OPPOSE SUCH ENACTMENT: The Ohio Consumers' Counsel (OCC) is the state's representative of Ohio residential utility consumers. OCC recommends against enactment of the legislation, so as to protect approximately 4 million residential electricity consumers from each paying on average up to a total Of $420 over 22 years to subsidize electric companies owning the Ohio Valley Electric Corporation. WILL YOU HAVE A WRITTEN STATEMENT, VISUAL AIDS, OR OTHER MATERIAL TO YES NO (IF YES, PLEASE PROVIDE COPIES TO THE CHAIRMAN OR SECRETARY) How MUCH TIME WILL YOUR TESTIMONY 15 mmums Office of the Ohio Consumers? Counsel Before The Ohio House Public Utilities Committee Testimony on House Bill 239 Presented by Michael Haugh On Behalf of the Office of the Ohio Consumers? Counsel June 6, 2017 Hello Chair Seitz, Vice Chair Carfagna, Ranking Minority Member Ashford, and members of the Committee. Thank you for this opportunity to testify. My ?name is Michael Haugh. I am the Assistant Director of Analytical Services for the Office of the Ohio Consumers? Counsel. The Ohio Consumers? Counsel is the state?s representative of four million residential utility consumers. My background is over 20 years of experience in the energy industry, including work for several deregulated energy suppliers. I am testifying in opposition to HE. 239, to protect Ohio consumers from each paying subsidies for power plants. There are four Ohio electric distribution utilities systems that have an ownership interest in the Ohio Valley Electric Corporation and they would charge Ohio consumers for the subsides. Consumers and the competitive market should be spared having to pay utilities for the anti-competitive subsidies. As background, the Ohio utilities or utility affiliates that have an ownership interest in OVEC I are: Ohio Power Dayton Power and Light Duke Energy Ohio and FirstEnergy Solutions fora total ownership of 38.680131 In October 1952, OVEC was formed by utilities that provided electric service to uranium enrichment facilities being constructed by the Atomic Energy Commission in Southern Ohio through an Inter? Company Power Agreement two generating plants began operations in 1955. The power agreement with the AEC was signed through December 31, 2005. On December 29, 2000, the US. Department of Energy gave notice to OVEC that it would be cancelling the power agreement on April 30, 2003. Since April 30, 2003, the generating capacity from OVEC has been sold into the wholesale electric markets. On August 11, 2011, the owners extended the term to June 30, 2040. The plants included in OVEC have almost 2,400 MW of nameplate capacity and are connected to the PJM wholesale markets. Of the 50 states and the District of Columbia, Ohio has the 18th highest average residential rate for electricitym-meaning 33 states have lower residential rates. (See Attachment 1) Of the restructured states?those that have moved towards the free market-?Ohio has the second highest residential price increases from 2008 to 2016. (See Attachment 2) Ohio has these higher electricity costs for consumers despite being awash in shale natural gas that has given us historically low gas prices. The US. Energy Information Administration has projected that natural gas prices will be relatively stable fora couple 1 OVEC 2015 Annual Report at page 1 decades or more. Given deregulation and low natural gas prices, Ohio has a growing number of new gas?fired power plants under planning or construction. (See Attachment 3) Competition is working in theel-ecltric generation market. A recent study by Ohio State University and Cleveland State University researchers found that Ohio consumers had saved about $12 billion from the utilities? competitively bid standard service offers during 2011 to 2015. And the researchers project another $12 billion to be saved for consumers in the next five years because of having the market?based standard service offer. We thank the Ohio General Assembly for giving consumers those benefits of the competitive electric generation market in the 1999 law. But there are at least a couple problems preventing Ohio families and businesses from realizing the full benefits of lower prices in the market. One problem is the continuing requests by Ohio electric utilities for consumers to pay subsidies above the market price of electricity. Consumers already have paid billions of dollars in subsidies to electric utilities since the enactment of Senate Bill 3 in 1999. We are new years beyond the 1999 deregulation law?s allowance of charges for the transition to competition. But the utilities are continuing their efforts to increase the cost of electricity for Ohioans. The owners of OVEC are asking for passage of a bill that would make millions of Ohio customers pay more subsidies. For several reasons I will now discuss, I recommend that you protect Ohio consumers from paying these subsidies and reject this legislation. One reason to reject this legislation is because the utilities had. the opportunity to withdraw from the Inter-Company Power Agreement in 2011. ln 2011, the OVEC plants? revenue was nearly $700 million2 and the utilities were reaping profits?but not sharing all of those profits with customers. In 2011, all four Ohio utilities were obtaining all or a portion of their generation through competitive wholesale auctionsand did not have a need to own generation to serve customers. The utilities? extension of the OVEC agreement allowed- them to profit from this plant in the wholesale markets. But now that the revenues for the plants have declined ($586 million-3) as a result of declining wholesale electric prices, the utilities want to be protected from their own decisions to continue operations at OVEC. And that means seeking to charge consumers for a subsidy. The utilities are seeking to shift the investor risk for OVEC to their customers. That is unfairto Ohio families and businesses who would pay this subsidy. Another matter is that the legislation is described as for national security. But the plants have not been shown to be needed for national security at this time. Moreover, regardless of a past national security connection, the Ohio utilities he an extended opportunity over sixty years for charging consumers for profits and for the costs of the plants. Consumers do not owe the utilities for anything more at this point. i will also discuss the reliability of generation service, which is more than adequate for Ohio consumers with or without these plants. In 2017, reliability is a regional issue and managed by PJM, the regional authority (not by Ohio). There is plenty of generation provided through the PJM wholesale markets, and the reliability index (reserve margin) exceeds PJM standards. 2 2010 OVEC FERC Form 1 Statement of Income Operating Revenue. 3 2016 OVEC FERC Form 1 Statement of Income Operating Revenue 4 And there are at least ?ve new state?of?the?art natural gas??red power plants that are in different stages of planning and construction in Ohio. The plants wiil benefit from the plentiful shale gas as a fuel resource in Ohio. And that will mean the plants can be eXpected to provide lower priced power for consumers in the region including Ohio. It would be bad for competition and bad for consumers for these new Ohio power plants to have to compete against subsidized utility power plants in the market. According to the Ohio Legislative Service Commission, this bill will cost Ohio utility customers over $256 million per year. These costs include a return on equity (profit) of 10.38% paid to OVEC. This is a healthy profit for an entity that has very low risk for recovery cf its expenses from its member utilities. The $256 million would cost an average residential customer $1.60 per month, about $20 per year and $420 over the 22?year term of the Inter-Company Power Agreement. That calculation assumes the Inter-Company Power Agreement is in 2040, when the plants are 85 years old; but with a guaranteed cost recovery there is no incentive to close down these plants. Although the biil allows for an offset of revenues earned in the wholesale market, there is no requirement for participation in the wholesale markets. (Lines 769 to 774) Also, the bili allows for automatic recovery of OVEC costs through the standard service offer, meaning that there would be no offsetting wholesale revenues in that circumstance. (Lines 496 to 500) The bill provides that if an EDU offers the generation into the wholesale market, any revenues will be credited to customers. This process can lead to incorrect signals in the market by removing key factors a plant should consider when participating in the wholesale markets. This legislation can be harmful to both the competitive markets and to consumers. It can be harmful to the competitive wholesale markets by allowing an inefficient, expensive generating plant to run while a more efficient, less expensive plant will be displaced. it can 5 harm customers if these plants? costs are too high and they are never called upon to run. In this instance the plant could sit idle and customers will be saddled with paying the subsidy for a plant that is not even running. There is another. issue in the legislation; That is, who will pay for the charges to subsidize I these power plants? The legislation appears to make the subsidy charges bypassable. (Lines 496 to 500) It would be unfair to make the charges bypassable, which means the full burden would fall. to standard service offer customers alone to pay all the subsidy charges, with many other customers not paying. All customers should share in the burden of paying the charges that are said to be related to national security. I emphasize that making the charges non?bypassable would notjustify enacting this bill far from it. A related issue is that the bill allows any revenues collected through the wholesale markets to be given to all customers through a non?bypassable credit. (Lines 769 to 774) This approach denies consumers who paid for the costs of the plants the full credit that should be associated with their payments of plant costs. In the event of enactment of the legislation, the fair approach for consumers is to make the subsidy charges and revenues non-bypassable and shared by all consumers. Ohio Revised Code Section 4928.38 states that at the end of the market development period a utility ?shall be fully on its own in the competitive market.? This bill does not put the utilities ?on their own? but instead once again would enable them to be subsidized by customers. Therefore, I respectfully urge you to protect over four million Ohio businesses and families, by rejecting House Bill 239. Thank you. ATTACHMENT 1 Ugs. Energy Informatian Administration- Data: 1731:1152- $563.8 Average Retai?i Price {if to Ui?mate {in?ame-r5 by End-Use- Sec?zo-n by 'Yes-azr-t-Q-Elate 'thmugh Dem-ember .2615 (Cents. peer kWh) Gene-mzber- State . @15- W3 1 Washingi?? 3'39 2.3- Ariana-1:3 1.2.13 2 L?uisiana 33.3.3 Qg Kansas. 12331 3 Bak?'t?a $.62 3Q. New Maxim 114? 4- Wka?m 9.3.2 3-1 12.50 5' Edam 9?93 32 South {:aroliina 12.5? 5- W-rgimiia 19,138 3-3- Newadi . :13 ?5 Okiahama 19.14 3 10.2% . Tennessee; 19,30 36 Delaware :11} Nabragi?ae 10.80 '11 51'6an 10.55 .323 Maryianci .122 Moat-aha 18,88. I 39 Wisconsin 13 Utah 10.88 .210 Michigan 14 Wynming 16,9? 2?11 Maine 15 Smut}: 'B-a?kcta 11.08 ?12 New Jersey 16 M?igmmi? 112$. ?13 Caiifaimia 1? Migsissippi' 112? IM- Ve-rmengt '18 Worth {Earniina 11.23 =45 New Hamps?im .19 Virginia 11.31? 46- New Yo?k 20- Gearg?ia 121.511 =47 Hh??e Wand 21 Texas 111,56 '43 ?35% 22 Endiana 1157 ?19 Massachusetts. 23 Fior?da 11.5.3 53% C?mmiwt 221' tnwa 3.1.63 Hawaii 25 .Ai-aiztama. 11.743 26 M?iznne-S?ta 12.12 {lo-imam:- 12.1.2. uomsgulwpv uogeuuom Ameua 's'n :amnos ATTACHMENT 3 Oregon Energy Center Clean Energy Future Oregon, LLC Oregon, Lucas County 955 MW, $835 milliorz Clean Energy Future-Trumbull Clean Energy Future- Lordstown LLC Lordstown, Trumbull County 940 MW, $8?5 m?liion Carroll County Energy Advanced Power Washington Township, .. Carroll County ?942 MW Commercial Operation: Q4 2017 . Harrison County Power Plant . EmberClear Corp. Cadiz, Harrison County 1000 lelW' Combined, $900 million Guernsey Power Station Apex Power Company Vailey Township, Guernsey County $930 million X. Hannibal Power Project (subject to change) Hannibal Development LLC Hannibal, Monroe County- 485 MW, $580 milEion by OPSB and/or under construction 34* Application ?led at OPSB development Compiled by Bricker 8: Eckler LLP Wolf, Jimmy From: Ryan Augsburger Sent: Monday, June 05, 2017 4:54 PM To: Wolf, Jimmy Subject: Witness Form Testimony: OMA Witness, Kim Bojko Attachments: 20170605164905065pdf; kbojko Testimony on OVEC legislation (6?5?17) (694102).pdf Hi Jimmy, Find attached witness form AND testimony for Kim Bojko. Kim will be testifying as an opponent to H8 239 on behalf of the OMA. Thank you. . i Ryan Augsburger Vice President and Managing Director of Public Policy Services The Ohio Manufacturers? Association i3rotecting and growing Ohio manufacturing 33 N. High Street, Suite 600 Columbus, OH 43215 Tel: 614.629.6817 Mobile: 614.348.1227 raugsburger@ohiomfg.com WITNESS. INFORMATION FORM Please complete the Witness Information Form before- testifying: .. Date: as $254,623 -. - .- Name: ?fe; a {View Mae?s. em ses?327?e A-?ew {1m Are- you representing: Yourself Organization Organization (If Applicable); Position/Title: {Egg 53? [43; 5&1? Address: see As- sees ?gs-geese; SJ 2? fies: City: State: 5% Zip: if :3 5 Best Contact Telephone: $3;ng Email: ?cgaim @tffoeg? mgtf?l Egg-(33335 Cow? Do you wish to be added. to the committee notice email distribution list? Yes No Business before the committee Legislation (Bill/Resolution Number): #33 Specific Issue; Are you testifying as a: Prop'onent Opponent Interested Party ?Will you have a written statement, Visual aids, or other material to distribute? Yes No {Hy-es) pleaSe send ?111 electromc version of the documents, if'p'ossible, to the Chair?s office prior- to committee. You may also submit hard copies to the Chair?s staff prior to co'mmitte'e.) How much time will you testimooy require? {919: Please provide? a brief statement on your "position": {Eff}; ngg??-g eypy?dt? we?? goose. $ng seas? bo-?s?e? ?iwd- ?gmlfig?l?eesfggoe?? ?es-?ssf??r? Please be advised that thisform and any materials (written or otherwise) submitted or presented to this committee are records that may be requestedby the public and may be published online. BEFORE THE PUBLIC UTILITIES COMMITTEE OF THE OHIO HOUSE OF REPRESENTATIVES REP. BILL SEITZ, CHAIRMAN HOUSE BILL 239 OPPONENT TESTIMONY OF KIM BOJKO, PARTNER CARPENTER LIPPS 8: LELAND LLP ENERGY COUNSEL TO THE OHIO ASSOCIATION JUNE 6, 2017 Kim Bojko Testimony, House Public Utilities Committee, June 6, 2017 Chairman Seitz, Vice Chairman Carfagna, Ranking Member Ashford, and members of the House Public Utilities Committee, my name is Kim Bojko. I am a partner with the law ?rm Carpenter Lipps Leland LLP, and I lead the firm?s energy and utilities practice. i am testifying today on behalf of The Ohio Manufacturers? Association (OMA) to describe concerns about various provisions of House Bill 239 (HB 239). In particular, the OMA is concerned about the bill?s potential negative impact on the competitive energy markets, customers? energy costs, manufacturing competitiveness, and job creation in our state. HB 239 would allow Ohio?s investor?owned electric utilities (utilities) or their affiliates who are part owners of two Ohio Valley Electric Corporation (OVEC) power plants (one in Ohio, and another in lndiana), to collect unwarranted subsidies from customers to support inefficient, uneconomic power plants in which the utilities or theiraf?liates have an ownership stake. The legislation would guarantee recovery from customers of all costs associated with the OVEC plants, including deferred costs. These charges, which could be assessed to all electricity users in Ohio, would remain in place until the assets are retired. It?s useful to know something of the history of OVEC in order to understand why the utilities? request is unreasonable. The Ohio Valley Electric Corporation is a company jointly owned by several electric utilities.1 OVEC and its wholly owned subsidiary, Indiana?Kentucky Electric Corporation, own and operate two electric generating complexes: Kyger Creek Power Plant, near Gallipolis, Ohio, and Clifty Creek Power Plant, near Madison, Indiana. Electric Power, Dayton Power Light, Duke Energy Ohio and FirstEnergy Solutions all have equity stakes in OVEC. 1 Kim Bojko Testimony, House Public Committee, June 6, 2017 OVEC was formed in the early 1950s by investor?owned utilities to generate electricity to meet the electric power requirements of the uranium enrichment facilities then under construction by the Atomic Energy Commission (AEC) just south of Piketon, Ohio. The Portsmouth Gaseous Diffusion Plant?s uranium enrichment facilities Supported the nation?s nuclear weapons program. For a short period of time, the Pike'ton? plant produced enriched uranium for commercial nuclear reactors. However, the demand for enriched uranium for national defense purposes dropped in the early 19905. In September 2000, the US Department of Energy notified OVEC that the power purchase agreement with Piketon was being canceled. In May 2001, the Piketon plant ceased operations. In 2003, the power agreement between OVEC and Piketon was terminated. Today the Piketon plant remains shut down and is preparing for decontamination and decommissioning. Essentially, what the utilities are proposing is a new utility giveaway bill that would bailout OVEC. The utilities?proposal is based on the pretense of OVEC being a ?national security asset? because it initially was created; in part, to provide electricity needed to produce enriched uranium to support the nation?s nuclear weapons- program. The DNA believes the utilities? stated rationale for the necessity of this request is a red herring. As far back as 2000, prior to the implementation of electricity restructuring in Ohio, the utilities knew that Kyger Creek and Clifty Creek Power Plants would no longer be used or needed to serve the demands of national defense. Today, the OVEC plants are no different than any other electric generation resource currently bidding into the wholesale energy markets, competing against other generation resources. What is different is that the OVEC plants are inefficient, produce expensive power and cannot get a foothold in the market. The utilities want the Ohio General Assembly to provide subsidies so they can ignore the energy markets that are working, keep the plants open regardless as to whether they are pro?table, force Kim Bojko Testimony, House Public Utilities Committee, June 6, 2017 Ohioans to purchase power from the plants, and avoid having to write down the value of these plants as they should have done years ago. if approved, this would not be the utilities? first consumer-paid subsidy. Ohio?s investor-owned Utilities received$9.2 billion in ?stranded asset? and ?regulatory -- transition? payments from 2000 to 2010. Despite collecting these payments, utilities failed to write down their noncompetitive generating plants - including OVEC which are the assets that were ?stranded.? Other customer groups have documented that the same utilities were ?gifted? an additional $65 billion in above?market payments through a host of complicated non?bypassable riders from 2010 to 2017. That?s a total of $15.7 billion in consumer subsidies between 2000 and 2017. Now they are asking for an additional $300 million dollars a year in customer subsidization, with no sunset. Ohio ratepayers should not be required to support uneconomic power plants operating at barely half-capacity, as the OVEC plants are. In 2016, Kyger Creek?s annual output was 52 percent, while Clifty Creek?s annual output was 44 percent. Requiring customers in Ohio to pick up the tab for these inef?cient generation assets would increase operating costs for Ohio?s businesses and disadvantage these businesses compared to businesses in competing states with lower electricity costs. Further, the subsidy would be levied on a signi?cant segment of the population, including customers in Dayton Power Light, Duke Energy Ohio and FirstEnergy service territories. Here are several problematic provisions of the proposed legislation: HB 239 changes state policy to recognize OVEC resources as "national security generation" and preserves ongoing, yet unspecified, bene?ts associated with such resources. Kim Bojko Testimony, House Public Utilities Committee, June 6, 2017 - HB 239 guarantees cost recovery of a? costs associated with OVEC, including deferred costs, which could potentially be substantial since the OVEC power plants are not efficient and they are likely losing money. LSC has estimated the cost to all consumers could potentially be as high as $256.6 million annually for the 24-year period, 2017 to 2040. lithe-costs are'netted against the revenues received from selling the output into the wholesale market, the estimated cost to consumers would be lower. it HB 239 allows the PUCO no discretion under the bill, the Commission must approve recovery for all costs. it The bill requires PUCO to make cost recovery nonbypassable if a 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 bene?t of retail customers." It implies that if the utility uses the output to supply the standard service offer, the charge may be bypassable. Under this scenario, there would be no revenues from the wholesale market that could be used to offset the costs. HB 239 subsidizes OVEC regardless of its price, regardless of the management practices of the operating utility, regardless of how it will affect regional markets for electricity generation, regardless whether an unregulated af?liate owns the share of OVEC, and regardless of whether the power'is being produced from the Ohio?sited plant. The utilities and their af?liates want a subsidy to operate and maintain the OVEC power plants. They want Ohio taxpayers to bail them out and support uneconomic plants that are no longer used to support, or otherwise related to, national defense, These requests are unreasonable and unwarranted for a variety of reasons: Piketon no longer processes nuclear fuel for weapons, and hasn?t for many years. It thus is not a national security asset. Kim Bojko Testimony, House Public Utilities Committee, June 6, 2017 The utilities were noti?ed in 2000 that Piketon?s contract with the utilities was going to be canceled. The contract terminated in 2003., The closure of the defense facility should have been factored into the utilities? business decisions. - The utilities have-already been paid transition revenues to help transition to a fully competitive generation market. HB 239 allows an unregulated af?liate to use the output of their contractual commitment to OVEC in the regulated utility's standard service offer. The language is silent as to how the affiliate will receive the ratepayer dollars from the utility. Presumably, it would be through an af?liate PPA, which would have to be approved by FERC. HB 239 allows utilities to reOpen, update or amend their current ESPs. Some of these ESPs are on appeal, pending before the Supreme Cciurt. Reopening the ESPs would halt the appeal process and allow utilities to continue to collect unlawful charges. capacity is 12.1 percent more than peak usage at Piketon. The additional 289.9 MW was built to service customers beyond Piketon and has continued to serve other customers after the closure of Piketon in 2006. This belies the utilities? argument that OVEC was built solely for- national security purposes. Under no circumstances should Ohio electricity users subsidize out?of?state power plants. Piketon?s peak usage (before 2001) was 2,100 MW. Total OVEC capacity is 2,390 MW. Ohio?located Kryger Creek is 45.4 percent of OVEC capacity, and Indiana?located Clifty Creek is 54.5 percent of OVEC capacity. 80, if the proposed subsidy i_s awarded to the utilities, the maximum subsidy should be based on 45.4 percent of 2,100 MW, not 100 percent of total capacity. Kim Bojko Testimony, House Public Utilities Committee, June 6, 2017 - If HB 239 becomes law, and therefore, OVEC gets full cost recovery for its operations, there would be no incentive for OVEC to Operate more ef?ciently or be competitive in the wholesale market. Under Ohio law, utilities may not own and operate generation assets. - 0 Utilities had multiple decades to sell or write down the value of their OVEC plants. Utilities should not be permitted to impose on customers even more above? market charges. - f_the utilities are pursuing a national defense rationale to offset their losses in the OVEC plants, the solution should be reached at the national level the costs should be spread over the entire population. No matter how you cut it, the legislative proposal is a subsidy for uncompetitive power. Subsidizing power produced with old, inefficient technologies should ,th be allowed. OMA recommends that customers not be forced to provide a subsidy to the owners of OVEC to bailout bad business decisions that they have made over the years. There is no compelling argument for having Ohio electricity customers pay for uneconomic generation assets. Ohio should 1191 reward utility owners with the subsidies they seek. Therefore, OMA recommends that the General Assembly allow the markets to work without interference. The owners of OVEC should decide whether to continue operating the OVEC units and sell the power into the wholesale market or to sell the plants to a new owner at market value. Alternatively, the OMA offers an idea for resolving OVEC without rewarding utility owners. The approach would require creating a third?party solution that may call to mind the Troubled Asset Relief Program (TARP), which was signed into law in by President George W. Bush in October 2008. TARP provided a vehicle for the US. Department of the Treasury to purchase toxic assets and equity- Kim Bojko Testimony, House Public Utilities Committee, June 6, 2017 from troubled ?nancial institutions to strengthen the nation?s ?nancial sector. It was a key component of the government?s actions to address the subprime mortgage crisis. If the owners cannot sell the OVEC plants, and if the owners deem the plants to be unpro?table or uneconomic, and the owners decide to close the plants, the owners could seek assistance from the state of Ohio. The state could assist in the closure of the plants by forming a nonpro?t Kyger Creek Decommissioning Corporation that could float bonds secured by a non?bypassable rider across Ohio ratepayers to shut down four of the units. This would be done only after OVEC turns over the title to the generating units free and clear for $1 to the Decommissioning Corporation. The transfer of assets must include on?site transmission equipment and connections. The site would then be owned free and clear by the Decommissioning Corporation, which could sell or lease the land for economic development purposes. Proceeds from the sale or lease of the site would be used to accelerate payment of the Decommissioning bonds. The Ohio Manufacturers? Association strongly believes that subsidized charges imposed on consumers and manufacturers in HE 239 are not consistent with competitive markets and are not good for Ohio in either the short term or the long term. For these reasons, the OMA ?rmly opposes HB 239. At a minimum, however, OMA encourages a redraft as there are many technical problems with the language before you, which makes the language very confusing and inconsistent. For example, cost recovery is not confined to plants operating in Ohio. Cost recovery is not limited or capped to current output (thus, cost recovery could be much higher depending on the level of output and what portion of that Ohio ratepayers are being asked to subsidize). Additionally, it is not clear when and whether the utilities can use the output of OVEC to supply the standard service offer. And if they do supply the standard service offer, it is implied (but not stated) that the charge becomes bypassable. Additionally, lines 495? 500 seem to contradict two other sections (lines 554?560 and lines 769-774), as lines 495-500 require recovery of OVEC costs to be through the standard service offer, which would make the charge bypassable. It is also not clear as to what mechanism would be put in place to allow an af?liate that owns a portion of the OVEC output to receive revenue from the utility's ratepayers. Kim Bojko Testimony, House Public Utilities Committee, June 6, 2017 Chairman Seitz . .. . members of the committee . . . this concludes my prepared remarks. Thank you for your kind attention. I would be happy to reSpond to any questions you may have. Wplf, Jimmy From: Trish Demeter Sent: Monday, June 05, 2017 4:05 PM To: Wolf, Jimmy; Sarah Spence Subject: Re: House Public Utilities Committee Meeting Attachments: Jimmy - Sincere apologies for my tardiness in submitting the testimony. It is attached. Please let me know if you or the Chairman have any questions. Thanks very much, Trish On Mon, Jun 5, 2017 at 3:43 PM, immy.Wolf@ohiohouse.eov wrote: Thanks Trish. From: Trish Demeter Sent: Monday, June 05, 2017 3:42 PM To: Wolf, Jimmy Sarah Spence Subject: Re: House Public Utilities Committee Meeting Hi Jimmy My Witness slip for tomorrow is attached. I will send our testimony asap; it is in the ?nal stages of approval here internally. Thank you in advance! Trish On Fri, Jun 2, 2017 at 9:58 AM wrote: Announcement of committee meeting COMMITTEE: Public Utilities CHAIR: 13111 saw: DATE: Tuesday, June 6, 2017 TIME: 3:00 PM ROOM: Room 1 16 Agenda Ell Sponsor Title Status H. B. No. Rep. Ryan Exempt out-of?state disaster relief 2nd Hearing 133 persons from taxes and laws Prop/Opp HE. 239 Representative Cost recovery for a national security 3rd Hearing Ryan Smith, generation resource Pending Referral Representative - Prop/ Opp/1P Rick Carfagna have ail testimony and Witness slips submitted t0 Chairman Seitz?s of?ce by 3 PM on Monday, June Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimv.wolf@ohiohouse.gov Trish Demeter Managing Director, Energy Ohio Environmental Council Ohio Environmental Council Action Fund 1145 Chesapeake Ave, Suite 1, Columbus OH 43212 {614) 487-5829 (Direct) Trish Demeter Managing Director, Energy Ohio Environmental Council Ohio Environmental Council Action Fund 1145 Chesapeake Avenue, Suite l, Columbus, 43212 (614) 437-5829 direct Opponent Testimony Ohio House Bill 239 (Smith, R., Carfagna) Ohio House Public Utilities Committee June 6, 2017 Chairman Seitz, Vice Chair Carfagna, and Ranking Member Ashford; I am Trish Demeter, Managing Director of Energy Programs for the Ohio Environmental Council (OEC) Action Fund. Thank you for inviting testimony on Ohio House Bill 239 (Smith, R., Carfagna), which would establish a special subsidy for the joint owners of two coal-fired power plants - Kyger Creek located near Cheshire, Ohio and Clifty Creek in Madison, Indiana paid for by Ohio electric customers. The OEC Action Fund is opposed to this legislation, as it keeps our state stuck in energy sources and regulatory structures of the past, and could lead to higher energy bills for electric consumers which inhibits the economics of energy choice and energy efficiency. Additionally, the bill raises fairness issues in that it charges Ohio ratepayers for generation assets located in a different state, at an unknown cost, and with no foreseeable end to the imposed charges. As we interpret the legislation, House Bill 239 impacts customers? bills by creating a charge on customers bills of any utility entity in Ohio that is a shareholder member of the Ohio Valley Energy Corporation (OVEC), or a sponsoring company of OVEC (which is a parent company of one or more of the shareholder members). This includes FirstEnergy, Duke Energy, Dayton Power Et Light, and rural cooperative utilities affiliated with Buckeye Power Generating, LLC will also pay the charge. The charge covers any and all costs associated with the operations of the two power plants, including deferred costs. The amount of the charge will fluctuate, based on operating costs and the price of electricity within the regional competitive market. Customers could receive a credit on their bill if the plants sell their power at a price below the going market rate for the region. However, the hope for a credit coming back to customers is far off at best, and unlikely to happen at all given the commonly?accepted projections for natural gas prices, and projections for wholesale energy and capacity prices moving forward. While the mechanics are different, House Bill 239 is incredibly similar to another pending piece of legislation before this committee House Bill 178 (DeVitis) - which proposes a rate-payer funded subsidy for Ohio?s two nuclear plants. House Bill 239 is different from the nuclear ZEN program proposal in HE 178 because while we know the total cost of the ZEN program to be approximately $300 million per year for 16 years, the total cost of House Bill 239 to Ohio ratepayers is unknown, and there does not appear to be an end date. We urge this committee to ask hard questions of proponents regarding the total cost because, in fact, the total cost estimates were the subject of much of the litigation when this same idea oi-bailout out Kyger Creek and Clifty Creek was being considered at the PUCO just recently. During that time, the promise of a credit coming back to customers was not expected before the year 2021. As proposed, House Bill 239 proposes a ratepayer mechanism similar to what was originally proposed in the latest Electric Security Plans (ESP) for AEP, Duke Energy, Dayton Power E: Light, and FirstEnergy in which customers are on the hook for any expense associated with the OVEC-owned plants, and a credit in the off chance that market trends, and market prices, drastically change. The result of these cases, as they stand today: a ESP is the only case that has been approved by the PUCO, and where the distribution utility still owns the entitlement to the plants themselves (as opposed to the unregulated generation affiliates of the monopoly distribution utility). The PUCO approved cost recovery for portion of the OVEC ownership. Therefore, customers are already paying, at least in part, for share of the cost for the Kyger Creek and Clifty Creek plants. a Duke Energy?s request for cost recovery for their OVEC share was rejected, and they never re-submitted a revised plan for their OVEC?related expenses to the PUCO. FirstEnergy?s ESP case is still in the process of re-hearing, and there is not a final order on this case as of yet. They are seeking cost-recovery for their OVEC share in this case. a ESP case is still ongoing and being actively litigated. Proponents of House Bill 239 appear to be claiming special status for the Kyger Creek and Clifty Creek plants, but the member and sponsoring companies of OVEC clearly pivoted in 2003 to be a jointly?owned unregulated generation corporation. 2015 Annual Report states that ?Sincethe termination of the DOE Power Agreement on April. 30, 2003, entire generating capacity has been available to the Sponsoring Companies under the terms of the Inter-Company Power Agreement (pg 1) This ICPA was extended in 2011 and is in force until June 30, 2040. Acting as an unregulated generation company, the risk of the plants is on the shareholders of the member and sponsoring companies; these are the rules that every other unregulated generation company has to abide by. Not only the agreement shows this, but the actions of OVEC demonstrate it. OVEC companies made business decisions to invest in these plants to keep them open, even after Ohio?s electric restructuring in 2000, and after the termination of the US DOE supply contract in 2003. In 2003, installation of air pollution control equipment totalling $355 million, and again in 2011-13 timeframe, more upgrades to the plants cost well over $1 billion. Moving forward, the plants pose an environmental risk that could potentially require future investments, but the decision to make the investments or not should be a business decision based on the risk to the owners of the plants, and not transferred over to the customers of some of the OVEC member-owners. Every year, Kyger Creek and Clifty Creek produce thousands of tons of coal ash, mercury, smog?forming pollutants and carbon dioxide, as well as other pollutants. Kyger Creek releases over a million pounds of sulfuric acideach year, 1.5 million pounds of hydrochloric acid, which is severely toxic and corrosive and can cause burns, ulceration, scarring and irritation, not to mention unlimited amounts of carbon poUqunK Proponents of House Bill 239 claim that they are unable to exit the agreement they hold among fellow OVEC shareholder companies andlor sponsoring companies. 1 urge this committee to understand the directive given to by the PUCO in particular when it comes to this matter. The PUCO ordered2 the company to pursue transfer or sale of the utility?s entitlement to the OVEC plants, and required the utility to report on its efforts in this regard. Why should ratepayers suddenly be footing the bill for what some proponents of this bill are claiming is an unworkable contract between private companies? If OVEC wants to continue operating these sixty?two year old coal plants, then shouldn?t they take on the business risk rather than saddle Ohio customers with the risk? AEP has shown. leadership in other matters, and demonstrated open willingness to transition towards cleaner, more efficient resources. For example, just recently, prior to the Trump Administration?s decision to withdrawal from the Paris climate agreement, CEO Nick Akins had some advice for the President: ?Work with the world community. Focus on the solutions that are in front of is imperative for us to continue to stay focused on what the prize is. And that?s that cleaner energy economy. ?3 AEP is showing leadership here with this statement and urging the President to work with the world community, and to focus on solutions. They should demonstrate the same leadership with their fellow Ohio Valley Energy Corporation partners to craft a plan for these plants without putting undue burden on Ohio consumers. Thank you for the opportunity to testify today and I?d be happy to answer any questions at this time. 1 2 PUCO Orders in Case Number 3 oomiZO?l Wolf, Jimmy From: Matthew Sent: Monday, June 05, 2017 1:24 PM To: Wolf, Jimmy Subject: RE: Committee Yes actually we are in the process of finalizing it now. l?ll be sending shortly. How'many witnesses are there between proponents and opponents if you?reat liberty to say? Matthew R. Koppitch Bricker 8; Eckler LLP 100 South Third Street Coiumbus, OH 43215 Direct Diai 614.227.8824 mkoppitch@bricker.com v?card This electronic transmission contains information from the law firm of Bricker Eckler LLP which is privileged, confidential or otherwise the exclusive property of the intended recipient or Bricker Eckler LLP. This information is intended for the use of the individual or entity that is the intended recipient. If you have received this eiectronic transmission in error, please notify us by telephone at 614227-8899, or by eiectronic mail at webmasterQbricker.com. Please destroy the original transmission. Thank you for your assistance. From: Jimmy.Wolf@ohiohouse.gov Sent: Monday, June 05, 2017 1:24 PM To: Koppitch, Matthew Subject: RE: Committee Good Afternoon Matt, I hope you had a good weekend. Are you going to be able to get me Mr. Siderewicz testimony by 3 Thanks Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmy.wolf@ohlohouse.gov From: Koppitch, Matthew [mailtomkoppitch@bricker.com] Sent: Friday, June 02, 2017 10:51 AM To: Wolf, Jimmy Subject: Committee Jimmy i will have Bill Siderewicz (Clean Energy Future) in town for testimony on Tuesday. I?ll send you his testimony as soon as it?s ?nalized. He?ll be testifying in opposition to H8 239. 1 Thanks 2-333 332333333 33 33:3 33333 Matthew R. Koppitch Brisker Eckler LLP 100 South Third Street Columbus, OH 43215 Direct Dial 614.227.8824 mkoppitch@bricker.com v-card This electronic transmission contains information from the law ?rm of Bricker 8L Eckler LLP which is privileged, con?dential or otherwise the exclusive property of the intended recipient or Bricker 8: Eckler LLP. This information is intended for the use of the individuai or entity that is the intended recipient. If you have received this electronic transmission in error, please notify us by telephone at 61?227?8899, or by eiectronic mail at webmaster@bricker.com. Please destroy the original transmission. Thank you for your assistance. Wolf, Jimmy From: Koppitch, Matthew Sent: Friday, June 02, 2017 10:51 AM To: Wolf, Jimmy Subject: Committee i Jimmy i will have Bill Siderewicz (Clean Energy Future) in town for testimony on Tuesday. l?ll send you his testimony as soon as it?s finalized. He?ll be testifyingin opposition to H3 239. . . Thanks as?? misses at on Matthew R. Koppitch Bricker Eckier LLP 100 South Third Street Columbus, OH 43215 Direct Dial 614.227.8824 mkoppitch@bricker.com v-card This electronic transmission contains information from the iaw firm of Bricker 8: Eckler LLP which is privileged, confidential or otherwise the exclusive property of the intended recipient or Bricker 8L Eclder LLP. This information is intended for the use of the individual or entity that is the intended recipient. If you have received this eiectronic transmission in error, please notify us by telephone at 514?227~8899, or by electronic mail at webmasterQbrickercom. Please i destroy the original transmission. Thank you for your assistance. Wolf, Jimmy From: Keaton, John Sent: Wednesday, May 31, 2017 10:40 AM To: Wolf, Jimmy Subject: RE: Duke Energy Testimony re 239 Thanks! From: Jimmy.Wolf@ohiohouse.gov Sent: Wednesday, May 31, 2017 10:21 AM To: Keaton, John Subject: RE: Duke Energy Testimony re 239 Don?t worry about it. We got one already filled out for her From: Keaton, John Sent: Wednesday, May 31, 2017 10:19 AM To: Wolf, iimmy Subject: RE: Duke Energy Testimony re 239 Can you send me the witness form again? I?ll have it filled out before we walk over. Thanks. From: Jimmv.Wolf@ohiohouse.qov Sent: Wednesday, May 31, 2017 10:18 AM To: Keaton, John Subject: RE: Duke Energy Testimony re 239 Exercise caution. This is an EXTERNAL email. DO NOT open attachments or click links from unknown senders or unexpected email. John, Thanks for this. Amy will be first up to give testimony today at 1 PM in room 313. Thanks Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmy.wolf@ohiohouse.gov From: Keaton, John Sent: Wednesday, May 31, 2017 10:09 AM To: Rep30 Wolf, Jimmy Subject: Duke Energy Testimony re 239 Chairman Seitz and Jimmy, Attached is testimony to be offered by Amy Spiller, Deputy General Counsel for Duke Energy, in support of HB 239. As always, please call or e-mail with any questions. Regards, john John Keaton State Government Affairs Director Ohio Duke Energy Business Services I Government 8: Community Affairs - . I313 155 East Broad St 20th Floor Columbus, OH 43215 - ENEQGY Office: 614?2224330 I Mobile: 6141?2716720 Wolf, Jimmy From: Keaton, John Sent: Wednesday, May 31, 2017 10:19 AM To: Wolf, Jimmy Subject: RE: Duke Energy Testimony re 239 Can you send me the witness form again? have it filled out before we walk over. Thanks. From: Jimmy.Wolf@ohiohouse.gov Sent: Wednesday, May 31, 2017 10:18 AM To: Keaton, John Subject: RE: Duke Energy Testimony re 239 Exercise caution. This is an EXTERNAL email. DO NOT open attachments or click links from unknown senders or unexpected email. John, Thanks for this. Amy will be first up to give testimony today at 1 PM in room 313, Thanks Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmy.wolf@ohiohouse.gov From: Keaton, John Sent: Wednesday, May 31, 2017 10:09 AM To: Rep30 Wolf, Jimmy <1immy.Wolf@ohiohouse.gov> Subject: Duke Energy Testimony re 239 I Chairman Seitz and Jimmy, Attached is testimony to be offered by Amy Spiller, Deputy General Counsel for Duke Energy, in support of HB 239. As always, please call or email with any questions. Regards, John John Keaton State Government Affairs Director Ohio Duke Energy Business Services Government Community Affairs 155 East Broad St 20th Floor Columbus, OH 43215 Office: 614-222?1330 1 Mobiie: 614?271-5720 Wolf, Jimmy From: Keaton, John Sent: Wednesday, May 31, 2017 10:09 AM To: Rep30; Wolf, Jimmy Subject: Duke Energy Testimony re 239 Attachments: 239 (Smith, R., Carfagna) Duke Energy Proponent Testimony (Final).pdf Chairman Seitz and Jimmy, Attached is testimony to be offered by Amy Spiller, Deputy General Counsel for Duke Energy, in support of HB 239. As always, please call or e?mail with any questions. Regards, John John Keaton State Government Affairs Director Ohio Duke Energy Business Services Government Community Affairs 155 East Broad St 20th Floor Coiumbus, OH 43215 Office: 614-222?1330 Mobile: 614?271~5720 PROPONENT TESTIMONY BEFORE THE HOUSE COMMITTEE BY AMY SPILLER, DEPUTY GENERAL COUNSEL FOR DUKE ENERGY OHIO BILL 2'39 NATIONAL SECURITY RESOURCES (Smith, R., Carfagna) MAY 31, 2017 Introduction Chairman Seitz, Vice Chair Carfagna, Ranking Member Ashford, and members of the Public Utilities Committee, my name is Amy Spiller and I am Deputy General Counsel for Duke Energy. My main focus is on the Company?s legal and regulatory business before the state government and specifically the Public Utilities Commission of Ohio. Thank you for the opportunity to provide proponent testimony on House Bill 239. This important legislation will provide much needed relief to Ohio?s investor?owned utilities that are suffering harm due to circumstances brought about by matters of national security and exacerbated by the evolution of the electric power industry in and around the State of Ohio. I realize that you have previously heard a history of the circumstances that brought me before this committee, but today, I would like to first recall some critical elements of that story. i will then direct the majority of my remarks to explaining the rationale supporting and the substantive details of the proposal before you. History The 'Ohio Valley Electric Corporation, or OVEC, has always been regarded as unique. And this uniqueness in large part iies in its origination. OVEC was organized in 1952, during the escalation of the Cold War, to help meet the country?s then~critical national security needs. At that time, the Atomic Energy Commission was constructing a uranium enrichment facility in Piketon, Ohio, as part of the nuclear strategy of the Department of Defense. The power needs of this strategy, and particularly the facility in Piketon, were both immediate and substantial. Answering the Atomic Energy Commission?s demands, 10 investor?owned utilities or their parent companies banded together to form OVEC. 132~House Bill 239 NATIONAL SECURITY RESOURCES Proponent Testimony of Amy Spiller, Deputy General Counsel for Duke Energy Ohio May 31,2017 Page 2 of 6 Subsequently, OVEC and the Atomic Energy Commission entered into a power agreement that was, at the time, the largest single?customer contract in the history of the electric utility industry a contract for 2,000 MW of generating capacity to power the Piketon facility. Yet the Atomic Energy Commission needed even more it needed assurance that power would be available during the initial construction of the OVEC plants and during subsequent outages. This time, 15 entities, including Ohio?s four investor-owned utilities, became the assurance the Atomic Energy Commission needed. And these entities, referred to as sponsors, memorialized those commitments through the lnter~Company Power Agreement with OVEC, pursuant to which they would ensure that the long?term needs of the Atomic Energy Commission were met. Two years after the power agreement with the Atomic Energy Commission was approved by regulators, OVEC began producing power. In 1956, these power plants were the largest and most efficient ever built by private industry. Circumstances, however, changed. in the waning years of the Cold War, as national security objectives were being achieved, the Country?s dependence on the Piketon facility declined. in 2003, the Department of Energy, the successor to the Atomic Energy Commission, canceled its contract with OVEC, and all of the output to plants reverted to the parties to the lnter~ Company Power Agreement. And consistent with the terms of that power agreement, OVEC has continued to operate these coal?fired power plants and contribute to our state?s economy. In 2016, this equated to employing 384 Ohio workers at an average wage of $85,496 and paying nearly $4 million dollars in state, school, and local government taxes. Just as they did for the federal government, though, circumstances changed for Ohio?s electric utilities. And, unfortunately, evolution of the electric power industry is slow and has not always followed a straight and steady path. This, combined with a patchwork of state and federal regulatory policies has left the sponsor companies in very different places. For example, Ohio?s utilities are members ofthe PJM Regional Transmission Operator (RTO) and sit in a fully deregulated state that does not provide for recovery of OVEC costs via base rates. Monongahela Power is also a member of PJM. But as it is located in West Virginia, a regulated state, it receives cost recovery from its customers. Louisville Gas Electric and Kentucky Utilities are not members of an RTO but, again, located in a regulated state, they are provided cost recovery. Southern lndiana Gas Sr Electric, also in a regulated state, is a member of the Midwest Independent System Operator, not PJM. it receives regulated cost recovery. Buckeye 132?House Bill 239 NATIONAL RESOURCES Proponent Testimony of Amy Spiller, Deputy General Counsel for Duke Energy Ohio May 31,2017 Page 3 of 6 Power, an Ohio cooperative and member of PJM, recovers its costs from its members. All very different places, indeed. Rationale for Support As you can see, the issues being dealt with herein are complex, yet not unsolvable. House Bill 239 provides the solution for Ohio?s utilities that quickly remanded to the Country?s call during I the Cold War. The merit of this legislation is evident in the following important ways. 0 it recognizes the uniqueness of OVEC and the commitments made by Ohio?s investor? owned utilities to our country. 0 Ohio River Valley utilities responded to fill a national security need at a crucial time in the nation?s history. OVEC built and provided for the Atomic Energy Commission?s benefit more than 2,000 megawatts of capacity in record time. The Ohio companies with contractual commitments to OVEC should be made whole with respect to obligations that arose solely because they answered the call of the United States government. I 0 Both former and current chairs of the Public Utilities Commission of Ohio have acknowledged that OVEC is different it has only ever had one customer, the federal government. its plants were not constructed to serve customers in a defined territory. In fact, despite being a public utility, OVEC has no service territory. 0 The Ohio utilities with a contractual commitment to OVEC cannot simply terminate that commitment or unilaterally decide to transfer it to another entity. Consistent with the terms of the agreement, it only takes one vote to prevent a transfer from happening. So while Ohio utilities have recently tried to transfer their contractual commitments, they have been unsuccessful. a House Bill 239 prevents disparate treatment between Ohio utilities and other parties to the IntenCompany Power Agreement. 132wHouse 239 NATIONAL SECURITY RESOURCES Proponent Testimony of Amy Spiller, Deputy General Counsel for Duke Energy Ohio May 31,2017 Page 4 of 6 0 Currently, cost recovery for the OVEC contractual commitment has been dissimilar. I Ohio cooperatives receive full cost recovery. . AEP Ohio currently has an order from the PUCO providing for near-term, nonbypassable cost recovery in the context of an electric security plan. I is awaiting a decision from the PUCO on whether it will approve near-term, bypassable cost recovery in connection with its electric security plan. I As mentioned above, parties situated in other neighboring states iike West Virginia, Indiana, and Kentucky, receive cost recovery. 0 These disparate outcomes for Ohio?s utilities are born of existing Ohio law that established the regulatory processes that administer state policy. As such, it is most appropriate to remedy the situation by way of reforms to that law. a House Bill 239 is consistent with Ohio poiicy regarding generation, competition, and retail customer choice. 0 The electric utilities are not seeking cost recovery to keep uneconomic generating units running. 0 From a retail perspective, customers? rights to shop for an alternative service provider will continue, just as they have since choice began. Duke Energy Ohio also expects that the competitive retail electric service providers that are certified in our service territory will continue to operate after House Bill 239 is passed, just as they do today. 0 From a wholesale standpoint, this legislation does nothing to impact the wholesale markets because OVEC units wili continue to run, regardless of whether the Ohio utilities receive cost recovery. 132-House Bill 239 NATIONAL SECURITY RESOURCES Proponent Testimony of Amy Spiller, Deputy General Counsel for Duke Energy Ohio May 31,2017 Page 5 of 6 I As previously mentioned, there are sponsoring companies that are situated differently than the Ohio utilities and, as such, are treated differently with regards to the recovery of their costs. . The market has already priced in the fact that OVEC will continue to Operate so this legislation will not have an influence on the price of power. I Put simply, the coal?fired OVEC units will continue to operate as they have done in the past and Duke Energy Ohio will continue to fulfill its contractual commitment. All this will happen without consequence to the state?s support of electric generation competition and customer choice. House Bill 239 provides the state with the opportunity to recognize the unique circumstances surrounding OVEC and correct for unintended but very real disparities currently allowed for in the law and it does run afoul of state policy in the process. So now let us turn our attention to the details of House Bill 239. Proposal Details House Bill 239 provides Ohio?s investor?owned utilities with recovery of the difference between the costs and revenues associated with their contractual commitment to OVEC. Today, OVEC capacity and energy are bid into wholesale markets. in the event revenues generated by the plants are insufficient to cover all costs, as is the current case, each Ohio utility would recover the difference from its customers. Further, where revenues exceed costs, the entire difference would be credited to customers. As recognized by the PUCO, this can provide customers with a stabilizing effect on the price of electricity when the market price begins to rise significantly. It is important to note that under any scenario, this legislation does not authorize utilities to earn or otherwise receive more than their OVEC cost obligation netted against the revenues received from the sale of capacity and energy. This legislation only addresses costs and does not seek to provide an investment or equity component for the utility. 132?House Bill 239 NATIONAL SECURITY RESOURCES Proponent Testimony of Amy Spiller, Deputy General Counsel for Duke Energy Ohio May 31,2017 Page 6 of 6 Additional customer protections occur in three separate ways. First, the Federal Energy Regulatory Commission, or FERC, evaluated and approved the lnter~Company Power - Agreement, which includes a formula pursuant to which costs are allocated to the sponsoring companies. And the FERC would have approved the agreement consistent with the common regulatory standard: fair, just, and reasonable. Second, the PUCO has purview overjurisdictional utilities? reasonable handling of revenues. it accomplishes this by evaluating and determining the prudency and effectiveness of the utility?s offering of its contractual commitments of capacity and energy into the respective wholesale markets. This legislation does not change the role or scope of authority. Third, cost recovery mechanisms like the one contemplated in House Bill 239 are typically trued up on a regular basis, thereby helping to guard against over- or under-collection. Conclusion in summary, House Bill 239 recognizes Ohio utilities? answerto a request by the federal government to commit significant resources in support of national security. It will provide Ohio?s utilities only with sufficient relief to match costs, excluding any return on investment for the utilities and providing customers with credits where applicable. it is consistent with state policy as customers will retain the ability to shop for the retail supplier of their choice and it will not impact wholesale markets or competition. Finally, it preserves customer protections including appropriate regulatory oversight by FERC and the PUCO. Chairman Seitz, Vice Chair Carfagna, Ranking Member Ashford, and members of the House Public Utilities Committee, thank you again for allowing me to testify in support of House Bill 239. i hope you will support rapid passage ofthis important legislation. now welcome your questions. Wolf, Jimmy From: Marc Sent: Tuesday, May 30, 2017 11:45 AM To: Wolf, Jimmy - Subject: Ohio?s Electric Cooperatives Pat O'Loughtin testimony Attachments: House Testimony May 2017.pdf Jimmy, .. Attached is written testimony for Pat O?Loughlin. Please let me know if you need anything else before committee. Thankg h?arc pare anti-at. cmetaantts, "Year Teudmw'iinewf ?g House Bill 239 Proponent Testimony Patrick O?Loughlin, President and CEO Ohio?s Electric Cooperatives- May 31, 2017 Chairman Seitz and members of the House Public Utilities Committee, thank you for the opportunity to testify before you in support of House Bill 239. My name is Pat O?Loughlin and I am President and CEO of Ohio?s Electric Cooperatives Buckeye Power, inc. and Ohio Rural Electric Cooperatives. inc.) Formed in 1959, Buckeye Power is Ohio?s generation and transmission cooperative, providing power to Ohio?s 25 member-owned, not?for-profit electric cooperatives. Its focus is providing reliable, affordable electricity to member co?ops, who then distribute it to nearly 400,000 homes and businesses in the State of Ohio. We own or have the right to purchase power from a diverse portfolio of base load and peaking electric generating facilities, outfitted with best?in-class environmental controls. Additionally, Buckeye Power, through its subsidiary, Buckeye Power Generating, LLC, is the second-largest owner in Ohio Valley Electric Corporation (OVEC), with an 18% stake. Maintaining the economic viability of the 11 generating units at Kyger Creek and Clifty Creek Generating Stations power plants is essential to providing reliable, affordable electricity to Ohioans. Buckeye Po'wer, along with Ohio?s investor-owned utilities, and other OVEC owners, have an' agreement to purchase power from OVEC until 2040. Passage of HB 239 will provide OVEC member companies with the longeterm economic certainty needed to meet their ?nancial obligations at the two power plants both of which are scheduled to be operational for many years to come. Buckeye Power can already recover OVEC costs directly through power purchase agreements with its distribution cooperatives members. However, it is essential that all OVEC owners be afforded a clear and certain path to recover full investment costs. Otherwise, cooperative consumers could be left to cover the costs with higher rates. Since the early 2000?s, OVEC has invested nearly $2 billion to protect the environment and comply with state and federal environmental regulations. The company has invested in air emission control systems to reduce nitrogen oxide (NOX), sulfur dioxide and mercury emissions to comply with the federal Clean Air Act. Failure to enact HB 239 could result in stranded costs for our consumers and economic distress for the communities surrounding Kyger Creek Generating Station in Gallia County. I urge passage of HB 239 and will be happy to answer any questions that you may have. 667? 30580 Bhfd. i 43229 Wolf, Jimmy From: Marc Sent: Tuesday, May 30, 2017 9:16 AM To: Wolf, Jimmy Subject: Re: witness slip Patrick O'Loughlin i will do so shortly. Thanks. Sent from my iPhone On May 30, 2017, at 9:14 AM, wrote: Good morning Ma rc, Thank you for sending this. if you could just send me an electronic copy of his testimony that would be great. Thanks Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmy.wolf@ohiohouse.gov From: Marc Sent: Tuesday, May 30, 2017 9:12 AM To: Wolf, Jimmy Subject: witness slip - Patrick O'Loughlin Jimmy, Attached is a witness slip for Patrick O?Loughlin, President and CEO of Ohio?s Electric Cooperatives. He would like to testify tomorrow in support of HB 239. Would like me to deliver copies of testimony to your of?ce? If so, how many? Thanks, Marc Wolf, Jimmy From: Marc Sent: Tuesday, May 30, 2017 9:12 AM To: Wolf, Jimmy Subject: witness slip - Patrick O?Loughlin Attachments: 3227H00?l .pclf Jimmy, Attached is a Witness slip for Patrick O?Loughlin, President and CEO of Ohio?s Electric Cooperatives. He would like to testify tomorrow in support of HB 239. Would like me to deliver copies of testimony to your office? It so, how many? Thanks, Marc w'ry' WITNESS INFORMATION FORM PLEASE COMPLETE '1 1113 11111111333 INFORMA 11011 FORM 13131301113. 11331111111113 1.017 - NAME: 1312111113111 1.361133113311311 E13010 111? (LS (IF APPLICABLE) 9165191131? +3.11 CEO ADDRESS: 1:11:77 B11191 C11Y3-C1113m1au3 .. 1:211:31-132201 ?1111313110113: 1" 1?13 @3113 57.5 7 AREYOU REPRESENTING: Do YOU 1111311 10 1533111311 0N LEGISLATION (13111. 1111111131311): 1115 13:1 3131:1111: 1331113: SUBJECT 1131111311311 Do YOU 131113011 13g- 011 OPPQSE -. THE 13111101111311? 013 REGARDING 11113 15311 PLEA SE OWE A BRIEF STATEMENT OF THE GROUNDS ON WHICH YOU FAVOR. DR SUCH ENACTMENT 11131191311171 51C (NEC- F10 (63691031511213: WILL YOU HAVE A STATEMENT VISUAL AIDS, OR OTHER MATERIAL To YES 543110 (IF YES, PLEASE PROVIDE COPIES TO FHE CHAIRWFAN 0R SECRETARY) How MUCH TIME 1.111131131301111 1135111110111 1131311111113? 5 . 1311;; 111:5. Wolf, Jimmy From: Nate Filler Sent: Friday, May 26, 2017 1:13 PM To: Wolf, Jimmy Subject: RE: House Public Committee Meeting Attachments: DPL HB 239 052617.pdf; DPL witness slip? Dave Cruseypdf Jimmy- . Per our discussion, I have attached testimony in support of H8 239. Our witness (Dave Crusey, siip also attached) will be coming from Dayton next week. We want to go after Duke Energy who will likely have their general counsel providing a bit more comprehensive testimony on the bill. Please let me know if you have any questions or need anything else. in regards to the email early this AM, we are working with all the utilities to respond back but i think most of the items 1-5 that your boss pointed out wiil make sense for us. #6 I cannot speak to and detiniteiy don?t think we need to go further in the weeds on those other matters. Have a nice hoiiday weekend, Nate Filler Director, Government Reiations Dayton Power and Light Of?ce: 937-259-7106/Cell: 937?479-7646 Sent: Thursday, May 25, 2017 3:58 PM To: Subject: House Public Utilities Committee Meeting ANNOUNCEMENT OF COMMITTEE MEETING CONIMITTEE: Public Utilities CHAIR: Bill Seitz DATE: Wednesday, May 31, 2017 TIME: 1:00 PM ROOM: Room 313 AGENDA BILL SPONSOR TITLE STATUS HB. 239 Representative Cost Recovery for a national security 2nd Hearing Ryan Smith, generation resource Pending Referral Representative Proponent Rick Carfagna have testimony submitted to Chairman Seitz? 5 office no later than 3 PM on Tuesday, May 3071?? Jimmy Wolf Legisiative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmv.wolf@ohi0house.eov HB 239 Proponent Testimony David J. Crusey, Director, Commercial Operations The Dayton Power Light Company May 30, 2017 Chairman Seitz, Vice Chair Carfagna, Ranking MemberAshford, and members ofthe House Public Utilities Committee, thank you for the opportunity to provide proponent testimony on House Bill 239. My name is Dave Crusey and have been employed for 28 years at The Dayton Power and Light Company and currently serve as the Director of Commercial Operations. As one of Ohio?s four electric distribution utilities, safely and efficiently provides distribution and transmission services to approximately 520,000 customers located in West Central Ohio. We are proud of our 100+ years of service to the residents and businesses in our 24 county service territory. Dayton Power and Light is supportive of HB 239 which provides a long?term solution for our commitment as a shareholder in the Ohio Valley Electric Corporation (OVEC). owns approximately 5% of OVEC. In my many duties for I also serve as a representative on the OVEC operating committee. Unlike other generation resources, the OVEC operating board requires unanimity for all major business decisions. For example, this includes significant decisions on expenditures and ownership interests. As a result, while our state regulatory structure has evolved, we still have our obligation as a part?owner of OVEC and must make the necessary expenditures to keep it operating, In my view, these plants are run in a lean and efficient manner. Operating costs must be approved by the OVEC board and many of the OVEC owners operate in merchant markets with a keen focus on controlling costs and overall economics especially given the challenges created by current market conditions. We are seeking a sensible path to recover the net of our costs and revenues. This legislation balances the interests of customers with the co?owners of OVEC by providing stability for continued operation of this important national security generation resource. i thank the committee for this opportunity to provide testimony on House Bill 239. I would be happy to answer any questions you may have at this time. WHNESS FNRM - BATE: . Sir/Eve 7 NAME: m. (If Nam? g3, I MN ?95- if?? (IF APPLICABLE) 4 ?me LL. EN New/Nag; a; ?wx NEEDRESS: dig-?Na 533"" . . 2:19; 3? ?22' 519.3%? 47$? VQURSELF . NLLN Do New WISH TO 3?33?va 0N LEGISLATLGN (BL-LL NUMBER): ,H?f 42;? 5? ISSUE: SUBJECT. mama-z E30 YOU FAVOR: ONNQSE . THE ENACIMBNT 0L: REGARDING T1518 188133? GIVE. A NNLELL GRNUNDS 0N YOU FAVOR 03% 0.99.033 sum fan/LN. NN 4* trio/N waxy?wN g?gf?r?tag/Nf?? LL you LEAVE 35L STATEMENT VISUAL mas OR MATERIAL TO 133833118111 YES New 53; PLEASE PRO COPIES T0 OR HQW MUCH TIME YOUR. 3 . .M Wolf, Jimmy From: Marc Sent: Thursday, May 25, 2017 2:03 PM To: Wolf, Jimmy Subject: RE: House Public Utilities Committee Meeting 5/23/17 Jimmy, 'i heard committee will meet Wed. 5/31 at 1:00pm for proponent. Correct? Thanks, Marc From: Jimmy.Wolf@ohiohouse.gov Sent: Wednesday, May 24, 2017 10:05 AM To: Marc Subject: RE: House Public Utilities Committee Meeting 5/23/17 Marc, lam going to confirm with the Chairman today, and i will let you know are having committee next week. Thanks, Jimmy 'Wolt Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 iimmy.wolf@ohiohouse.gov From: Marc Sent: Wednesday, May 24, 2017 9:39 AM To: Wolf, Jimmy Subject: RE: House Public Utilities Committee Meeting 5/23/17 jimmy, Are you pianning proponent testimony on HB 239 on 5/30? if so, i would like to put Ohio?s Electric Cooperatives CEO Pat O?Loughlin on the list. When do you need written testimony? Thanks, Marc .Sent: Friday, May 19, 2017 4:31 PM To: DL Committee List ALL@ohiohouse.gov; Di. Committee PublicUtilities List DEM@ohiohouse.gov; 1 DL Committee PublicUtilities List GOP@ohiohouse.gov Subject: House Public Utilities Committee Meeting 5/23/17 ANNOUNCEMENT OF MEETING COMNIIT-TEE: Public Utilities CHAIR: Bill Seitz DATE: Tuesday, May 23, 2017 TIME: 3:00 PM ROOM: - Room 116 AGENDA BILL SPONSOR TITLE STATUS H.B. XX Sponsor XX Cost recovery fora national security Hearing generation resource Pending Introduction and Referral Sponsor Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmv.wolf@ohiohouse.gov Wolf, Jimmy From: Sent: To: Subject: Thanks immy. Sent from my iPhone Marc Wednesday, May 24, 2017 10:13 AM Wolf, Jimmy Re: House Public Utilities Committee Meeting 5023/17 On May 24, 2017, at 10:05 AM, "Jimmy.Wolf@ohi0house.gov? wrote: Marc, lam going to confirm with the Chairman today, and i will let you know are having committee next week. Thanks, Jimmy Woif Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmy.wolf@ohiohouse.gov From: Marc Sent: Wednesday, May 24, 2017 9:39 AM To: Wolf, Jimmy <3immy.Woif@ohiohouse.gov> Subject: RE: House Public Utilities Committee Meeting 5/23/17 Jimmy, Are you planning proponent testimony on HB 239 on 5/30? if so, i would like to put Ohio?s Electric Cooperatives CEO Pat O?Loughlin on the list. When do you need written testimony? Thanks, Marc I From: Jimmy.Woif@ohiohouse.gov Sent: Friday, May 19, 2017 4:31 PM To: DL Committee List ALL@ohiohouse.gov; Di. Committee List DEM@ohiohouse.gov; DL Committee List GOP@onionouse.gov Subject: House Public Utilities Committee Meeting 5/23/17 ANNOUNCEMENT OF COMMITTEE MEETING 1 COMMITTEE: Public Utilities CHAIR: Bill Seitz DATE: Tuesday, May 23, 2017 TIME: 3:00 PM ROOM: Room 1 16 AGENDA BILL SPONSOR TITLE STATUS HB. XX Sponsor XX Cost recovery fora national security 1st Hearing generation resource Pending Introduction and Referral Sponsor Jimmy Wolf Legislative Aide to Representative Seitz 30th House District 614.466.8258 3immv.woif@ohiohouse.gov Wolf, Jimmy From: Marc Sent: Wednesday, May 24, 2017 9:39 AM To: Wolf, Jimmy Subject: RE: House Public Utilities Committee Meeting 5I23/?l7 Jimmy, Are you planning proponent testimony on HB 239 if so, i would like to put Ohio?s Electric Cooperatives CEO Pat O?Loughlin on the list. When do you need written testimony? Thanks, Marc From: Jimmy.Wolf@ohiohouse.gov Sent: Friday, May 19, 2017 4:31 PM To: Subject: House Public Utilities Committee Meeting 5/23/17 ANNOUNCEMENT OF COMMITTEE MEETING Public Utilities CHAIR: Bill Seitz DATE: Tuesday, May 23, 2017 TIME: 3:00 PM ROOM: Room 116 AGENDA BILL SPONSOR TITLE STATUS H.B. XX Sponsor XX Cost recovery fora national security Hearing generation resource Pending Introduction and Referral Sponsor Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 i Jimmv.woif@ohiohouse.gov . Wolf, Jimmy From: Jacob, Abe Sent: Tuesday, May 23, 2017 11:12 AM To: Woif, Jimmy Subject: HB 239 Sponsor Testimony . Attachments: Smith and Carfagna HB 239 House Sponsor Testimonydocx Jimmy, Attached is theirjoint testimony. Abe J. Jacob Legislative Aide Representative Rick Carfagna Ohio House of Representatives District 68 abe.jacob@ohiohouse.gov (614)466-1431 State Representatives Ryan Smith and Rick Carfagna hint?Sponsor Testimony - House Bill 239 May 23, 2017 Chairman Seitz, Ranking Member Ashford, and members of the House Public Utilities Committee, thank you for allowing Representative Carfagna and the opportunity to provide sponsor testimony on House Bill 239. This legislation provides a long?term solution for Ohio investor?owned utilities in response to their commitment to the federal government and to a corporation that operates a coal?fired power plant located in my district near Cheshire, Ohio, and a second coal?fired power plant located in Madison, Indiana. These commitments arose because Ohio?s utilities did not hesitate to support national security at a critical time in our nation?s history. in 1952, during the Cold War and at the time when the federal government needed to develop the nation?s nuclear arms program, the Atomic Energy Commission (ABC) looked to the private sector to ful?ll the tremendous electrical needs of an uranium enrichment facility to be located in Piketon, Ohio, just north of Portsmouth. Ten Ohio River Valley area investor?owned utilities, and in subsequent years their successors and affiliates, answered the call and created OVEC. The Ohio Valley Electric Corporation, better known as OVEC, is unique in both its ownership structure and the national security mission for which it was created, but it is also a marvel insofar as what it accomplished. OVEC expeditiously constructed, owned, and Operated. two generating stations capable of producing over 2,000 megawatts of electricity to supply dedicated capacity and energy to Portsmouth Gaseous Diffusion Plant in Piketon, Ohio. in addition, the OVEC sponsoring companies agreed to provide additional security to backstop the project including: - Providing power to ABC during construction; - Providing power to ABC during maintenance or emergency outages; and, - Accepting the incremental power that the ABC and, later the Department of Energy (DOE), did not need at certain times. During the heart of the Cold War years all proceeded as planned and OVEC accomplished its mission. Following the nation?s victory over the Soviet Union, things began to change. As the need for electrical power for the enrichment facility declined, output from OVEC plants was diverted to domestic use and, in 2003, the af?liation with the United States Department of Energy (DOE) was terminated. When that happened, all of the costs associated with OVEC fell on the sponsoring companies. This event was a turning point and key contributor to the problem this legislation seeks to remedy. When OVEC was formed, the sponsoring companies were all vertically integrated entities in regulated states. Over time, the sponsoring companies found themselves no longer identically structured; subject to different regulatory paradigms, different Regional Transmission Organizations (RTOs) or different control area rules; and, driven by different business objectives. Further complicating the situation for Ohio?s utilities is corporate structure, which, owing to the uniqueness of its origin and purpose, was designed such that unanimity is required for all major business decisions, including the transfer of ownership. The interplay of these circumstances results in a diSparity in the path to cost recovery for OVEC?sponsoring companies located in regulated states versus those in deregulated states. Stated differently, cost recovery for Ohio?s utilities is much more complex and difficult to acquire than for their counterparts that are located in states like Indiana, Kentucky, and West Virginia, that still regulate electric generation. Within the next 2 years, under the direction of the state through the Public Utilities Commission of Ohio (PUCO), the Ohio utilities that have not done so already will likely have divested all their legacy generation?wall, but for their contractual commitments to OVEC. The uniqueness of the OVEC situation has long been appreciated by the PUCO, which has granted recovery of OVEC-related costs in some I limited cases, for limited periods of time. But, a long?term solution is needed for Ohio?s distribution utilities that have undeniably ful?lled their commitment to national security and the United States government. A couple additional items are important to note about this proposal: - This legislation seeks to provide recovery of prudently incurred costs only; there is no return component for the investor?owned utilities built into the costs. - OVEC?related cost recovery will not impact the wholesale competitive markets, nor will it affect customers? rights to shOp for a retail energy supplier of their choice. The unique mission and circumstances that brought about OVEC, the disparity in terms of cost recovery, and the lasting effects of obligations that Ohio?s investor?owned utilities quickly accepted and ful?lled deems granting consistent and long-term cost recovery appropriate. This important legislation will provide a much needed remedy to a lingering problem and I hope you will join me in supporting its passage. Thank you for the opportunity to provide sponsor testimony on House Bill 239. We would be happy to answer any questions you may have at this time. . Rep30 From: Steven Nourse Sent: Thursday, March 09, 2017 3: 51 PM To: Wolf, Jimmy Cc: . Christine Wright Subject: RE: Questions regarding proposed Ohio electric utility legislation Attachments: LSC questions (March 9 EU responses). Here are the EU responses to the'initial set of LSC questions. i would have copied Kathy as well but did not have her email address please forward to her for me. We will be following up on Chairman Seitz?s additional questions separately. Let me or Chrisy know if we can help in any other way. Thanks, Steven T. Nourse Senior Counsel American Electric Power Service Corporation Legal Department, 29th Floor 1 Riverside Plaza Columbus, Ohio 43215-2373 Phone: (614) 716?1608 Audinet: 8-200~1608 Fax: (614) 716?2014 Audinet: 8?200-2014 Email: stnourse@aep.com a ems; m: ass a take-?t? From: Jimmy.Wolf@ohiohouse.gov Sent: Monday, March 06, 2017 2:30 PM To: Steven Nourse Subject: FW: Questions regarding proposed Ohio electric utility legislation Steve, Below are the questions that LSC has about the draft language Chrisy gave us to work with. Like i stated early, Kathy is more than happy to discuss these questions with you directly. Best, Jimmy Wolf Legislative Aide to Representative Bill Seitz 30th House District 614.466.8258 Jimmy.wolf@ohioh0use.gov Sent: Friday, March 03, 2017 10:20 AM To: Wolf, Jimmy Subject: Questions regarding proposed Ohio electric utility legislation Hello, Jimmy. Thank you for-your telephone call yesterday. l?rn glad that we clarified what you would like me to do for the first draft of the Ohio electric utility prOposaI for Representative Seitz. As we discussed, I will put the proposed language into proper form with the understanding that requests for other versions of the draft may follow. in the meantime, have several questions about the proposed language. They are listed below: 1. What are the overall goals of the draft language? it appears one goal is to permit electric utilities to construct, develop, own, or operate certain types of generation resources and work with affiliates to create new generation. Another goal appears to be eliminating the requirement that electric services companies meet the renewable energy standards. is this correct? Are there any other goals? 2. What is the purpose for changing the term ?electric distribution utility? to ?electric utility? in some places but retaining it in other places within R.C. Chapter 4928.? 3. How will the proposed changes affect electric service companies? 4. How will the proposal affect the market rate offer provisions of the chapter? Should R.C. 4928.142 be repealed? 5. Should R.C. sections 4928.31 to 4928.40 be repealed? 6. What are ?multiple affiliated utilities? in line 410 of the draft language? 7. Should the biil allow for a transition period from the current system to the new? 8. What do "electric that are under common ownership? and ?combined proposal? mean in lines 448 to 449? Is this related to the ?joint electric security plan? referred to in line 793? 9. What are "nonwshopping load? and ?all connected load? in line 455? 10. Do lines 519 to 521 mean that a currently existing electric security plan cannot be amended unless the electric utility files an application to amend it within 120 days of the bill?s effective date? How will this impact current law regarding electric security plans? 11. Who does the audit and reconciliation in line 530? 12. Lines 658 to 661 address distribution of smart grid technology, but it is not clear how this is done. Please explain what you would like this provision to do. 13. In line 662, should the cross reference referto division (iv) and instead of and 14. lines 685 to 688 mean that the burden of proof requirement for a utility does not apply to prudently incurred costs associated with national security generation resources, shale energy resources, renewable, and advanced energy resources? Or are you saying that the burden of proof is irrelevant because recovery of those costs must be approved? Either way, how is that supposed to work? How do you verify the cost and who has the burden of doing so? Why would there still be a proceeding? 15. In line 771, to what does ?such adjustments? refer after the term is deleted in lines 754 and 760? is the renumbered division (D) necessary any longer? 16. In line 902, should there be criteria or something giving the EU direction on authorizing who the agent should be? Lines 907 and 940 also refer to development services agencies. Would these be referring to the agents authorized by the electric utility? Please let me know if my questions are not clear. Thank you. Kathy Kathleen Luikart Research Associate Legislative Service Commission 77 South High Street, 9th Floor Columbus, OH 43215 614?466-4071 This e-mail message from the Legal Department of American Electric Power? is for the sole use of the intended recipient(s) and may contain con?dential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e?mail and destroy all copies of the original message. Resnonses to LSC Questions about Electric Utility Legislative Restructuring Proposal 1. What are the overall goals of the draft language? It appears one goal is to permit electric utilities to construct, develop, own, or operate certain types of generation resources and work with af?liates to create new generation. Another goal appears to be eliminating the requirement that electric services companies meet the renewable energy standards. is this correct? Are there any other goals? - Response: The primary goals of the proposal fall into ?ve categories: (1) improve the path for new utility generation in a way that is policy-driven by focusing on advanced energy resources, renewable energy resources and shale gas resources, (2) provide a clear path of reCovery for the Ohio Valley Electric Corporation (OVEC) contractual entitlement of electric utilities, which constitutes a national security generation resource, (3) update the smart grid and corporate separation provisions to meet customer?driven service needs and facilitate the utility of the ?lture, (4) generally update R.C. Chapter 4928 to move beyond the SB. 3 transition period and move to an enhanced Electric Security Plan construct going forward; and (5) encourage job growth and investment within the State by providing a more streamlined approach for providing discounts to utility rates for new and expanding businesses and by encouraging utility infrastructure development Each of these goals have a more detailed set of subcomponents and supporting policies. For example, the utility generation path in the above list) involves placing the existing renewable mandate on the electric utility and eliminating the renewable compliance obligation for electric service companies; this consolidation of the existing renewable mandate renders compliance more ef?cient and cost?effective and, thus supports renewable resource deployment going forward. in support ofthe same goal, the path for Commission approval and cost recovery are set forth in the proposal so as to also remove barriers to the deployment of such new generation resources that advance energy policies. We are happy to provide more detail about all of these goals and help develop any such materials to help advance the proposal. What is the purpose for changing the term ?electric distribution utility? to ?electric utility? in some places but retaining it in other places within R.C. Chapter 4928.? Resgonse: While it is ultimately a matter of labeling or perhaps even semantics, the intent behind the change in terminology was to make it more accurate and remove the moniker of being solely a distribution utility or ?wires? company, especially since new generation resources can be owned or operated by utilities under current law and that prospect is signi?cantly improved through the legislative proposal. In addition, there are current statutes (sag, 4928.17) that use both terms interchangeably and that causes confusion. Moreover, the current de?nition of ?electric distribution utility? in RC. does not really add or subtract anything that is not already captured in RC. l)?s de?nition of ?electric utility? because all electric utilities provide distribution service. Mechanically, the intended ?x was to update the term ?electric distribution utility? to ?electric utility? in those provisions being updated in the legislative proposal. This admittedly leaves other provisions (not being amended by the legislation) with the term ?electric distribution utility? and we are open to discussing whether it makes sense to also amend those provisions by updating the terminology. . How will the proposed changes affect electric service companies? Response: If this question relates back to question the change of terminology from ?electric distribution utility? to ?electric utility? does not affect electric service companies. If question is asking about the legislation as a whole, the only provision that directly affects electric service providers is the amendment to RC 4928.64 which eliminates the renewable compliance obligation for such companies. . How will the proposal affect the market rate offer provisions of the chapter? Should R.C. 4928.142 be repealed? Resgonse: The electric utilities agree that the MRO should be repealed since the Commission has never permitted an. MRO plan and has always considered an ESP as the preferred option. Thus, the MRO is not historically been a viable alternative approach and should be removed from the law. Section 2 (line 1187) of our proposal provides for the repeal of the NERO option. As a related matter, the so?called MRO test would be eliminated from the ESP statute (lines 692-702). Should R.C. sections 4928.31 to 4928.40 be repealed? Response: Our approach was to try and be surgical and limit changes to those sections needed to accomplish our proposed changes. But that is a great idea that'would also help - achieve goal #4 listed above and remove provisions that are ?dead letters? anyway. . What are ?multiple affiliated utilities? in line 410 of the draft language? Resgonse: That is a companion change to line 512 in the ESP statute. It is intended to mean that a group of affiliated electric utilities (such as the FirstEnergy affiliates) can ?le a single ESP, and that same concept is also referenced in- line 793. Should the bill allow for a transition period from the current system to the new? Response: We did not provide for an explicit transition period but there are a couple provisions that can be considered as facilitating the transition from the status quo to the new system. First, each electric utility can ?le to update its ESP based on the new law under the provision in lines 517-527. Second, to implement the transition of the portfolio/renewable obligation to electric utilities under the revised R.C. 4928.64, the Commission is authorized ?(lines1036?1040) to address transition issues in that regard. .8. 10. ll. 12. What do ?electric utilities that are under common ownership? and ?combined proposal? mean in lines 448 to 449? Is this related to the ?joint electric security plan? referred to in line 793?? Response: See the response to question 6. What are ?non-shopping load? and ?all connected loa in line 455? Response: Connected load is a reference to all ?wires? customers of the electric utility that are connected meaning both shopping and non-shopping customers. The two sentences in lines 452- 460 are intended to mean that the Commission will determine, as part of its ruling on a utility application under RC. 4928.1421, whether the new generation resource will serve load, and, if so, what load the new generation resource will serve and who will pay for the retail services associated with the new generation resources. These are important variables of regulatory ?exibility that should be determined by the Commission based on the speci?c circumstances presented, but the decision should be binding and permanent once it is made. Do lines 519 to 521 mean that a currently existing electric security plan cannot be amended unless the electric utility ?les an application to amend it within 120 days of the bill?s effective date? How will this impact current law regarding electric security plans? Resgonsg; The intent is to automatically permit a reopener for update the ESP as it relates to changes made in the legislation. The language referenced in the proposal would give an automatic right to update the ESP to implement the legislative changes without re?litigating the entire package. For example, AEP Ohio?s currently?pending ESP proposal if approved would extend to 2024; it would be unfair to everyone and signi?cantly delay implementation of the new regulatory structure if the Company had to wait until 2024 to implement the new law. This provision is narrowly tailored to implement the new law while not completely overhauling the current ESP plan. Who does the audit and reconciliation in line 530? Response: The Commission would direct the audit and adjudicate the reconciliation, as it generally does today for riders and rate adjustment mechanisms. If the Commission Staff does not perform the audit directly, it would contract with an independent third?party to do the audit; that is consistent with current practice. Lines 658 to 661 address distribution of smart grid technology, but it is not clear how this is done. Please explain what you would. like this provision to do. Response: This provision contains two typographical errors. The word ?distribution? in line 658 should be ?deployment.? The updated definition of ?smart grid? in lines 329- l3. 339 already incorporates the distribution characteristic of the technology. So the question about distribution of smart grid technology should be answered by ?xing the typo. Separately, the word ?distribution? should be deleted in line 659 in order to consistently implement the terminology change discussed above in response to question As to the overall purpose of this provision, it is to help advance goal #3 as discussed in question #1 by clarifying that the electric utility can deploy smart grid technology exclusively on the utility side of the meters e. on the grid) and on a non?exclusive basis on the customer side of the meter. Obviously, the utility needs to control the grid for security and reliability purposes; whereas, the behind?the?rneter opportunities to serve customer needs should. be permitted but done in a way that does not limit customer choices or functionally equivalent competitive offerings. In line 662, should the cross reference refer to division (iv) and instead of and Response: That is not the intent. Item is new and was not encompassed by the phrase ?the latter? in the current law; that relates back to the language that is now (iv) under the preposal. The proposed language would add item into the scope of the provisions described in lines 662?674. There was a missed reference in this provision though in line 669, the reference to should now reference . 130 lines 685 to 688 mean that the burden of proof requirement for a utility does not apply to prudently incurred costs associated with national security generation resources, shale energy resources, renewable, and advanced energy resources? Or are you saying that the burden of proof is irrelevant because recovery of those costs must be approved? Either way, how is that supposed to work? How do you verify the cost and who has the burden of doing so? Why would there still be a proceeding? Response: The intent is better understood by recognizing that there is a distinction between the prudence of a decision to undertake a project given projected costs and bene?ts and the prudence of the costs actually incurred to implement that decision. With a new generation resource under RC. 4928.1421, the prudence inquiry for the decision to move forward with the project is determined upfront based on projected costs before any costs associated with a new generation project are recovered in an ESP and the utility would have the burden of proof in that prOceeding.. That decision would not be relitigated in any subsequent proceeding and the expected costs to implement that previously?approved decision are presumed to be recoverable in the ESP without any additional burden of proof. But imprudent costs do not enjoy that presumption of recovery. If the costs to implement the decision were dramatically higher the projected costs that were identi?ed in the initial proceeding, the utility would need to justify the additional expense. The net effect is that the utility has a partial burden of proof for these costs: to show that the costs were prudently incurred. As to the process, there are 4 15. 16. generally management/prudence audits and ?nancial audits conducted by the Commission relating to any costs being flowed through riders (rate adjustment mechanisms); management/prudence audits confirm the prudence of the decisions that resulted in costs being incurred and ?nancial audits confirm the accounting and ?nancial records that tie the dollars relating to a project or activity to the same level of dollars being recovered in rates. So for the costs associated with a new generation resource, the prudence audit would only extend to prudence of costs incurred to implement the project, not the decision to implement the project. And for OVEC, the prudence audit does not extend to urisdictional issues. The financial audit function would apply to all costs being recovered through riders. In sum, the language used in lines 685?688 retains the general burden of proof and creates an exception that matches up with the prior decision under RC. 4928,1421. In line 771, to What does ?such adjustments? refer after the term is deleted in lines 754 and 760? Is the renumbered division (D) necessary any longer? Response: Those are two different things but perhaps the choice of SB 221 drafters to use the word ?adjustments? for both is confusing or ambiguous. The adjustments in line 754 are adjustments to capital structure of a comparable commnyuscd to measure signi?cantly excessive earnings for the electric utility. The comparable phrase to line 754 for the remaining SEET test is found in line 775. Whereas, the line 771 reference refers to rate adjustment components of the approved ESP as referenced in lines 769-770. For additional clarity of this point, however, the word ?adjustments? in line 771 could be changed to ?provisions.? In line 902, should there be criteria or something giving the EU direction on authorizing who the agent should be? Lines 907 and 940 also refer to development services agencies. Would these be referring to the agents authorized by the electric utility? Response: The ?agen referred to in line 902 is simply a matter of convenience and expedient communication; Whether it is JobsOhio, a utility employee or another agent does not change the scope of the authorized statements. Only the pre?approved generic discount levels [already approved by the Commission under Division (D), which can be periodically updated under Division would be offered by the agent and the customer?Specific discounts would then be approved under the Division (B). The references to development service agencies in lines 907 and 940 are just saying interested parties can advise the Commission and offer recommendations. Rep30 From: Christine Wright Sent: Thursday, April 20, 2017 11:58 AM To: Wolf, Jimmy Subject: draft language Attachments: Compiled Legislative?Style Draft 4-19-17.pdf Jimmy? Attached is the language that the four utilities agreed to on the OVEC plus option discussed on April 5. Please let me know if you have any questions or need additional detaiis. Thank you, Chrisy Confidential Draft of 19 April 2017 132nd General Assembly Regular Session H.B.IS.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, 4928.143, and 4928.17 of the Revised Code be amended and sections 4928.25 and 4928.26 of the Revised Code be enacted to read as follows: Sec. 4928.01 Competitive retail electric service de?nitions. (A) As used in this chapter: (1) "Anciliary 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, sci'ieduiing, system control, and dis-patch services; reactive?suppiytrorn generation resources and voltage control service; reactive suppiy 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 collection agent? means a fully independent agent, not af?liated with or otherwise controlled by an electric utility, electric services company, electric cooperative, or governmental aggregator subject to certi?cation 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 biliing 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. Con?dential Draft of 19 April 2017 (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?pro?t 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 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 an electric light. company that is engaged on a ., for?profit or not?tor?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, er independent power producer but excludes an electric cooperative, municipal electric utility, governmental aggregator, or billing and collection agent. (l0) "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. Con?dential Draft of 19 April 2017 (13) "Governmental aggregator" means a legislative authority of a municipal corporation, a board of township trustees, or a board of county commissioners acting as an aggregator for the provision of a competitive retail electric service under authority conferred under section 4928.20 of the Revised Code. (14) A person acts "knowingly," regardless of the person's purpose, when the person is aware that the person's conduct will probably cause a certain result or will probably be of a certain nature. A person has knowledge of circumstances when the person is aware that such circumstances probably exist. (15) "Level of funding for tow-income customer energy ef?ciency programs provided through electric utility rates" means the level of funds speci?cally 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 ef?ciency 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. assistance programs" means?the percentageof?inceme payment plan program, the home energy assistance program, the home weatherization assistance program, and the targeted energy efficiency and weatherization program. (17) "Market development period" for an electric utility means the period of time beginning on the starting date of competitive retail electric service and ending on the applicable date for that utility as specified in section 4928.40 of the Revised Code, irrespective of whether the utility applies to receive transition revenues under this chapter. (18) "Market power" means the ability to impose on customers a sustained price for a product or service above the price that would prevail in a competitive market. (19) ?Mercantile customer" means a commercial or industrial customer if the electricity consumed is for nonresidential use and the customer consumes more than seven hundred thousand kilowatt hours per year or is part of a national account involving multiple facilities in one or more states. 99. 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 Con?dential Draft of 19 April 2017 (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 (8) 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 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); 115 116 117 118 119 120'" 121 122 123 124 125 126 127 132 133 134 135 136 137 138 139 140 141 142 Con?dential Draft of 19 April 2017 future nuclear decommissioning costs and fuel disposal costs as those costs have been determined by the commission in the electric utility's most recent rate or accounting application proceeding addressing such costs; the undepreciated costs of safety and radiation control equipment on nuclear generating plants owned or leased by an electric utility; and fuel costs currently deferred pursuant to the terms of one or more settlement agreements approved by the commission. (27) ?Retail electric service" means any service involved in supplying or arranging for the supply of electricity to ultimate consumers in this state, from the point of generation to the point of consumption. For the purposes of this chapter, retail electric service includes one or more ofthe 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? meansrneasuring the difference in art-applicable billing period. 'betiiveen the eiectriciey-suppiied by an 'e-iectricsenlrice provider and'the 'eiectricity 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 ail 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 5 143 144 145 145 147 148 149 150 151 152 153 154 155 156 1'57 158 159 160 161 162 163 164 165 166 167 168 169 170 Con?dential Draft of 19 April 2017 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 8.6. 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 I__t_rioxide. i'n'accordancewith the-America n_ society Iofftesting andmaterials I 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 ill 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; 171 172 173 174 175 178 177 178 . 179 180 181 182 183 184 185 18%) 187 188 189 190 191 192 193 194 .195 Con?dential Draft of 19 April 2017 Advanced solid waste or construction and demolition debris conversion technology, including, but not limited to, advanced stokertechnoiogy, and advanced fluidized bed gasification technology, that results in measurable greenhouse gas emissions reductions as calculated pursuant to the United States environmentai protection agency?s waste reduction model Demand?side management and any energy ef?ciency improvement; Any new, retrofitted, refueied, 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 49.28.66 of the. Revised tied it (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; 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 212 213 214 215 216 217 218 219 220 221 222 223 224 Con?dential Draft of 19 April 2017 (iv) Power produced by a runwof?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 contaminant source in this state, which source has been in operation since on or before January 1, 1985, provided that the cogeneration technology lsa part of a facility located in a county rating a population of more than three hundred surly-fivernoasosn but I 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 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241' 242 243 244 245 246 247 248 249 250 251 252 253 Con?dential Draft of 19 April 2017 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 renewabie 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 ?ows 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, anadrornous, and catadromous fish. Confiden rial Draft of 19 Aprit 2017 254 (iv) The facility complies with the recommendations of the Ohio 255 environmental protection agency and with the terms of its federal energy 256 regulatory commission liCense regarding watershed protection, mitigation, 257 or enhancement, to the extent of each agency's respective jurisdiction 258 - - - over-the facility. 259 The facility complies with provisions of the "Endangered Species Act 260 of 1973," 87 Stat. 884, 16 U.S.C. 1531 to 1544, as amended. 261 (vi) The facility does not harm cultural resources of the area. This can be 262 shown through compliance with the terms of its federal energy regulatory 263 commission license or, if the facility is not regulated by that commission, 264 through development of a plan approved by the Ohio historic preservation 265 of?ce, to the extent it has jurisdiction over the facility. 266 (vii) The facility complies with the terms of its federal energy regulatory 267 commission license or exemption that are related to recreational access, 268 accommodation, and facilities or, if the facility is not regulated by that 269 - con-emission, the compiies with similar requirements as are 270 I recommended by resource agencies, to the extent they have jurisdiction 271 over the facility; and the facility provides access to water to the public 272 without fee or charge. 273 The facility is not recommended for removal by any federal agency 274 or agency of any state, to the extent the particular agency has jurisdiction 275 over the facility. 276 (38) "Waste energy recovery system" means either of the following: 277 A facility that generates electricity through the conversion of energy from 278 either of the following: 279 Exhaust heat from engines or manufacturing, industrial, commercial, or 280 institutional sites, except for exhaust heat from a facility whose primary 281 purpose is the generation of electricity; to 282 283 284 285 288 287 288 289 304 305 306 307 308 309 310 311 Con?dential Draft of 19 April 2017 (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 simuitaneousiy uses the recovered heat to produce steam, provided that the 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 efficiency, resiliency, or reduce energy demand or use, and the deployment, adaptation, replacement or subsequent reinforcement of any technology that improves the storage, control, or delivery of eiectric energy, including, but not limited to, advanced metering, andautomation of system functions, battery storage, demand response and other energy reduction technologies, distribution automation, eiectric vehicle charging stations, home energy monitoring and control devices, lighting controls and other smart controls, microgrids, physical and Cybersecurity technologies, yeti?MAR optimization and_simi!ar technologies. and 8.533,; other technology approved by the public commission. (40) "Combined heat and power system" means the coproduction of electricity and useful thermal energy from the same fuel source designed to achieve thermal?ef?ciency 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 by investor~owned utilities for the original purpose of providing power to the federai 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 retailelectric 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 11 312 313 3?14 315 316 317 318 319 320 321 322 323 328 329 330 331 332 333 334 335 335 337 338 339 Con?dential Draft of 19 April 2017 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 foiiowing throughout this state: (A) Ensure the availability to consumers of adequate, reliable, safe, efficient, nondiscriminatory, and reasonably priced retaii electric service; (B) Ensure the availability of unbundled and cemparable 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 smali generation facilities; (D) Encourage innovation and market access for cost?effective supply? and demand?side retaii eiectr?ic service including, _.but..not priCi'ng,? waste energy recovery'Systems, smart grid programs, and implementation otadvanCed 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 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 12 340 341 342 343 344 345 346 347 348 349 350 351 352 353 334 i 355 356 357 358 359 360 361 362 363 364 365. 366 367 Con?dential Draft of 19 April 2017 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; (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 business-cg -, (N) Facilitate the state?s effectiveness in the giobal economy; (0) Ensure the continuinq economic viability of historical investments made by electric distribution utilities in national security qeneratinq 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 ali 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 13 387 388 389 390 391 392 393 394 395 396 397 Con?dential Draft of 19 April 2017 offer in accordance with section 4928.142 or 4928.143 of the Revised Code and, at its discretion, may apply simultaneously under both -I billGods: Only a standard service offer authorized in accordance with section 4928.142 or 4928143 "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 shalt serve as the utility's default standard service offer for the purpose of section 4928.14 of the Revised Code. Notwithstanding In II: .- n- a - na- l-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 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 attentive-on 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 affiliate?s contractual commitment in its standard service offer provided under sections 4928.142 or 4928.143 of the Revised Code. provided that the affiliate?s contractual commitment is the same entitlement that was previously reflected in the retail rates of the electric distribution utility. The utility shall recover any and all costs, including any deferred costs, of the af?liate?s share of the resource. (89) 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 certi?ed territory. The commission shall adopt rules regarding filings under those sections. Sec. 4928.142 Standard generation service offer price competitive bidding. 14 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 4?19 420 421 422 423 424 Con?dential Draft of 19 April 2017 (A) For the purpose of complying with section 4928 141 of the Revised Code and subject to division (D) of thIs section - momma an electric distribution 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 shaiihave the right within-one hundredtwentv days of the effective date of of the 132nd qenerai assembiv to file an application to reopen, update.? or amend its then?current marketmrate offer in order to implement the amended version of this section which proceeding shalt not otherwise reopen matters previously decided. (1) The-market?rate-ef-ier supply and pricing of electric generation service under a market-rate offer shall be determined through a competitive bidding process that provides for all of the following: Open, fair, and transparent competitive solicitation; Clear product definition; (0) Standardized bid evaluation criteria; by an'independent third [party that shaii?design the soiicitati?o?ri," 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 shaii be prohibited from participating in the bidding process. (2) The market~rate offer shall include provisions for recovery of all costs, inciudino any deferred costs, associated with an electric distribution utility?s contractual commitments related to a national security generation resource. 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 shali foster supplier participation in the bidding process and shall be consistent with the requirements of division of this section. 15 Con?dential Draft of 10 May 2017 429 qualifications of bidders, which rules shall foster supplier participation in the bidding 430 process and shall be consistent with the requirements of division of this section. 431 (8) Prior to initiating a competitive bidding process for a market?rate offer under division (A) of 43% this section the electric distribution utility shall file an application with the commission. An 433 electric distribution utility may file its application with the commission prior to the effective date 434 of the commission rules required under division of this section, and, as the commission 435 determines necessary, the utility shall immediately conform its filing to the rules upon their 438 taking effect. An application under this division shall detail the electric distribution utility's 43? proposed compliance with the requirements of division ofthis section and with 438 commission rules under division of this section and demonstrate that all of the following 439 requirements are met: 440 (1) The electric distribution utility or its transmission service affiliate belongs to at least 441 one regional transmission organization that has been approved by the federal energy 442 regulatory commission; or there otherwise is comparable and nondiscriminatory access 443 to the electric transmission grid. ?4 .2 - is.) rainy-?such. regions-i- transmission organization has-a- :tor to lotion and the - 445 ability to take actions to identify and mitigate market power or the electric distribution 448 utility?s market conduct; or a similar market monitoring function exists with 447 commensurate ability to identify and monitor market conditions and mitigate conduct 448 - associated with the exercise of market power. 449 (3) A published source of information is available publicly or through subscription that 450 identifies pricing information for traded electricity on? and off-peak energy products that 451 are contracts for delivery beginning at least two years from the date of the publication 452 and is updated on a regular basis. The commission shall initiate a proceeding and, within 453 ninety days after the application?s date, shall determine by order whether the 454 electric distribution utility and its market-rate offer meet all of the foregoing requirements. 455 if the finding is positive, the electric distribution utility may initiate its competitive bidding 458 process. lfthe ?nding is negative as to one or more requirements in divisions (AM) or 457 or this section, the commission in the order shall direct the electric distribution 458 utility regarding how any deficiency may be remedied in a timely manner to the 459 commission's satisfaction; otherwise, the electric distribution utility shail withdraw the 16 460 46?] 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 Con?dential Draft of 10 May 2017 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 necessary to ensure automatic recovery of all costs, including any deferred costs, associated with a national security Generation resource. (0) Upon the completion of the competitive bidding process authorized by divisions (A) and (B) of this sect-ion, including for the purpose of division (D) of this section, the commission shall select the ieast~cost bid winner or winners of that process, and such selected bid or bids, as prescribed as retail rates by the commission, shall be the electric distribution utility?s standard service offer unless the commission, by order issued before the third calendar day following the conclusion of the competitive bidding process for the market rate offer, determines that one or more of the following criteria were not met: (1) Each portion of the bidding process was oversubscribed, such that the amount of supply bid upon was greater than the amount of the toad 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 ofJuly 3t, 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 five. 17 491 492 493 494 495 496 497 498 499 500 501 502 503 504 505 see - 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 Con?dential Draft of 10 May 2017 Consistent with those percentages, the commission shall determine the actual percentages for each year of years one through five. The standard service offer price for retail electric generation service under this ?rst 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 equaltothe electricdistribution 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?as'sociated with those-'cd'sts; 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 bene?ts 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 18 522 523 524 525 - 525 - 527 525 529 530 543 544. 545 546 547 548 549 550 551 552 Con?dential Draft of 10 May 2017 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-utilityfor providingthe 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 l, 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 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 otter, cause the duration of the blending- period to exce'ed'ten?ye'ars as doubted 'trorn'the effective date oi-theh'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 file an application for public utilities commission approval of an electric security plan as prescribed under division (8) 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 within one 19 553 554 555 556 557 558 559 580 561 552 553 554 555 555 557 555 555 570 571 572 573 574 575 575 577 575 579 550 581 582 583 Con?dential Draft of 10 May 2017 hundred twenty days of the effective date of of the 132?? 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 ghanqe in lawgany terms and conditions of the prior electric security plan relating tofa national security generation resource shall no longer be in effect. (B) Notwithstanding any other provision of Title 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 shail be granted by the commission on a nonbypassable basis addition, ifthe proposed. electric security plan hasjaterm, tangen-than?three . I 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 pian as authorized under that division. (2) Theplan 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 af?liate; 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 20 584 585 586 587 588? 589 590 591 592 593 594 595 596 813 614 615 616 Con?dential Draft of 10 May 2017 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 or occurrence of the expenditure. allowance fer 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. (0) 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 scurced through a competitive bid process subject to any such rules as the commission adopts under division of this section, and is newly used and use-fill on Lor'afte'r January 2009, whici'r surchargeshall'cover allicosts 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 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, backup, or supplemental power service, default service, carrying costs, amortization periods, and accounting or deferrals, including future recovery of such deferrals, as would 21 617 618 619 620 621 622 623 624 625 626 627 628 629 630 E331 632 633 634 635 636 637 636 639 640 641 642 Con?dential Draft of 10 May 2017 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. 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 Ior?afterthat datepursuant 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: (1) single issue ratemaking, (Li) a revenue decoupling mechanism, or (E) any other incentive ratemaking, and (i1) infrastructure and modernization incentives for the electric distribution utility, and deployment of smart qrid technology on an exclusive basis on the electric distribution utility?s side of customer meters and on a non? exclusive basis on the customers? side of customer meters. 22 643 644 645 646 .647 648 649 650 651 652 653 654 655 656 657 658 660 661 662 663 664 665 666 667 668 669 670 671 672 673 674 Con?dential Draft of 10 May 2017 Provisions reoardino subsections (iv) and Mine?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 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 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 ef?ciency 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. (1) 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 afterthe application's filing date and, for any subsequent application by the utility under this section, not later than two hundred seventy??ve days after the application?s ?ling 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. Additionaliy, if the commission so approves an application that contains a surcharge under division or of this section, the commission shall ensure that the bene?ts derived for any purpose for which the surcharge is established 23 675 676 677 682 683 684 685 686 687' 688 689 691 692 693 694 695 696 697 698 699 700 701 702 703 704 Confidential Draft ot10 May 2017 are reserved and made avaiiable to those that bear the surcharge. Otherwise, the commission by order shall disapprove the application. (2) modi?es and approves-an a-ppiication under divisiOn of this section, the electric distribution utility may withdraw the application, thereby terminating it, and may file a new standard service otter under this section or a standard service offer under section 4928.142 of the Revised Code. lithe 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 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 at the Revised Code-,i-respectiveiy. -- (D) Regarding the rate plan requirement of division (A) of section 4928.141 of the Revised Code, if an electric distribution utility that has a rate plan that extends beyond December 31, 2008, files an application under this section for the purpose of its compliance with division (A) of section 4928.141 of the Revised Code, that rate plan and its terms and conditions are hereby incorporated into its proposed electric security plan and shall continue in effect until the date scheduled under the rate plan'tor its expiration, and that portion of the electric security plan shalt 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 (8) of section 4928.64, or division (A) of section 4928.66 01? the Revised Code. 24 705 706 707 708 710 711 712 713 714 715 716 717 718 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 735 737 Confidential Draft of 10 May 2017 (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 thensexisting pricing and all other terms andconditions, 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 ?nancial 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 such adjustments for capital structure as may be appropriate, dur?ing'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 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 25 738 739 740 741 742 743 744 745 746 747 748 749 750 751 752 753 755 756 757 758 759 760 761 762 763 764 765 766 767 768 Con?dential Draft of 10 May 2017 future committed investments in this state. The burden of proof for demonstrating that signi?cantly 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 adjustments; providedthathupon making such prospectiveadjustments, -. .- 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 speci?ed in division of this section, and the commission shall permit the continued deferral and phase?in of any amounts that occurred prior to that termination and the recovery of those amounts as contemplated under that electric security plan. In making its determination of significantly excessive earnings under this division, the commission shall not consider, directly or indirectly, the revenue, expenses, or earnings of any affiliate or parent company. Sec. 4928.17 Corporate separation plans. (A) Except as otherwise provided in sections 4928.142 or 4928.143 or 4928.31 to 4928.40 of the Revised Code and beginning on the starting date of competitive retail electric service, no electrip'utility shall engage in thisstate, either directlyor through an af?liate, in the businesses of supplying a noncompetitive retail electric service and supplying a competitive retail electric service, or in the businesses of supplying a noncompetitive retail electric service and supplying a product or service other than retail electric service, unless the utility implements and operates under a corporate separation plan that is approved by the public utilities commission under this section, is consistent with the policy specified in section 4928.02 of the Revised Code, and achieves all of the following: (1) The plan provides, at minimum, for the provision of the competitive retail electric service or the nonelectric product or service through a fully separated af?liate of the utility, and the plan includes separate accounting requirements, the code of conduct as ordered by the commission pursuant to a rule it shall adopt under division (A) of section 4928.06 of the Revised Code, and such other measures as are necessary to effectuate the policy specified in section 4928.02 of the Revised Code. (2) The plan satisfies the public interest in preventing unfair competitive advantage and preventing the abuse of market power. 26 789 770 771 772 7 73 774 775 778 777 778 779 780 781 782 783 784 785 787 788 789 790 791 792 793 794 795 798 797 798. 799 800 801 Con?dential Draft of 10 May 2017 (3) The plan is sufficient to ensure that the utility will not extend any undue preference or advantage to any affiliate, division, or part of its own business engaged in the business of supplying the competitive retail electric service or nonelectric product or service, including, but not limited to, utility resources such as trucks, tools, office equipment, office space, supplies, customer and marketing information, advertising, billing and mailing systems, personnel, and training, without compensation based upon fully loaded embedded costs charged to the affiliate; and to ensure that any such affiliate, division, or part will not receive undue preference'or advantage from any affiliate, division, or part of the business engaged in business of supplying the noncompetitive retail electric service. No such utility, affiliate, division, or part shall extend such undue preference. Notwithstanding any other division of this section, a utility's obligation under division of this section shall be effective January 1, 2000. (B) The commission may approve, modify and approve, or disapprove a corporate separation plan filed with the commission under division (A) of this section. As part of the code of conduct required under division of this section, the commission shall adopt rules pursuant to division (A) of section 4928.06 of the Revised Code regarding corporate separation and procedures for plan filing and approval. The rulesshail include limitations on affiliate practices solely for the puapose""of"'m'aiittaining a separation of the affiliate-3's business from the business of the utility to prevent unfair competitive advantage by virtue of that relationship. The rules also shall include an opportunity for any person having a real and substantial interest in the corporate separation plan to file specific objections to the plan and propose specific responses to issues raised in the objections, which objections and responses the commission shall address in its ?nal order. Prior to commission approval of the plan, the commission shall afford a hearing upon those aspects of the plan that the commission determines reasonably require a hearing. The commission may reject and require refiling of a substantially inadequate plan under this section. (C) The commission shall issue an order approving or modifying and approving a corporate separation plan under this section, to be effective on the date specified in the order, only upon findings that the plan reasonably complies with the requirements of division (A) of this section and will provide for ongoing compliance with the policy specified in section 4928.02 of the Revised Code. However, for good cause shown, the commission may issue an order approving or modifying and approving a corporate separation plan under this section that does not comply with division of this section but complies with such functional separation requirements as 27 922 923 924 925 926 927 928 929 93G 93?! 932 933 937 938 939 940 941 942 943 944 945 946 947 Con?dential Draft of 10 May 2017 (J) The commission shall promuloate rules to implement this section within 90 days of the effective date of SB XX of the XX Generai Assembly. (K) As used in this section: (1) ?delta revenue?. means the amount remainino after subtractind-the amount billed by the electric utility under the economic develooment contract from the amount that the electric utility is otherwise authorized to charqe for energy and capacity on a bypassable basis under its tariff rates and riders for that customer. (2) ?JobsOhio? means the nonprofit corporation formed under section 187.01 of the Revised Code or, at any time when a contract under section 187.04 of the Revised Code is not in effect, the development services aqency. Sec. 4928.26 Electric Infrastructure Deveiooment (A) As used in this section: (1) ?Infrastructure development" means the plannino. development and construction of . substation facilitiesahd extensions of transmission or distribution - "'eiectfic utility owns'and operate-sand the performance of load studies. (2) ?infrastructure development costs? means any cost of infrastructure development, including, if applicable, an allowance for funds used durino construction. (3) ?JobsOhio? means the nonpro?t corporation formed under section 187.01 of the Revised Code or, at any time when a contract under section 187.04 of the Revised Code is not in effect the development services agency or its successor under Chapter 121.02 of the Revised Code. (B) A electric utility may ?le an application with the commission for approval of infrastructure development necessary to support or enable a state or local economic development proiect, includinq any proiect approved, certified or funded by JobsOhio. The electric utility shall file the application prior to beqinninq the infrastructure implementation. (C) The application shall contain each of the followinq: 32 611 612 613 614 615 616 617 618 619 620 621 622 623 624 625 626 627 628 Con?dential Draft ot19 April 2017 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. (9) 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 of the Revised Code to the contrary, provisions regarding: (1) single issue ratemaking, a revenue decoupling mechanism, er- (?i'any other incentive Ira-temaking, and (hi) infrastructure and modernization incentives for the electric distribution utility, (it deployment of smart grid technology. Provisions regarding subsections and (iv)~Ihe~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 or smart grid technology deployment. 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 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 22 639 640 641 642 643 644 645 646 647 648 649 650 651 652 653 654% 655 656 657 658 659 660 661 662 663 664 665 666 667 (C) Con?dential Draft of 19 April 2017 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 ef?ciency 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. (1) 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 underthis 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??ve days after the application's ?ling date. Subject to division (D) of this section, the commission by order shall approve or modify and approve an application "tied under division-(A) of this section if it finds that the-electric sectirity 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 anypurposetor which thesurcharge is established are reserved and made available to those that bear the surcharge. Otherwise, the commission by order shall disapprove the application. (2) lfthe 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. 23 668 669 670 671 672 673 674 675 676 - 691 692 693 694 695 696 69.7 698 699 700 Con?dential Draft of 19 April 2017 Ifthe 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 schritv generation resource am; 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 ofthe Revised Code, that rate plan and its terms and conditions are hereby incorporated into its proposed electric security plan and shail 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-forth of this section shall not appiy until after. the expiration. of. .. -'the that utility may insiude in its electric security plat-t ur'ia-er-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 492864, 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 pian, 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 shail 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 signi?cantly in 24 701 702 703 704 705 706 707 708 709 710" 711 712 713 714 715 716 7-1-8 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 Con?dential Draft of 19 April 2017 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. lfthe 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 reasonabie 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 .totheprovisions that are included in an electric-security. plan under this section, the commission ?hail eonsider, 'feilcwing the end of each annual period of the pian,? if 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 shail 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 25 734 735 736 . 73.7 738 739 740 741 742 743 744 745 748 747 748 749 750 751 752 753 754 755 756 757 758 759 760 761 762 763 764 Con?dential Draft of 19 April 2017 that electric security plan. ln making its determination of significantly excessive earnings under this division, the commission shall not consider, directly or indirectly, the revenue, expenses, or earnings of any affiliate or parent company. Sec. 4928.17. Corporate. separation plans (A) Except as otherwise provided in sections 4928142 or 4928.143 or 4928.31 to 4928.40 of the Revised Code and beginning on the starting date of competitive retail electric service, no electric utility shall engage in this state, either directly or through an af?liate, in the businesses of supplying a noncompetitive retail electric service and supplying a competitive retail electric service, or in the businesses of supplying a noncompetitive retail electric service and supplying a product or service other than retail electric service, unless the utility implements and operates under a corporate separation pian that is approved by the public utilities commission under this section, is consistent with the policy specified in section 4928.02 ofthe Revised Code, and achieves ali of the following: (1) The plan provides, at minimum, for the provision of the competitive retail electric service orthe nonelectric product or service through a fully separated affiliate of the y, and the pian includes . separate account ing requirement the code of conduct ordered by the commission pursuant to a rule it shall adopt under division (A) of section 4928.06 of the Revised Code, and such other measures as are necessary to effectuate the policy specified in section 4928.02 of the Revised Code. (2) The plan satisfies the public interest in preventing unfair competitive advantage and preventing the abuse of market power. (3) The plan is sufficient to ensure that the utility will not extend any undue preference or advantage to any affiliate, division, or part of its own business engaged in the business of supplying the competitive retail electric service or nonelectric product or service, including, but not limited to, utility resources such as trucks, tools, office equipment, office space, supplies, customer and marketing information, advertising, billing and mailing systems, personnel, and training, without compensation based upon fully loaded embedded to the af?liate; and to ensure that any such affiliate, division, or part will not receive undue preference or advantage from any affiliate, division, or part of the business engaged in business of supplying the noncompetitive retail electric service. No such utility, affiliate, division, or part shall extend such undue preference. 26 765 766 767 768 769 770 771 772 773 774 775 776 777 778 779 780 781 782 783 784 785 786 787 788 789 790 791 792 793 794 Con?dential Draft of 19 April 2017 Notwithstanding any other division of this section, a utility's obligation under division of this section shall be effective January 1, 2000. (B) The commission may approve, modify and approve, or disapprove a corporate separation plan filed with the commissionunder division (A) of this section. As part of the code of conduct required under division of this section, the commission shall adopt rules pursuant to division (A) of section 4928.06 of the Revised Code regarding corporate separation and procedures for plan filing and approval. The rules shall include limitations on affiliate practices solely for the purpose of maintaining a separation of the affiliate?s business from the business of the utility to prevent unfair competitive advantage by virtue of that relationship. The rules also shall include an opportunity for any person having a real and substantial interest in the corporate separation plan to file speci?c objections to the plan and propose specific responses to issues raised in the objections, which objections and responses the commission shall address in its final order. Prior to commission approval of the pian, the commission shall afford a hearing upon those aspects of the plan that the commission determines reasonably require a hearing. The commission may reject and require refiling of a substantially inadequate plan under this section. approving or modifying and approvingl'af corporate separation plan under this section, to be effective on the date specified in the order, only upon findings that the plan reasonably complies with the requirements of division (A) of this section and will provide for ongoing compliance with the policy speci?ed in section 4928.02 of the Revised Code. However, for good cause shown, the commission may issue an order approving or modifying and approving a corporate separation pian under this section that does not comply with division of this section but complies with such functional separation requirements as the commission authorizes to apply for an interim period prescribed in the order, upon a finding that such alternative plan will provide for ongoing compliance with the policy specified in section 4928.02 ofthe Revised Code. (D) Any party may seek an amendment to a corporate separation plan approved under this section, and the commission, pursuant to a request from any party or on its own initiative, may order as it Considers necessary the ?ling of an amended corporate separation plan to reflect changed circumstances. 27 795 796 797 798 799 800 801 802 803 804 805 806 807 808 809 - 810 811 812 813 814 815 816 817 818 819 820 821 Con?dential Draft of 19 April 2017 (E) No electric distribution utility shall sell or transfer any generating asset it whoily or partly owns at any time without obtaining prior commission approval. (F) Notwithstanding any other provision in this section; commission approvai of an electric distribution utility?s proposed action, plan, product or service offering, or initiative under sections 4909.18, 4928143, 4928.64, or 492866 of the Revised Code fully satisfies the requirements of this section. Sec. 4928.25 Economic Development Schedule (A) In order to encourage iob growth and encourage investment within this state, and notwithstanding any other provision of Title 49, each electric utility is hereby authorized and shall develop and file an economic development schedule that shall provide economic incentive rates for energy and capacity through the electric utility?s standard service offer that shall be available to any non-shopping mercantile customer or prospective customer at a proiect site (a ?qualifying customer proiect?) that: is newly locating in the state. expanding operations in the state, or likely to otherwise cease its operations or relocate its operations out-of?state; . . (2) hasa forecasted peak demand of five (5) megawatts or more: and (3) satisfies the criteria in division (B) of this section and has an economic development contract approved under division (C) of this section. (B) A current or prospective customer requesting to take service under the economic development schedule. shall provide the electric utility verifiable information detailing how each of the following criteria will be met: (1) The project has demonstrable ?nancial viability after taking into account the incentive rate' and (2) The economic impact statement of the incentive under the economic development schedule exceeds the cost of the incentive. (3) The term of the economic development incentive is between five (5) and fifteen (15) years. 28 822 823 824 828 829 830 831 832 833 834 835 838 838 839 840 841 842 843 844 845 846 847 848 849 850 851 Con?dential Draft of 19 April 2017 (C) The current or prospective customer shall also submit the followino information: Local, state, or federal support in the form of tax abatements or credits, iobs programs, or other incentives that the customer will receive. (2) Commitments beinq made by the customer for new capital investment and new iobs associated with-the qualifyinq customer project, includinq specific milestones for achievinq those levels over time. (3) Other information as may be required by reoulation or order of the commission. (D) Subiect to the outcome of the process set forth in division (E) of this section. the electric utility shall have the authority to offer a qualifyinq customer proiect a discount from the charges it is otherwise authorized to charqe for enerqy and capacity on a bypassable basis under its tariff rates and riders for that customer. The electric utility shall also have the power to authorize an agent (who could be a development services agency such as JobsOhio) to make such offers. There shall be multiple levels of discounted rates established, with the largest discount beinq twenty percent deducted from what would otherwise be the energy and capacity charoes on a bypassablebasis under its tariff rates and riders for that customerjfhe structure and eliqibility criteria fer each. be developed births-commission ait'er'receivinp input from the electric utilities and any interested development service aqencies and shall be structured as a slidinq-scale of discount levels based on expected levels of employment, capital investment and enerqy usaqe. The discount schedule should also include customer commitment and enforcement requirements associated with each level of discount that is made available. (Q 1) Once the prospective customer has fulfilled the requirements of division (B) of this section, the prospective customer and applicable electric utility may execute a service adreement for a term of between five (5) and ?fteen (15) years (the ?economic development contract?) containincr terms and conditions consistent with the economic development schedule. The electric utility shall thereafter submit an application to the commission for approval of that economic development contract and such application shall also include the information provided by the customer as set forth in division of this section. The application shall also include an estimate of the total and annual 29 857 858 859 860 861 862 863 86-4 865 ass. . 867 868 869 870 871 872 873 874 875 876 87'.7 878 879 Con?dential Draft of 19 April 2017 differences in revenue that onld be incurred under the economic development contract relative to the otherwise applicable standard offer service rate (the ?delta revenue?). (2) The commission by order shall approve or deny the application within sixty days after filing. if the commission has not denied the application with good cause within sixty days, the application and economic development contract are deemed approved as ?led. Every economic development contract approved under this section shall be - under the supervision and regulation of the commission, and is subiect to change, alteration. or modification by the commission in a manner consistent with this section. Customers with an approved economic development contract must submit to the commission and applicable electric utility an annual progress report in a format acceptable to the commission during each year of the term of the contract. The report shall detail the customer?s compliance with the criteria in division (B) gf this section; No Change-in the economic incentive rate shall be made or required for the term of the contract unless either of the following occurs: the contracting customer expressly consents. (ii) the commission determines. following notice and hearing, that the contracting customer no longer satisfies the criteria in division (B) of this section. (F) Every four years after the effective date of this section, the commission may adiust the size of the discounts in division (D) of this section based upon the then prevailing market prices and other factors as it deems appropriate to assure that the state remains attractive for economic develooment. Electric utilities and interested development services agencies may provide recommendations to the commission related to the appropriate level of incentives. Any update under this division shall apply prospectively and shall not affect any existing economic development contracts. 30 880 881 882 883 884 885 888 887 888 889 890' 891 892 893 894 895 898 897 898 899 900 901 902 903 904 905 908 907 Con?dential Draft of 19 April 2017 (G) An eiectric shall recover all delta revenues and any other economic development contract costs throuqh a nonbypassable ridercharqed to ali of its customers. (H) Financial statements, financial data; and trade secrets submitted to or received by the commissionorelectric utility from a customer or as part of the filing described in division of this Section for purposes of satisfyino the requirements of this section, or any proprietary information or personal identification information taken from those statements, data, or trade secrets for any purpose, are not public records for the purpose of section 149.43 of the Revised Code. (I) The electric utility shall supply the enerqy and capacity under the economic development schedule throuqh the utility?s standard service offer procurement process, a competitive bid process, a request for proposals, or other purchases made in wholesale markets. (J) The commission shall promulqate rules to implement this section within 90 days of the effective date of 88 XX of the XX General Assembly. (K) As used in this section: . ?delta revenue? means the amount remaining aftersubtractinpthe'amount by the electric utility under the economic development contract from the amount that the electric utility is otherwise authorized to charge for enerqy and capacity on a bypassable basis under its tariff rates and riders for that customer. (2) ?JobsOhio? means the nonprofit corporation formed under section 187.01 of the Revised Code or, at any time when a contract under section 187.04 of the Revised Code is not in effect. the development services aqency. Sec. 4928.26 Electric infrastructure Development (A) As used in this section: (1) ?infrastructure development? means the planninq, development and construction of substation facilities and extensions of transmission or distribution facilities that an electric utility owns and operates and the performance of load studies. (2) ?infrastructure development costs? means any cost of infrastructure development, includinq, 970 if appiicable, an allowance for funds used durinq construction. 31 908 909 910 911 912 913 914 915 916 917 918 919 920 "?922 923 924 925 925 927 928 929 930 931 932 933 934 935 Con?dential Draft of 19 April 2017 (3) ?JobsOhio? means the nonprofit corporation formed under section 187.01 of the Revised Code or, at any time when a contract under section 187.04 of the Revised Code is not in effect, the develOpment services aqencv or its successor under Chapter 121.02 of the Revised Code. (B) A electric utility may ?le an application with the commission for approval of infrastructure development necessary to support or enable a state or local economic devel0pment protect, includino any project approved, certified or funded by JobsOhio. The electric utility shall file the application prior to beqinnino the infrastructure implementation. The application shall contain each of the followinq: i) A statement from the state or local entity involved that the infrastructure development is necessary to support or enable the economic development proiect. (2) A description of the economic development proiect; (3) A summary of the infrastructure development costs; (D) may ordeniaiotg. . . The cemmission may approve a project under this section if the infrastructure development is necessary to support or enable a state or local economic development proiect and the infrastructure development costs for the proiect are proiected to generate a return on the electric utility?s investment that is less than the most recently authorized rate of return. (E) The commission by order shall approve or deny the application within sixty days after filinq. lfthe commission has not denied the application within sixty days, the application and economic development contract are deemed approved as filed unless the commission suspends the application for qood cause shown. if the application is suspended, the commission shall approve, deny, or hold a hearing on the application not later than forty?five days afterthe date the suspension begins. if the commission holds a hearing, it shall issue an order approvinq or denyinq the application within thirty days of the final day of hearinq. F) An electric utility shall timely recover all infrastructure development costs throuqh a nonbypassable rider charoed to all distribution customers reoardless of whether the infrastructure development is used and useful at the time constructed. 32 Rep30? From: Rep30 Sent: Thursday, April 20, 2017 3:21 PM To: Lehman, Ryan Subject: FW: draft language Attachments: Compiled Legislative?Style Draft 4?19?17.pdf From: Christine Wright Sent: Thursday, April 20, 2017 11:58 AM To: Wolf, Jimmy Subject: draft language Jimmy -- Attached is the language that the four utilities agreed to on the OVEC plus option discussed on April 5. Please iet me know if you have any questions or need additional details. Thank you, Chrisy