Prepared quarterly for the Ohio Manufacturers' Association
Index to quarterly reports
Remand of Duke Energy Ohio’s Rate Stabilization Plan, Case No. 03-93-EL-ATA
Appointment of PUCO Commissioners
EP Service Distribution Reliability, 06-222-EL-SLF
Columbia Gas of Ohio: New Stakeholder Process
Remand of Duke Energy Ohio’s Rate Stabilization Plan
Case No. 03-93-EL-ATA
The remand proceeding has an immediate impact on a series of pending dockets involving the various riders that have their origin in the RSP case, and which were due for adjustment on January 1, 2007. The OCC requested that the RSP riders be abated while the matter was on remand. Instead, the Commission issued an Entry that either froze the rider amounts, suspended the rider, or allowed the rider to expire. The PUCO found as follow with respect to the riders:
Annually Adjusted Rider (AAC), which had been set at a specific rate through 2006, is continued at the same rate through 2007 subject to a true-up, until such time as the PUCO approves a change.
System Reliability Tracker (SRT): DE – Ohio proposed a new rate for 2007 subject to a true-up. OCC argued that DE – Ohio had substantially overstated its costs for 2006 such that the SRT had been providing a credit. The PUCO decided that it would allow the SRT to expire by its own terms on December 31, 2006.
Fuel and Purchased Power Rider (FPP): This rider is adjusted quarterly and is intended to recover actual costs. The PUCO allowed DE – Ohio to reflect the congestion costs and losses from the transmission cost rider to the FPP. The PUCO allowed the continuation of the quarterly adjustments to the FPP subject to subsequent audit and true-up (including the congestion costs).
Infrastructure Maintenance Fee (IMF): The PUCO did not stay the IMF but noted that it was subject to true-up “depending on the Commission’s ultimate determination” [this is an issue that the Ohio Supreme Court remanded to the PUCO due to lack of an adequate record].
By entry dated February 1, 2007, the Attorney Examiners assigned to the case set a consolidated procedural schedule for by the remanded RSP case as well as the various other pending cases involving the Commission’s review of the RSP-related riders. This entry divided the case into Phase 1, dealing with the issues on remand, and Phase 2, addressing the other, RSP rider-related issues.
Evidentiary hearings were held in Phase 1 of the proceeding beginning on March 19, 2007. Phase 2 hearings commenced on April 10, 2007. Initial and reply briefs are completed for Phase 1. The briefing on Phase 2 is pending.
Appointment of PUCO Commissioners
On February 23, 2007, Governor Ted Strickland appointed energy consultant and former Ohio Consumers' Counsel Attorney Paul Centolella to fill the vacancy left by Commissioner Judy Jones.
During the first week in April, Ohio Attorney General Marc Dann threatened legal action to remove from office PUCO Chairman Schriber and commissioners Fergus and Lemmie because the PUCO's Nominating Council violated the law when it voted in private to forward names to the former Governor Taft for consideration. Mr. Dann stated that the recent appointment of Paul Centolella was also "invalid and void." If the commissioners did not resign, Mr. Dann threatened to file a writ essentially invalidating the appointments of Chairman Alan Schriber and commissioners Ronda Hartman Fergus and Valerie Lemmie. Mr. Dann did not seek the resignation of Commissioner Don Mason because his nomination and appointment fell outside of an applicable three-year look-back period. On April 6, 2007, Commissioners Schriber, Fergus and Lemmie all tendered their resignations effective April 15, 2007.
On April 9, 2007, the Nominating Council held a special meeting wherein Chairman Alan Schriber, commissioners Ronda Hartman Fergus and Valerie Lemmie and commissioner-designee Paul Centolella were all re-nominated. While some called for full-scale changes in PUCO membership, Governor Strickland re-appointed all the commissioners, including the newly appointed Paul Centollela.
EP Service Distribution Reliability
06-222-EL-SLF
The filing of AEP’s “self-complaint,” Case No. 06-222-EL-SLF, requires the background of the case that preceded it, Case No. 03-2570-EL-UNC, which pertains to a settlement reached between Columbus Southern Power and Ohio Power (collectively “AEP”) and the PUCO Staff regarding distribution service to certain rural areas of the state. AEP agreed to make improvements to their 25% worst performing circuits in order to reduce the average outage time by 40%, and to maintain three other circuit quartiles at levels that would not worsen from their 2002 levels.
In January 2006, AEP filed its final report pursuant to the stipulation. While the performance goals for the 25% lowest performance circuits were exceeded, AEP stated that the baseline system average interruption duration index was not maintained for the remaining three circuit quartiles. AEP also filed an application requesting the PUCO to implement a process whereby AEP would present enhanced service reliability programs for PUCO approval, and if approved, AEP would be authorized to recover those costs through an increase in distribution rates.
Thereafter, the PUCO directed Staff to review and file a report on AEP’s performance during the course of the stipulation and recommend what consequences should be taken for its failure to fulfill the terms of the stipulation, and to determine what areas of distribution service quality require improvement in order for AEP to provide reliable distribution service. On April 17, 2006, Staff filed its report finding that for the years 2001 through 2005, the system-wide reliability performance of both Columbus Southern Power and Ohio Power “has been getting worse on all measures, even after their efforts during the past two years.” Staff recommended that the PUCO order AEP to submit a comprehensive plan to improve its service reliability.
The PUCO issued an entry in May 2006 directing AEP to begin developing a plan to enhance its service reliability, and to file a response to Staff’s recommended consequences for its failure to maintain system-wide performance for the second, third and fourth quartiles. AEP filed its response arguing that the PUCO should not impose any consequences for its failure not to meet all the terms of the stipulation. AEP offered to commit $5 million to further improving its system reliability, and agreed not to request recovery from its customers any of the $5 million. However, in late July 2006, the PUCO found that the $5 million proposed by AEP was not adequate to address its failure to meet the terms of the stipulation. Therefore, the PUCO fined AEP $10 million, and stated that AEP would not be permitted to recover the fine from ratepayers. On October 6, 2006, AEP filed its Enhanced Distribution Service Reliability Plan along with supporting testimony. AEP indicated the scope of the cost that would be passed through as a distribution service enhanced reliability rider for a five-year period. It alleged that over a five-year period it needed an additional $637.4 million beyond what its distribution revenues would provide.
A number of parties, including the OMA, were granted intervention. The party playing the most active in the case is the Office of the Ohio Consumers’ Counsel (OCC). Also intervening have been the Ohio Partners for Affordable Energy and Appalachian People’s Action, Direct Energy, Industrial Energy Users – Ohio and Lifestyle Communities, Inc.
Six local public hearings were scheduled; Peggy Claytor testified at the January 11, 2007 hearing in Canton, Ohio. Subsequent to the local public hearings, the OCC requested parties to attend a settlement conference where discussions ensued regarding the scope of the plan and cost recovery. The OCC and the Staff at several sessions suggested approaches to settle the case. OMA participated and proposed a variation of one of the approaches. Ultimately, because all of the intervenors (notably OCC) could not agree to the hybrid Staff/OMA approach, AEP proposed to withdraw the self-complaint.
A joint motion to withdraw the application, which OMA was a signatory, was filed on April 18, 2007. The parties also requested that the PUCO direct AEP to spend the $10 million, which had been earmarked for service reliability, to be spent on additional vegetation management efforts consistent with AEP’s Plan. By Attorney Examiner Entry issued April 27, 2007, the procedural schedule was held in abeyance pending the PUCO’s consideration of the motion to withdraw the self-complaint.
Columbia Gas of Ohio: New Stakeholder Process
The market structure, as well as the underlying cost structure of Columbia Gas of Ohio (“COH”) has reached a significant turning point. In all probability, COH will be filing a general rate case, the first in over 15 years, within the next several months. In the meantime, COH is convening a new stakeholder process to discuss proposals for forward looking changes to the way in which COH conducts both its customer choice program and its gas transportation program as well. The interests of stakeholders not represented during this process are likely to have their interests compromised.
COH has not had a general rate case since the very early 1990s. Since 1994, COH’s distribution rates have been kept static, and its gas transportation support service rates (banking, balancing and related tariff terms and conditions) have been governed through a collaborative process that negotiated and filed a variety of stipulations as an alternative to litigated cases. The cornerstone of the collaborative process has been COH’s CHOICE program and the treatment of the revenues derived from the GCR portfolio of capacity and commodity resources made available as a result of the CHOICE program. Essentially, COH has used revenues generated from the off-system sale of these resources as a means of avoiding the need for tariff rate increases. The resources used to provide banking and balancing services for GTS customers are implicated by this same portfolio of resources.
The current Stipulation, dated October 8, 2003, in Case No. 94-987-GA-AIR, et al (“2003 Stipulation”) was approved by the Public Utilities Commission of Ohio (“PUCO” or “Commission”) on March 11, 2004 with substantial modifications. One such substantial modification was the Commission’s refusal to accept as reasonable Columbia’s GCR portfolio management though October 31, 2010, as called for by the 2003 Stipulation. The treatment of Columbia’s portfolio of gas commodity contracts and firm pipeline capacity contracts is at the heart of the 2003 Stipulation, and consequently, the 2003 Stipulation contains key provisions that could be affected in COH’s gas cost recovery (“GCR”) proceeding.
During the course of the GCR hearing, COH agreed to convene a “stakeholder” meeting to discuss the post-2008 environment. Ostensibly, this new “stakeholder” process will serve as a revamped collaborative process. The current stipulation expires on December 31, 2008. COH has indicated that 2007 is the opportunity to provide meaningful input into the Post 2008 operation of its system. The first meeting of this group was held on April 11, 2007. The next meeting is scheduled for this month.
OMA took advantage of the brief window of opportunity to join and participate in the discussions that will, no doubt, have a significant impact on the cost structure and rate design issues that affect transportation customers on the COH system. The importance of this stakeholder process is amplified due to the serious implications of the issues now pending before the Commission in the GCR litigation.
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