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Joseph P. Buckley a witness for the Ohio Office of Consumer Counsel (OCC) files testimony that provides an analysis of the ESP and MRO, weighing both quantitative and qualitative factors to determine the most advantageous option. 

See testimony of Joseph Buckley here. 

Excerpts of Joseph Buckley’s Testimony:

{***} Q19. Are Electric Security Plans Still Necessary? 

A19. I don’t believe they are. While they have served as a valuable tool during Ohio’s transition to a competitive electricity market, it’s time to reassess their necessity. The market has matured significantly, and the benefits of a full transition to market rate offers now outweigh the potential risks associated with electric security plans.

Why Eliminate Electric Security Plans? 

Market Maturity: The Ohio electricity market has demonstrated its ability to function competitively. The initial concerns about market 4 instability and consumer protection have largely been addressed. 

Reduced Need for Price Stability: Electric security plans were designed to provide price stability during a period of market transition. The market 7 has matured, with robust competitive auctions now occurring for the 8 Duke-Ohio load, with many participating bidders and resulting in 9 competitive prices. 

Regional Transmission Organizations have matured: For example, PJM has fostered market transparency and efficiency through reforms to increase competition and reduce market power concentration. Today PJM regularly holds competitive auctions to procure generation and transmission for 65 million consumers over a 13-state region at competitive prices. An independent market monitor oversees the market  to make sure that the market participants follow competitive practices. 

Electric Distribution Utilities no longer own generation: The original rationale for electric security plans was to allow electric distribution utilities to commit their own generating plants to supply consumers, as an alternative to a competitive auction. This rationale no longer exists because utilities no longer own generating plants. Today the generation for an electric security plan is procured through a competitive auction, so there is no difference between an electric security plan and a market rate offer as to how generation is procured to serve consumers. In addition, this makes the concern about blending the generation price for a market rate offer with the generation price of an electric security plan moot. 

Consumers have access to a wide variety of competitive offers from competitive suppliers: the PUCO’s Apples-to-Apples web page shows 8 that competitive suppliers have 150 different generation supply offers available to Duke residential consumers, all at competitive prices.

Q23. Under Current Market Conditions, Would Your Interpretation Render The Statute Meaningless By Always Making Electric Security Plans Less Favorable Than Market Rate Offers? 

A23. Yes, in today’s market, electric security plans will never be more favorable in the aggregate than market rate offers. This will not adversely impact consumers because today we have a well-functioning wholesale electric market.

Today there is also a well-developed retail electric market and utilities no longer own generating plants. As a result, electric security plans use the same competitive auction process for procuring generation as would occur in a market rate offer. As a result, there is no difference in the generation component of an electric security plan versus a market rate offer. 

However, this wasn’t always the case. When S.B. 221 was enacted in 2008, all four Ohio electric distribution utilities used their own generation for electric security plans. By using their own generating plants, the utilities could offer more favorable terms, especially during the early development of the retail electric market. This provided stability and certainty that incentivized utilities to offer their own generation at competitive prices. {***}

While favoring an MRO over an ESP is not a new position for OCC, OCC’s instant testimony, filed in a pending application from Duke Energy Ohio for a new ESP, more broadly advocates for adoption of MROs generally, and calls for the cessation of the use of ESPs, rather than prior-case testimony which more narrowly addressed whether a specific ESP plan was more favorable than an MRO. {***}

As background, Ohio law allows the electric utilities to select one of two options – either an ESP or an MRO for supplying and pricing electricity default service 

To date, PUCO has not approved any MROs.   

See docket link below for all filed testimony and other documents.

24-278-EL-SSO  (Opened 3/25/2024)
Duke Energy Ohio, Inc.- SSO-Standard Service Offer 

See also:
24-0279-EL-ATA
24-0280-EL-AAM