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AEP Ohio’s Settlement Setting SOS Rates Approved By PUCO
The Public Utilities Commission of Ohio approved, without modification a non-unanimous stipulation establishing a new electric security plan (ESP V) at AEP Ohio, for a term of June 1, 2024, through May 31, 2028.
The settlement agreement approved was filed on Sept. 6, 2023 and signed by AEP Ohio, PUCO staff, Ohio Energy Group, Ohio Partners for Affordable Energy, Enel North America, Environmental Law and Policy Center, Walmart, Ohio Energy Leadership Council, Interstate Gas Supply, Ohio Manufacturers’ Association Energy Group, Retail Energy Supply Association, Citizens’ Utility Board of Ohio, Ohio Environmental Council, Direct Energy, Ohio Hospital Association, Kroger and Armada Power.
During the term of the ESP, AEP Ohio will continue to source electricity for its customers through a competitive bidding process. A residential customer using 1,000 kWh enrolled in AEP Ohio’s standard service offer (SSO), sometimes referred to as the default generation rate, will experience a total monthly bill reduction of approximately $30 due to falling prices for electricity.
AEP Ohio will generally continue its current auction approach as set forth in its original ESP application, with the additional use of a capacity proxy price for standard offer service or SSO auctions held at a time in which the PJM base residual capacity auction has not yet been held for the applicable delivery period.
Beginning, June 1, 2025, delivery year, a mix of 12, 24 and 36-month contracts will be used for the SSO.
PUCO denied all sought changes to SSO procurements proposed outside of the stipulation, such as customer class-specific supply products and auctions, or measures to reduce migration risk to SSO suppliers.
Excerpts from the Order:
“With the significant reduction in auction clearing prices recently observed and the adoption of the CPP, the Commission is continuing to monitor and to gradually address the price volatility in SSO prices by implementing mitigation measures that are commensurate to the circumstances at hand. By introducing only a couple of refinements, the Commission can more efficiently react to price volatility … at this time, the Commission is not persuaded that additional action is necessary or appropriate.”
“Our conclusion in this case is consistent with our determination just a few months ago in the AES Ohio ESP Case and further bolstered by the continually improving results observed by the Commission in SSO auction proceedings. Nothing in the record of this case convinces the Commission that the modifications to the SSO auction process, as advocated by OCC and Constellation, are necessary or appropriate. Specifically, based upon the evidence in this case, we are not persuaded that conducting the auctions by class or by ‘natural breaking points’ will result in aggregate savings to consumers in this state. Nor are we persuaded that the mechanism proposed by Constellation will not shift migration risk from wholesale suppliers to consumers in this state.”
“The Commission will continue to evaluate, within the infrastructure of Ohio’s applicable laws, whether aspects of the auction process are adversely impacting the long-term cost of service for customers and how to address price volatility. As such we find Constellation’s rationale for the process that must be followed to amend AEP Ohio’s auction process unconvincing.”
Opinion & Order (04/03/2024)
Settlement Agreement (09/06/2023)
23-23-EL-SSO (01/06/2023)
(In the Matter of the Application of Ohio Power Company for Authority to Establish a Standard Service Offer)
