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Excerpts from the Ohio Public Utilities Commission  Opinion & Order:

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1. INTRODUCTION 

{¶ 2} This Opinion and Order considers a stipulation and recommendation that purports to resolve four cases involving Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company (collectively, FirstEnergy or the Companies). We believe that consolidation of these proceedings provided parties with unique opportunities for discussion that ultimately resulted in rate certainty for customers and establishment of the scope and cost of the second phase of grid modernization investments by the Companies. {***}

{***} III. BACKGROUND 

{¶ 3} The Companies are electric distribution utilities (EDUs), as defined in R.C. 4928.01(A)(6), and public utilities as defined in R.C. 4905.02, and, as such, are subject to the jurisdiction of this Commission. 

{¶ 4} R.C. 4928.141 provides that an EDU shall provide consumers within its certified territory a standard service offer (SSO) of all competitive retail electric services necessary to maintain essential electric service to customers, including a firm supply of electric generation service. The SSO may be either a market rate offer in accordance with R.C. 4928.142 or an electric security plan (ESP) in accordance with R.C. 4928.143. 

{¶ 5} The Commission has approved several riders in FirstEnergy’s approved ESP proceedings, some of which require the Companies to file annual updates. In re Ohio Edison Co., The Cleveland Elec. Illum. Co., and The Toledo Edison Co., Case No. 08-935-EL-SSO, et al. (ESP I Case); In re Ohio Edison Co., The Cleveland Elec. Illum. Co., and The Toledo Edison Co., Case No. 10-388-EL-SSO (ESP II Case); In re Ohio Edison Co., The Cleveland Elec. Illum. Co., and The Toledo Edison Co., Case No. 12-1230-EL-SSO (ESP III Case); In re Ohio Edison Co., The Cleveland Elec. Illum. Co., and The Toledo Edison Co., Case No. 14-1297-EL-SSO (ESP IV Case). Among these Commission-approved riders is the advanced metering infrastructure/modern grid rider (Rider AMI). Rider AMI is a non-bypassable rider and operates as the mechanism for recovering the costs related to the deployment of smart grid and advanced metering infrastructure. In the ESP II Case, the Commission provided its guidance in matters related to Rider AMI and costs that could be recovered through this rider. The Commission authorized FirstEnergy to collect smart grid costs that it incurred as part of its pilot program over a ten-year period through Rider AMI, with quarterly adjustments to the rate. The rider is billed monthly on a fixed customer charge basis.  {***}

{¶ 23} On April 15, 2024, the Companies filed a motion to consolidate the Grid Mod II Case, 2019 AMI Case, 2020 AMI Case, and 2021 AMI Case. {***}

{¶ 26} On May 23, 2024, the ALJ consolidated the Grid Mod II Case, 2019 AMI Case, 2020 AMI Case, and 2021 AMI Case.

{¶ 27} On June 13, 2024, the ALJ issued a supplemental procedural schedule setting a deadline for rebuttal testimony and ordering that the evidentiary hearing reconvene on July 2, 2024. {¶ 28} The evidentiary hearing commenced on June 5, 2024, and recommenced and concluded on July 2, 2024. 

{¶ 29} The following parties submitted timely initial briefs on July 31, 2024: FirstEnergy, Staff, OELC, Walmart, OEG, ELPC, jointly OMAEG and Kroger, jointly RESA and IGS, and jointly the OCC and Northwest Ohio Aggregation Coalition (NOAC). FirstEnergy, NOPEC, ELPC, jointly OMAEG and Kroger, jointly RESA and IGS, and jointly OCC and NOAC filed timely reply briefs on August 21, 2024. {***}

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1. DISCUSSION 

Summary of the Stipulation

{¶ 30} The following is a summary of the conditions agreed to by the Companies, CUB, ELPC, IGS, Kroger, NOPEC, OEG, OELC, OEC, OMAEG, RESA, and Walmart (Signatory Parties) and is not intended to replace or supersede the actual Stipulation. As noted above, the Stipulation was filed on April 12, 2024, and notice of errata to the Stipulation was filed on May 21, 2024. The following includes a non-exhaustive list of the provisions of the Stipulation:

GENERAL 

{¶ 31} The Stipulation is intended to resolve the Grid Mod II Case, 2019 AMI Case, 2020 AMI Case, and 2021 AMI Case. The Stipulation reduces the total estimated capital cost from $626 million to approximately $421 million. (Co. Ex. 1 at 5.) 2. 

LEGACY METER COSTS 

{¶ 32} Legacy meter costs associated with Grid Mod II deployment will not be included in Rider AMI and will instead be deferred as a regulatory asset with carrying charges. FirstEnergy may seek authorization to recover those costs in a separate proceeding, and no signatory party waives their ability to challenge recoverability in that proceeding. (Co. Ex. 1 at 5.) 

CEI PILOT 

{¶ 33} During the first quarter of Grid Mod II, a credit will be provided in Rider AMI to return to customers the revenue requirements associated with: (1) new CEI Pilot capital costs incurred between January 1, 2019, and June 1, 2019, and (2) new CEI Pilot costs incurred after June 1, 2019. Additionally, the Companies are no longer required to offer its residential critical peak rider, Rider RCP, to customers in the CEI Pilot area, effective the first summer following approval of Grid Mod II. The Companies are also no longer required to provide separate reporting on the CEI Pilot performance, effective with the approval of Grid Mod II. (Co. Ex. 1 at 6.)

DISTRIBUTION AUTOMATION (DA)/INTEGRATED VOLT VAR CONTROL (IVVC) 

{¶ 34} The Companies will withdraw their DA, IVVC, optimization, and advanced distribution management system, except the distributed energy resource management system referred to as DERMS, proposals from this proceeding but may seek authority for these investments in a separate filing. Signatory Parties may challenge the Companies’ filings seeking authority for these investments. (Co. Ex. 1 at 6.) 

ADVANCED METERING INFRASTRUCTURE (AMI) 

{¶ 35} The Companies will install the remining advanced meters, estimated to be 1.4 million, along with the necessary infrastructure including expansion of the meter data management system and associated systems. The estimated cost of AMI deployment is $418 million. 5 (Co. Ex. 1 at 7.) 

HOSTING CAPACITY 

{¶ 36} The Companies will implement a circuit-level solar accommodation map within six months after approval of Grid Mod II. The map will provide an accommodation limit for each circuit and will be externally available and updated annually until the heat map becomes available. Within two years after approval of Grid Mod II, the Companies will implement a heat map that provides power capacity rating for each distribution circuit. The heat map will include planned customer load in excess of two megawatts (MW) in queue and shall be made externally available. The heat map should also display available circuit hosting capacity for new load to support economic development. The Companies will report the status of implementation to the Grid Mod Collaborative.6 (Co. Ex. 1 at 7-8.) 

TIME-VARYING RATES 

{¶ 37} The Companies will make efforts to increase awareness of time-varying rate (TVR) options for eligible SSO customers. The Companies will work with the Grid Mod Collaborative to develop a plan to provide customers with information to compare TVR and SSO rates. Costs for marketing the SSO TVR will continue to be recovered through a bypassable charge. With Commission approval, the Companies will withdraw their SSO TVR when there are either at least three suppliers offering products utilizing AMI data or at least three different types of time-varying products utilizing AMI data. The Companies will not utilize customers’ AMI data to market SSO TVR, but the Companies may utilize that data to notify customers that they may benefit from a time-of-use (TOU) offering after the Commission approves the withdrawal of the Companies’ SSO TVR. (Co. Ex. 1 at 8-9.) 

SMART THERMOSTAT REBATES (STR) 

{¶ 38} The Companies will budget $3 million7 per year for the STR program during the term of Grid Mod II. The ability to spend the maximum amount will be dependent on customer participation. STR up to $150 will be available to low-income residential customers, who are at or below 300 percent of the federal poverty level, and STR up to $100 will be available to other residential customers who are on a TVR option or participating in a demand response program. If the Companies spend less than $1.5 million in any year, the planned spending for the subsequent year will increase to $4.5 million. The Grid Mod Collaborative will help determine how the increased plan spending will be utilized. The Companies will track total energy savings and total capacity savings for customers on the Companies’ residential SSO TVR and separately track the customers participating in both the SSO TVR and STR program. The Companies will permit competitive retail electric service (CRES) providers to help facilitate the provision of smart thermostats to customers so long as CRES providers comply with all program requirements and processes. The Companies will evaluate STR participation, as well as costs and benefits two years after the order approving Grid Mod II is final. (Co. Ex. 1 at 10-12.) 

CUSTOMER ENERGY MANAGEMENT (CEM) REPORTS 

{¶ 39} The Companies propose to track total energy savings and total capacity savings for CEM participants. The Companies will report on participation and savings in the quarterly Grid Mod Collaborative meetings. Specific information must be provided to Grid Mod Collaborative participants one week prior to each meeting. The Companies will evaluate CEM participation in comparison to estimated participation annually, beginning two years after the order approving Grid Mod II is final. CEM reports will not be used to market or recommend any specific manufacturer or provider of products or services. (Co. Ex. 1 at 13-14.) 

GRID MOD PERFORMANCE 

{¶ 40} For Grid Mod II, the Companies will implement certain recommendations from the OBA report, including: (a-p)………

{¶ 41} To address metrics-related recommendations from the OBA report, the companies will incorporate new or modified metrics for customer benefits and operational savings. For metrics with a specific performance target in the cost-benefit analysis, the Companies will include target levels and levels achieved in the metrics report. The Companies will report quarterly to the Grid Mod Collaborative on operational savings and customer benefits. The Companies agree to an OBA of Grid Mod II commencing three years after Commission approval of Grid Mod II, which will include a review and possible increase of operational savings credited to the revenue requirements of Rider AMI. (Co. Ex. 1 at 14-18.)

DATA ACCESS 

{¶ 42} Certified CRES providers can access residential customer hourly interval data on the supplier portal, which requires customer authorization and will remain unchanged in Grid Mod II. Pending Commission approval, the Companies will make available to CRES providers additional hourly interval data for their enrolled residential customers. In accordance with the Grid Mod I stipulation, the Companies have taken steps necessary to utilize residential customer interval data for wholesale market settlements, including calculating peak load contribution. The Signatory Parties agree that hourly interval data for residential customers with an AMI meter is being utilized for billing purposes, so the Companies shall be permitted to disclose that data, and CRES providers shall be entitled to access the hourly interval data for its enrolled residential customers without needing to take additional steps, such as providing customer authorization to the Companies. If the Commission disagrees that the hourly interval data is being used for billing purposes, the Signatory Parties request that the Commission waive the consent requirement in Ohio Adm.Code 4901:1-10-24(D)(3). 

{¶ 43} The Signatory Parties believe that NOPEC would benefit from access to customer hourly interval data for its aggregated customers and that such access is consistent with Ohio policy, including R.C. 4928.20(K). Thus, the Signatory Parties ask that the Commission waive the consent requirement in Ohio Adm.Code 4901:1-10-24(D)(3) for NOPEC. Upon Commission approval of that waiver, the Companies will create a coordination agreement that will apply to NOPEC’s access to customer interval data, which must be executed before data access will be provided. NOPEC will only have access to the customer data so long as it is an active governmental aggregator. NOPEC must comply with program requirements. The Companies will not be obligated to create new systems in response to NOPEC data requests. 

{¶ 44} The Companies will continue working with stakeholders to discuss access to smart meter data. The Companies will continue Grid Mod Collaborative meetings. The Companies will provide retail customer data to CRES providers, governmental aggregators, and third-party aggregators to allow them to enroll any customers and participate in the PJM Interconnection LLC (PJM) markets. Data sharing will begin no later than one year from the Grid Mod Collaborative meeting following approval of Grid Mod II unless the Companies give notice that more time is needed. The Companies will continue to provide interval data through their customer portal to commercial and industrial customers who have interval or advanced meters. If available, the Companies will provide 15-minute interval data to commercial and industrial customers. (Co. Ex. 1 at 19-25.) 

RIDER AMI 

{¶ 45} Beginning with the first Rider AMI update for recovery of Grid Mod II costs, the Companies will incorporate modifications to the recovery of costs, including using the return on equity, capital structure, and cost of debt from the most recently approved base rate case, eliminating the forecasting component, and including details on quarterly investments. When the Commission issues a decision in the 2024 base rate case, the allocation of costs between customer classes will be updated in Rider AMI to match the allocation in the base rate case. Until Grid Mod II operational savings are incorporated into base distribution rates, the Companies will provide credits through Rider AMI as outlined in the Stipulation. To resolve the Rider AMI audits for years 2019 through 2021, the Companies will ensure all other recommendations from the staff reports for these audits are addressed. The Companies will ensure that the costs of incentive compensation that Staff recommended for removal have been removed from Rider AMI and reconciled. (Co. Ex. 1 at 25-27.) 

ELECTRIC VEHICLES (EV) 

{¶ 46} The Companies will withdraw the managed EV charging pilot. The Companies will propose tariff revisions applicable to publicly available EV charging customers in the 2024 base distribution rate case. In the next rule review of the Commission’s line extension rules, the Companies agree to support that EDUs be responsible for 80 percent of line extension costs for EV supply equipment so long as the EDUs receive full cost recovery. (Co. Ex. 1 at 27.) 

DISTRIBUTED ENERGY RESOURCE MANAGEMENT SYSTEM 

{¶ 47} The Companies will work with Staff to file a report on progress and lessons learned in years two and four of Grid Mod II (Co. Ex. 1 at 27). 

FRONT-OF-THE-METER BATTERY ENERGY STORAGE SYSTEM (FTM BESS) 

{¶ 48} The Companies will withdraw the FTM BESS pilot (Co. Ex. 1 at 27). 

LATERAL ELECTRONIC CIRCUIT PROTECTION PILOT (LECP) 

{¶ 49} The Companies will withdraw the LECP Pilot (Co. Ex. 1 at 27). 

FEDERAL FUNDING 

{¶ 50} The Companies will examine whether federal funding is available and present the results of their findings to the Grid Mod Collaborative. The Companies will solicit input regarding additional funding sources that may be available. To the extent that the Companies receive federal funding specifically for Grid Mod II projects, there will be a corresponding offset in Grid Mod II costs. (Co. Ex. 1 at 28.) {***}

IS THE SETTLEMENT A PRODUCT OF SERIOUS BARGAINING AMONG CAPABLE, KNOWLEDGEABLE PARTIES? 

Party Arguments {¶ 54} A majority of the Signatory Parties, including FirstEnergy, OMAEG, Kroger, RESA, IGS, OEG, Walmart, and OELC address the first criterion and conclude that the Stipulation represents a settlement among a diverse group of capable and knowledgeable parties. They add that the Signatory Parties have participated in complex regulatory proceedings before the Commission and are represented by experienced counsel familiar with Commission proceedings. FirstEnergy claims that settlement negotiations lasted over several months, noting that all parties were invited to eight separate settlement discussions taking place from October 2023 through April 2024. The Companies explain that to the extent that they engaged in individual discussions with certain parties, any results of those communications were shared with the entire group of intervenors. (Co. Ex. 2 at 3, 7; Co. Ex. 1 at 2-3.) (Co. Initial Br. at 6-7; OMAEG/Kroger Initial Br. at 8-10; RESA/IGS Initial Br. at 3-4; OEG Initial Br. at 2-3; Walmart Initial Br. at 4; OELC Initial Br. at 3-4; OMAEG/Kroger Reply Br. at 5-7.) No party, including OCC or NOAC, challenges that this criterion has been met (OCC Ex. 5 at 2). 

1. Commission Decision 

{¶ 55} The Commission finds that the Stipulation appears to be the product of serious bargaining among capable, knowledgeable parties. We note that the Signatory Parties routinely participate in complex Commission proceedings and that counsel for the Signatory Parties have extensive experience practicing before the Commission in utility matters (Co. Ex. 2 at 3, 7). The Signatory Parties represent diverse interests including the Companies, commercial and industrial customer advocates, residential and small business customers, environmental advocates, and CRES providers (Co. Ex. 2 at 7). Additionally, no party challenges that the Stipulation meets this criterion. {***}

Opinion & Order (12/18/2024)

22-0704-EL-UNC 

In The Matter Of The Application By Ohio Edison Company, The Cleveland Electric Illuminating Company, And The Toledo Edison Company For Approval Of Phase Two Of Their Distribution Grid Modernization Plan.

In The Matter Of The Application Of Ohio Edison Company, The Cleveland Electric Illuminating Company, And The Toledo Edison Company For Review Of Rider AMI.