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AEP Ohio Stipulation & Recommendation – Filed 9/7/2011. Presentation To Public Utilities Commission of Ohio Honorable Chairman Todd A. Snitchler Honorable Commissioner Paul A. Centolella Honorable Commissioner Cheryl Roberto Honorable Commissioner Steven D. Lesser
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AEP Ohio Stipulation & Recommendation – Filed 9/7/2011 Presentation To Public Utilities Commission of Ohio Honorable Chairman Todd A. Snitchler Honorable Commissioner Paul A. Centolella Honorable Commissioner Cheryl Roberto Honorable Commissioner Steven D. Lesser Honorable Commissioner Andre T. Porter September 19, 2011
AEP Ohio: Settlement Overview Resolves the following cases: • Merger of CSP & OPCo (10-2376-EL-UNC) • ESP2 (11-346-EL-SSO & 11-348-EL-SSO) • Energy Curtailment (10-343-EL-ATA) • Capacity Charges (10-344-EL-ATA) • Deferred Fuel Cost (11-4920-EL-RDR & 11-4921-EL-RDR)
AEP Ohio Commission Staff Ohio Energy Group Ohio Manufacturers’ Association Energy Group City of Hilliard City of Grove City Association of Independent Colleges & Universities of Ohio The Kroger Company Wal-Mart Stores, East & Sam’s East Paulding Wind Farm II Natural Resources Defense Council Ohio Environmental Council Environmental Law & Policy Center EnerNOC Ohio Hospital Association Exelon Generation Company Duke Energy Retail Sales AEP Retail Energy Partners Retail Energy Supply Association Constellation NewEnergy, Inc & Constellation Energy Commodities PJM Power Producers 22 Parties Joined In Stipulation
Summary of Integrated Plan ESP extends from January 2012 through May 2016 Generation rates set at fixed base (plus cost-based FAC & AER) through May 2015 Auctions beginning in 2013 will set prices for SSO load in final year of plan (June 2015 – May 2016) Capacity charges to CRES providers $255/MW-day from January 2012 – May 2015 except for designated portions of AEP Ohio load eligible for additional discounts (RPM rates) each year: 2012 (21%) 2013 (29% until securitization is implemented, then 31%) 2014 – May 2015 (41%) March 2012: AEP Ohio changes from PJM’s FRR to RPM for 2015-2016 AEP Ohio merger and corporate separation approved Filings at FERC for corporate separation and AEP (East) Pool modification (early 2012)
Summary of ESP Rate Structure Market-based design of generation rates is included similar to original proposal Market transition rider (MTR) (designed to gradually move total rate to market-based design) modified to achieve 50% transition through May 2015 (original proposal was for 100% transition through May 2014). Schools are exempt from MTR charges Many riders (including proposed nonbypassable generation riders) are withdrawn POLR, Environmental (EICCR), NERC Compliance (NERCR), Facilities Closure Cost Recovery (FCCR), Carbon Capture & Sequestration (CCSR), Rate Security Rider (RSR), Emergency Curtailable Service (ECS) Other riders are modified Phase-in recovery rider (PIRR) rate is reduced to debt rate (from previously authorized rate reflecting WACC), and implementation is delayed one year for residential customers Distribution investment rider (DIR) modified to eliminate O&M cost recovery (changed to same basis as FirstEnergy’s most recently authorized distribution rider), and is capped annually through the 3+ year period associated with the agreed upon distribution stay-out provision. Green Power Portfolio Rider (GPPR) modified to require that all associated RECs will be in addition to AEP Ohio’s compliance portfolio
Summary of ESP Rate Structure (cont’d.) New revenue-neutral load factor rider (nonbypassable) designed to retain benefits for energy-intensive (high load factor) customers (design is similar to an existing FirstEnergy rider) Credit increased for existing interruptible (IRP-D) customers in support of compliance with peak demand reduction standards Schools benefit from shopping credits and exemption from MTR charges $10M of shopping credits (including schools) available annually to GS-2 customers Generation Resource Rider (GRR) is established at zero in anticipation of future cases seeking approval of nonbypassable recovery of the cost of new generating resources to be dedicated to AEP Ohio customers Turning Point Solar New combined cycle gas plant to replace existing Muskingum River 5 coal unit
Economic Development AEP Ohio agrees to fund the AEP Ohio Growth Fund at $5M per year, depending upon prior year earnings. Signatory parties will provide guidance and oversight regarding use of funds. AEP Ohio commitment to support Ohio shale gas development Negotiate competitively priced supply contracts with Ohio producers for existing gas plants Opportunity through future filing for new gas plant (replacement for MR5) to be fueled with competitively priced Ohio shale gas
Commitment to Alternative Energy Approval of Timber Road REPA Green Power Portfolio Rider provides opportunity for customers to purchase their desired amount of supply from renewable sources Agreement to pursue advanced energy studies and projects with members of the Association of Independent Colleges and Universities of Ohio Pursue programs for customer-sited EE/PDR resources, including LED streetlighting pilot programs Agreement to pursue development of up to 350 MW of customer-sited combined heat and power, waste energy recovery and distributed generation resources
Collaboration Efforts • Stakeholder process to finalize competitive bid process for the market-based SSO • Stakeholder process to develop the detailed implementation plan for allotment of RPM set aside • Advisory group for consideration of decoupling proposals • Collaborate with Staff for input on PWO fund spending • Advisory group for OGF spending • Advisory group of hospitals to address emergency preparedness coordination and circuit reliability and redundancy • Collaborative effort to develop programs and opportunities for customer-sited energy efficiency and peak demand reduction resources • Collaborative effort to develop an AEP Ohio filing related to combined heat and power, waste energy recovery and distributed generation resources • Undertake a collaborative effort to pass suitable and appropriate securitization legislation, including quarterly status meetings
AEP Ohio: Total Rate Summary Cents/kWh% Increase 2012 Rates Before ESP 8.81 -- 2012 ESP Rates 8.88 0.9% 2013 ESP Rates 9.07 2.1% 2014 ESP Rates 9.26 2.1% Jan – May 2015 ESP Rates 9.26 0.0%
Rate Summary (2012-May 2015 Supply Rates) - Percentage increases are based on projected rates as of 1/1/2012. - Changes in this file represent forecasted fuel value from Case No. 11-281-EL-FAC which increased from estimate used in original ESP filing. - Reflects a 41 month term compared to a 29 month term as originally proposed.
Rate Summary (2012-May 2015 DIR) - Percentage increases are based on projected rates as of 1/1/2012. - Reflects Distribution Investment Recovery Rider at settlement maximum amount which was not quantified in the original filing.
Rate Summary (2012-May 2015) - Percentage increases are based on projected rates as of 1/1/2012. - Changes in this file represent forecasted fuel value from Case No. 11-281-EL-FAC which increased from estimate used in original ESP filing. - Reflects Distribution Investment Recovery Rider at settlement maximum amount which was not quantified in the original filing. - Reflects a 41 month term compared to a 29 month term as originally proposed.
