In a recently released order, the Public Utilities Commission of Ohio (the "Commission") stopped short of approving Monongahela Power Company’s (the "Company") application to modify its generation rates to provide for a market-based standard service offer ("ISSO"). Case No. 03-1104-EL-ATA, Finding and Order, issued July 24, 2003. Instead, the Commission authorized the Company to take the first step toward implementation of its plan—issuance of a request for proposal ("RFP")—and withheld a final decision on the Company’s application until responses to the RFP are known and evaluated.
Ohio law requires electric distribution utilities ("EDU"), like the Company, to provide customers with "a market-based SSO" after its "market development period." ORC § 4928.14. After the market development period, any customer who is not receiving service from a certified retail electric service automatically defaults to the EDU’s SSO. Id. The Company’s market development period concludes at the end of calendar year 2003 with respect to large commercial and industrial customers and street lighting. Its market development period concludes at the end of calendar year 2005 with respect to residential customers and small commercial and industrial customers. The plan set forth in the Company’s application is its proposed method of complying with the requirement for a market-based SSO.
The Company proposes to establish two separate alternative market-based SSOs from which its customers could choose. One alternative is a variable rate SSO under which the Company will procure services on the spot market through the Pennsylvania-New Jersey-Maryland Interconnection, LLC. The other alternative is a fixed rate SSO under which the Company will procure services through a competitive wholesale bidding process. Under the Company’s plan, a customer who defaults to SSO service without choosing between the two market-based SSO options would default to the fixed rate SSO.
The fixed rate SSO wholesale bidding process would begin with a solicitation for wholesale suppliers to bid a fixed price to supply "full requirements service" for a stated percentage of the Company’s retail load for specific customer classes for one year. Once under contract, the wholesale suppliers would be responsible to provide full requirements service for the agreed percentage of retail load at the fixed price regardless of "any changes in customers’ demand for any reason." According to the application, "full requirements wholesale supply service" includes "energy, capacity, [and] ancillary services and losses," but excludes "network integration transmission service."
In the application, the Company indicates that it has proposed a similar process in Maryland and argues that establishing uniform procedures across each of the states it serves would be more cost-effective for its customers.
The Commission decided to authorize issuance of the RFP without rendering a decision on the application. The Commission explained in its order that "the results of the RFP are necessary to determine if [the Company’s] application is reasonable," and "the nature and number of the responses to the RFP will serve to help assess the status of the applicable wholesale market."