Ohio Energy Workshop JJ Dayton Power & Light (DPL): New ESP and the Impacts on Customer Rates and Tariffs (Effective 1/1/14), Energy Efficiency Projects & Renewable Energy Portfolio Requirements and Impacts of New Legislation, and Shopping & Demand Response Opportunities for Customers Wednesday, February 19, 2014 2:00 p.m. to 3:15 p.m. Biographical Information J. Edward Hess, Technical Specialist, McNees Walace and Nurick, LLC. 21 East State Street, 17th Floor Columbus, OH 43215-4228 Direct Telephone: 614.719.5954 Fax: 614.469.4653 ehess@mwncmh.com Ed is a Technical Specialist with McNees Wallace & Nurick’s Energy, Communications, and Utility Law Practice Group. Ed uses his extensive experience and knowledge to help the firm’s clients address issues that affect the price and availability of utility services. Prior to joining McNees Walace and Nurick in October 2009, Ed worked for the Public Utilities Commission of Ohio for over thirty years. He served as the chief accounting officer and was primarily responsible for the staff’s policies and recommendations to the Commission for the operating income and rate base portions of utility base rates. This included preparation of the Staff Reports of Investigation, preparing and presenting testimony, and counseling the Commission on its final Order. After the State of Ohio passed its electric restructuring law in 1999, Ed oversaw the staff’s recommendations to the Commission for compliance with the statute. He developed new rules required by the law and he was primarily responsible for processing and negotiating electric utility transition plans. He is a certified public accountant. Dona R. Seger-Lawson, Director, Regulatory Operations The Dayton Power and Light Company 1065 Woodman Drive, Dayton, OH 45432 (937) 259-7808 dona.seger-lawson@aes.com Dona R. Seger-Lawson is the Director of Regulatory Operations for The Dayton Power and Light Company (DP&L). Ms. Seger-Lawson’s responsibilities in her present position are to direct the activities of the Company’s areas dealing with pricing and regulation. Ms. Seger-Lawson joined DP&L in 1992 and has held various positions in the pricing and regulatory areas of the Company. She has been an active participant in the legislative process on behalf of DP&L, evaluating impacts Ohio SB 3 and SB 221 on DP&L and the retail electric industry in Ohio. She took one of the lead roles in the development and negotiation of the Company’s Electric Security Plan I (ESP I) case before the Public Utilities Commission of Ohio (PUCO), and provided expert testimony on behalf of the Company in its ESP II case that established standard service offer rates through December 2016. She was the lead in the development and negotiation of the Company’s first Open Access Transmission Tariff (OATT) before the Federal Energy Regulatory Commission (FERC) that established the price, terms and conditions for transmission and ancillary services. Dona has provided expert testimony at both the FERC and the PUCO on such matters as environmental cost recovery, unbundled retail rate structures, cost of service, cost allocation mechanisms, transition cost recovery, billing system cost recovery, retail service terms and conditions, and a variety of key operational support matters necessary for the development of retail electric customer choice in the Company’s service territory. Ms. Seger-Lawson holds a Bachelor of Science degree in Business Administration as well as a Master’s in Business Administration with a Finance concentration from Wright State University (WSU) in Dayton, Ohio. She is currently serving a four year term on City Council for the City of Bellbrook. Dona resides in Bellbrook, Ohio with her husband Mike, son Zach, and daughter Emma. Dayton Power & Light (“DP&L”): Energy Efficiency Projects & Renewable Energy Portfolio Requirements and Impacts of New Legislation, and Shopping and Demand Response Opportunities for Customers 18th Annual Ohio Energy Management Conference February 18‐19, 2014 Ed Hess Technical Specialist ehess@mwncmh.com 1 © 2013 McNees Wallace & Nurick LLC www.mwn.com Presentation Overview Shopping Opportunities Value Available from RTO Programs Opportunities to Help Satisfy Ohio’s Portfolio Mandates and Avoid Riders 2 © 2013 McNees Wallace & Nurick LLC www.mwn.com Shopping Opportunities 3 © 2013 McNees Wallace & Nurick LLC www.mwn.com PUCO’s Quarterly Switching Report as of September 30, 2013 (MWH) Class Residential Commercial Industrial Ohio Edison 71.45% 90.98% 80.42% © 2013 McNees Wallace & Nurick LLC Cleveland Electric Toledo Illuminating Edison 76.20% 71.66% 91.62% 90.20% 90.35% 77.40% AEP‐Ohio 27.10% 78.77% 73.46% www.mwn.com Dayton Duke Energy Power & Ohio Light 51.20% 41.18% 84.38% 82.92% 97.54% 97.89% Customer Opportunities – Shopping Price‐to‐Compare (Current Rates) Distribution Rates are Non‐bypassable Transmission Rates are Non‐bypassable and Bypassable Generation Rates are Non‐bypassable and Bypassable DP&L Tariff Website ‐ http://www.dpandl.com/customer‐service/dpl‐ policies/electric‐choice‐overview/comparing‐energy‐prices/ DP&L’s Ohio Electric Choice Website What to Consider Registered Electric Generation Suppliers with Phone Numbers Comparing Energy Prices including Price to Compare Calculator Common Questions Website Address ‐ http://www.dpandl.com/customer‐service/dpl‐ policies/electric‐choice‐overview/ PUCO’s Website Address (Residential Offers) http://www.puco.ohio.gov/puco/index.cfm/apples‐to‐apples/dpl‐electric‐ apples‐to‐apples‐chart/ 5 © 2013 McNees Wallace & Nurick LLC www.mwn.com Value Available from RTO Programs 6 © 2013 McNees Wallace & Nurick LLC www.mwn.com PJM Capacity Market Background PJM is a regional transmission organization ("RTO") that coordinates the movement of wholesale electricity PJM coordinates the continuous buying, selling and delivery of wholesale electricity through competitive spot markets On‐line tools enable participants to submit bids and offers and to monitor continuous real‐time data PJM runs markets for day‐ahead energy, real‐time energy, generation capacity, and associated ancillary services PJM establishes market prices by matching supply with demand Cost of last needed supply resource determines the clearing price for the markets 7 © 2013 McNees Wallace & Nurick LLC www.mwn.com PJM Capacity Market Overview Within PJM, Capacity is a product that load must buy Insures that PJM has enough installed resources to serve load and cover needed reserves on the highest of high demand days so that “the lights stay on” PJM obtains its needed capacity and reserve requirements through a series of Reliability Pricing Model (RPM) auctions Base Residual Auctions ("BRA") are held annually for each delivery year (DY), three years in advance of the DY Up to three subsequent incremental auctions held to adjust the capacity quantities and obtain a portion of the overall capacity requirement Demand Resources and Energy Efficiency Resources may participate in the auctions 8 © 2013 McNees Wallace & Nurick LLC www.mwn.com PJM Capacity Market Demand Response and Energy Efficiency Demand Resources (Participation in Capacity Auctions) On par with generation resources Three‐year advance commitment Base Residual Auctions & Incremental Auctions each year prior to Delivery Year ("DY") Must plan ahead to capitalize on capacity value Participant is obligated to reduce load when requested by PJM Energy Efficiency Resources Cost consequences for non‐performance Compensation depends on participation level and may depend on location 9 © 2013 McNees Wallace & Nurick LLC www.mwn.com PJM Capacity Market Demand Side Response (DSR) End‐use customers with Demand Side Response ("DSR") capability can participate in the PJM markets Effectively competing against generation suppliers by selling their “capacity” to PJM DSR reduces stress on the grid during times of high electric demand DSR can lower wholesale prices by replacing the need for more‐ expensive generating units DSR participants receives payment for shifting or reducing electricity consumption during times of high demand or high prices Presently, participation in PJM's Capacity Market (RPM) provides the most value to DSR participants 10 © 2013 McNees Wallace & Nurick LLC www.mwn.com PJM Capacity Market Emergency DSR Participation – “Limited” DSR 1‐year commitment: June 1 – May 31 ("Delivery Year") PJM has the right to request up to 10 separate curtailments, each lasting no more than 6 hrs. Participant is provided at least 2 hr. advance notification of curtailment Curtailment can only occur during non‐holiday weekdays between 12 p.m. – 8 p.m. May‐September and 2 p.m. ‐ 10 p.m. October‐April Compliance is verified for any June‐Sept. Curtailment events 1‐hour Test curtailment required if no curtailment events occur 11 © 2013 McNees Wallace & Nurick LLC www.mwn.com PJM Capacity Market New Emergency DR Options Implemented by PJM Effective with 2014‐2015 delivery year Two new DR Programs to go with the current “10 x 6” product (Limited DR Program): Extended Summer DR ‐ available June thru October, and the following May. Provides for unlimited interruptions of up to 10 hours each, between the hours of 10:00 a.m. and 10:00 p.m. Annual DR ‐ available any day of the year for unlimited interruptions of up to 10 hours each, between the hours of 10:00 a.m. and 10:00 p.m. for June thru October, and the following May; and between the hours of 6:00 a.m. and 9:00 p.m. for November thru April 12 © 2013 McNees Wallace & Nurick LLC www.mwn.com PJM Capacity Market Other PJM DR Programs – Economic DR Under PJM’s Economic DR Program (ELRP), two programs: (compensation is based on real‐time or day‐ahead LMP prices) I. Real‐Time (RT) Dispatchable Participant submits offer price/quantity, minimum downtime, and notification period No non‐compliance charges PJM provides notification to curtail load 1 or 2 hours in advance II. Day‐Ahead (DA) Participant submits offer price/quantity and notification period by noon the day prior to the intended curtailment Price certainty, financially guaranteed market Know by 4:00 p.m. day before curtailment, if offer cleared Must perform or there are non‐performance charges 13 © 2013 McNees Wallace & Nurick LLC www.mwn.com PJM Capacity Market Energy Efficiency (EE) Resources EE Resources may participate in RPM auctions EE Resources are projects involving installation of more efficient devices or equipment, or implementation of more efficient processes/systems that exceed then‐current building codes, appliance standards, or other relevant standards An EE resource is used as a capacity resource in the auction and is paid the resource clearing price times the MW amount cleared Be scheduled for completion prior to the delivery year Not be reflected in the peak load forecast posted for the BRA auction for the delivery year initially offered Achieve load reduction during defined EE performance hours (weekdays from June 1 through August 31, between 2:00 p.m. and 6:00 p.m. EPT) Not be dispatchable (dispatchable demand may be offered as a DR in RPM) 14 © 2013 McNees Wallace & Nurick LLC www.mwn.com Examples of EE Resources Efficient lighting installation Efficient appliance installation Efficient air conditioning installation Building insulation Process improvements Permanent load shifts that are not dispatched based on price or other factors 15 © 2013 McNees Wallace & Nurick LLC www.mwn.com To Participate in PJM Capacity Market Contact your Curtailment Service Provider McNees Wallace & Nurick will continue to offer Curtailment Services to facilitate our clients’ participation in PJM's DR Programs: • Joe Bowser: jbowser@mwncmh.com • Kevin Murray: murraykm@mwncmh.com 16 © 2013 McNees Wallace & Nurick LLC www.mwn.com Opportunities to Help Satisfy Ohio’s Portfolio Mandates and Avoid Riders 17 © 2013 McNees Wallace & Nurick LLC www.mwn.com Energy Efficiency and Peak Demand Reduction Benchmarks – SB 221 Energy Efficiency Beginning in 2009, an electric distribution utility shall implement energy efficiency programs that achieve energy savings equivalent to at least 3/10 of 1% of the total kilowatt‐hour sales of the electric distribution utility. The savings requirement increases to an additional 5/10 of 1% in 2010, 7/10 of 1% in 2011, 8/10 of 1% in 2012, 9/10 of 1% in 2013, 1% from 2014 to 2018, and 2% each year through 2025. The cumulative, annual energy savings are to be 22% by the end of 2025. (Per Ohio Revised Code Section 4928.66(A)(1)(a)) 18 © 2013 McNees Wallace & Nurick LLC www.mwn.com Energy Efficiency and Peak Demand Reduction Benchmarks – SB 221 Peak Demand Reduction Programs Beginning in 2009, an electric distribution utility shall implement peak demand reduction programs designed to achieve a 1% reduction in peak demand in 2009 and an additional 75/100 of 1% reduction each year through 2018. In 2018, the standing committees in the Ohio House of Representatives and the Senate primarily dealing with energy issues shall make recommendations to the general assembly regarding future peak demand reduction targets. (Per Ohio Revised Code Section 4928.66(A)(1)(b)) 19 © 2013 McNees Wallace & Nurick LLC www.mwn.com Energy Efficiency and Peak Demand Reduction Benchmarks – SB 221 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Energy Efficiency Peak Demand Reductions 0.3% 0.8% 1.5% 2.3% 3.2% 4.2% 5.2% 6.2% 7.2% 8.2% 10.2% 12.2% 14.2% 16.2% 18.2% 20.2% 22.2% 1.00% 1.75% 2.50% 3.25% 4.00% 4.75% 5.50% 6.25% 7.00% 7.75% 20 © 2013 McNees Wallace & Nurick LLC www.mwn.com Energy Efficiency and Peak Demand Reduction Benchmarks – SB 221 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Energy Efficiency Annual Increase Peak Demand Reductions Annual Increase 0.30% 0.50% 0.70% 0.80% 0.90% 1.00% 1.00% 1.00% 1.00% 1.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 1.00% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 21 © 2013 McNees Wallace & Nurick LLC www.mwn.com DP&L’s Energy Efficiency Rider (Rider EER as of 1/1/14) $/kWh Secondary $ 0.0009218 Primary $ 0.0009218 Primary‐Substation $ 0.0009218 High Voltage $ 0.0009218 Schools $ 0.0009218 Street Lighting $ 0.0009218 Adjusted annually 22 © 2013 McNees Wallace & Nurick LLC www.mwn.com DP&L’s Energy Efficiency Rider (Rider EER Proposed) $/kWh Secondary $ 0.0035797 Primary $ 0.0025409 Primary‐Substation $ 0.0022489 High Voltage $ 0.0021751 Schools $ 0.0041947 Street Lighting $ 0.0037209 Adjusted annually 23 © 2013 McNees Wallace & Nurick LLC www.mwn.com Energy Efficiency and Peak Demand Reduction DP&L EE/PDR Programs Energy Efficiency and Peak Demand Portfolio Filing (POR Filing) Filed 4/15/2013 Settlement filed 10/2/2013 PUCO approved Settlement 12/4/2013 Settlement Included Extended Programs through 2015 Expanded the Government Audit Program to include all Commercial and Industrial Customers Shared Savings mechanism included (Caped at $4.5 million per year) Continues to Collect Lost Distribution Revenues DP&L will bid EE/PDR savings into the PJM Capacity Market. Proceeds are used to reduce costs of Programs. Large Customer Self Direct Applications retain the rights to their EE/PDR for bidding into PJM markets 24 © 2013 McNees Wallace & Nurick LLC www.mwn.com DP&L’s Business & Government Energy Efficiency and Peak Demand Rebates Rapid Rebates for Business To be eligible for a Rapid Rebate, your equipment must: Be included on the list of eligible equipment at the time the application is submitted Use electricity as the fuel source and be installed in the DP&L service area Be comprised of new equipment purchased from a manufacturer, distributor or contractor Rapid Rebate web site ‐ http://www.dpandl.com/save‐money/business‐ government/rapid‐rebates/ 25 © 2013 McNees Wallace & Nurick LLC www.mwn.com DP&L’s Business & Government Energy Efficiency and Peak Demand Rebates Custom Rebates for Business To be eligible for a Custom Rebate, your equipment must: Be any of the following project types: An energy efficiency measure added to an existing system Early retirement of equipment and replacement with more efficient equipment Replacement of failed equipment or equipment at the end of its useful life with more efficient equipment Use electricity as the fuel source and be installed in the DP&L service area Be comprised of new equipment purchased from a manufacturer, distributor or contractor Exceed minimum federal‐ and state‐mandated efficiency standards Have a maximum payback based on electricity cost savings of 7 years and demonstrate permanency or sustainability of savings over the payback period or a 5 year period, whichever is longer Custom rebate web site ‐ http://www.dpandl.com/save‐money/business‐government/custom‐ rebates/ 26 © 2013 McNees Wallace & Nurick LLC www.mwn.com DP&L’s Business & Government Energy Efficiency and Peak Demand Rebates New Construction Rebates for Business There are two new construction rebates. Customers can take advantage of either method of saving, but not both. Lighting Power Density (LPD) Reduction for Interior Lighting. The LPD reduction incentive encourages you to install lighting designs and equipment that provide quality lighting that uses less energy. Whole Building Energy Performance Baseline Improvements. The whole building baseline improvement incentive rewards you for designing your buildings to be more efficient than a baseline building constructed to ANSI/ASHRAE/IESNA Standard 90.1‐2007. New Construction Rebate Web site ‐ http://www.dpandl.com/save‐ money/business‐government/new‐construction‐rebates/ 27 © 2013 McNees Wallace & Nurick LLC www.mwn.com DP&L’s Business & Government Energy Efficiency and Peak Demand Rebates Large Customer Self‐Direct Program One‐time rebate Ongoing exemption from Rider EER through the Public Utilities Commission of Ohio (PUCO) mercantile self‐direct pilot program for improvements made not only this year, but also during the three prior calendar years Baseline calculation used for the exemption period Must be a “Mercantile Customer” Large Customer Self‐Direct Program Web site ‐ http://www.dpandl.com/save‐money/business‐government/large‐ customer‐self‐direct‐program/ 28 © 2013 McNees Wallace & Nurick LLC www.mwn.com DP&L’s Business & Government Energy Efficiency and Peak Demand Rebates Large Customer Self‐Direct Program A “mercantile customer” is a commercial or industrial customer (the electricity consumed is for non‐residential use) that consumes more than 700,000 kilowatt‐hours per year or is part of a national account involving multiple facilities in one or more states. Mercantile customer may file an Application to commit its demand reduction, demand response, or energy efficiency programs, for integration with the EDU’s programs PUCO mercantile self‐direct pilot program applications ‐ http://www.puco.ohio.gov/puco/index.cfm/puco‐forms/mercantile‐ customer‐application‐to‐commit‐ee‐and‐pdr‐programs/ 29 © 2013 McNees Wallace & Nurick LLC www.mwn.com DP&L’s Business & Government Energy Efficiency and Peak Demand Rebates Business Energy Audit Program All commercial, industrial and government facilities may have 3 facility energy audits per calendar year. Federal‐ and state‐owned facilities along with residential buildings are not eligible for energy audits at this time. The facility must be within DP&L's service territory. Audit work related to the feasibility or study of alternative generation, including renewable generation, is not eligible for program incentives. Once the energy audit has been completed, DP&L will reimburse you 50% of the cost of the audit. DP&L will pay the remaining 50% if you implement identified electricity‐saving projects within 1 year of the audit, and the amount of your investment is equal to or greater than the cost of the audit. http://www.dpandl.com/save‐money/business‐government/business‐ energy‐audit‐program/ 30 © 2013 McNees Wallace & Nurick LLC www.mwn.com Contact Information Ed Hess McNees Wallace & Nurick LLC 21 East State Street, 17th Floor Columbus, OH 43215‐4228 Direct Telephone: 614.719.5954 Fax: 614.469.4653 ehess@mwncmh.com http://www.mwn.com/ 31 © 2013 McNees Wallace & Nurick LLC www.mwn.com The Dayton Power and Light Company New ESP Rates and Tariffs Dona Seger-Lawson DP&L ESP II Order • Term: January 1, 2014 – May 31, 2017 • Major elements: 1) 2) 3) 4) Competitive Bid A plan for divesting our generation assets Non-bypassable charge Transmission rate shift from bypassable to a portion being non-bypassable 5) Certain rates/riders will be adjusted on a seasonal quarter basis (Fuel, AER, TCRR-B, RPM, and CBT) www.dpandl.com 33 Industrial Transmission Charge Example *Difference in Standard Offer transmission charges are due to different forecasts and different distribution of costs, resulting in lower rates. www.dpandl.com 34 Competitive Bid - Generation • Previously DP&L’s Generation Rates were based on Historical Costs – set based on a point in time • Now DP&L’s Generation Rates will be phased into a Market-based Price DP&L Load Bids through Auction Process Generation Provider A Generation Provider B Generation Provider C www.dpandl.com Generation Provider D 35 Competitive Bid - Schedule 10% 40% 70% 100% 2014 2015 2016 May 31, 2017 www.dpandl.com 36 DP&L’s CBP auction schedule 2014 1 2 3 4 5 6 7 8 9 Auction 1 41 month Auction 2 29 month Auction 3 17 month 2015 10 11 12 2016 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 2017 10 10 30 30 10 40 70 Total # of Tranches www.dpandl.com 37 11 12 1 2 3 4 5 Divesting Generation - Significant Impact to the Business from Operations to Financial Structure Today – Vertically Integrated Tomorrow – Generation Separated Distribution Distribution Transmission Transmission Divested from DP&L by May 31, 2017 Generation Generation www.dpandl.com 38 ESP Order – Other elements • Significantly Excessive Earnings Threshold of 12% • Economic Development Fund - $2M annually • New Competitive Retail Enhancements 1. Eliminate minimum stay and return to firm provisions 2. Web-based portal to facilitate information sharing with CRES providers 3. Implementation of an auto cancel feature 4. Remove enrollment verification that requires a CRES provider to have the first two digits of customer name in addition to the account number 5. EDI enhancements 6. Sync list so that CRES Providers and DP&L agree on what customers are served by whom www.dpandl.com 39 What Does This Mean For DP&L’s SSO Rates? • DP&L’s SSO Generation Price will be phased out and replaced with results from the competitive bid auction • Nonbypassable Charges • Transmission Charges • Other rate changes www.dpandl.com 40 A number of parties sought rehearing on various issues in DP&L’s ESP case – PUCO has issued two Entries on Rehearing addressing certain issues – Many other issues remain open for reconsideration by the PUCO – Timing of Rehearing final order is unknown – It is possible additional changes could be ordered by the Commission www.dpandl.com 41 Potential Upcoming Issues or Changes • Ohio SB 58 may be re-introduced – Modifying energy efficiency and renewable mandates • Potential economic development incentives • DP&L was encouraged by the PUCO to file a distribution rate case, an AMI/Smart Grid plan, and a Billing system modernization plan • PUCO Retail Markets Initiative (RMI) may result in billing and system changes some of which may be very expensive to implement • DP&L has many energy efficiency and demand reduction programs www.dpandl.com 42 DP&L Business Rebate Programs The Dayton Power & Light Company 43 2014 Rebate Programs Rapid Custom www.dpandl.com New Construction 44 Rapid Rebates Prescriptive Rebates on 100+ Measures Rapid Lighting Motors •Fluorescent •VFDs •CFLs •High-bays HVAC Air Compressors •Air conditioning •Load/No Load •Air source heat pumps •Variable Speed •Chillers • Pre-approval is not required for most measures. • Can apply for projects started after January 1, 2014. www.dpandl.com 45 Custom Rebates If it doesn’t fit the Rapid Rebate program, DP&L will calculate a customized rebate… Lighting $0.05 per kWh saved + $50 per KW saved Heating, Ventilation & Air Conditioning $0.10 per kWh saved + $100 per KW saved Custom Other $0.08 per kWh saved + $100 per KW saved Pre-approval is required. www.dpandl.com 46 New Construction Rebates 2 Types of Rebate Incentives: Lighting Power Density (LPD) Reduction Whole Building Energy Performance Baseline Improvements New Construction Application must be submitted while project is in design phase. www.dpandl.com 47
© Copyright 2025