H O WA R D P E T R I C O F F V O RY S , S AT E R , S E Y M O U R & P E AS E L L P

ASSOCIATI

ON OF

ENERGY

ENGINEERS –

SW O

HIO

PJ M

AN

D O

HI O

RE

GU

L AT

OR

Y C

HA

NG

ES

- 2

01

3

1

H O WA R D P E T R I C O F F V O RY S , S AT E R , S E Y M O U R & P E AS E L L P

REGULATORY COMPACT

Electric Utilities granted a monopoly franchise from the state

Electric Utilities build, own, operate and maintain electric service network sufficient to supply service to all customers in their service territory

Generation

Transmission

Distribution

Rates and terms of service set by Public Service Commission

Reasonable return on investment so long as it is

Reasonable Level of Service

Used and Useful

2

H O WA R D P E T R I C O F F V O RY S , S AT E R , S E Y M O U R & P E AS E L L P

RATES SET UNDER COST OF SERVICE

Test Year Inventory of investment – Rate Base

Test Year accounting of costs

Operation and maintenance

Administrative and Executive

Return of and on the Rate Base Investment.

Allocation of Costs based on “cost causation”

Public Service Commission sets rates and terms of service by type

3

H O WA R D P E T R I C O F F V O RY S , S AT E R , S E Y M O U R & P E AS E L L P

REGIONAL TRANSMISSION ASSOCIATIONSEnergy Policy Act creates Regional Transmission Association

Co ordinate dispatch among utilities

Assure regional service stability

Planning on a regional basis

Markets

Real Time

Next Day & Beyond

Capacity

States Decide whether participation in mandatory / Rate impact

4

H O WA R D P E T R I C O F F V O RY S , S AT E R , S E Y M O U R & P E AS E L L P

PJM INTERCONNECTIONAll four of Ohio’s major investor owned utility groups belong

Operates the grid – though ownership remains with the utilities

All additions of both sources and sinks and approved

Entrant pays cost to modify the system

Planning functions

generation

transmission

conservation

Markets

marginal pricing models

clearing house for all load serving entities

5

H O WA R D P E T R I C O F F V O RY S , S AT E R , S E Y M O U R & P E AS E L L P

DEVELOPMENTS AT PJM

Base Residual Auction – Conducted three years in advance

All generators must bid or be pledged to FPP

Conservation (Demand Response) is a bid

Constrained areas – priced separately

Base Residual Auction for service year 2015-2016 was $59 down from $136 per Megawatt Day

Cost to Load Serving Entities & End Users Down

Revenue to Generators Down

6

H O WA R D P E T R I C O F F V O RY S , S AT E R , S E Y M O U R & P E AS E L L P

OHIO REGULATION CHANGES – PJM CAPACITYAEP Ohio Cases No. 10-2929-EL-UNC and 11-346-EL-SSO

State Compensation Plan for Capacity

Applies only to FRR utilities

AEP Ohio

Ohio Power

Columbus Southern Power

Duke Energy Ohio

AEP Ohio now receiving the difference between RPM Capacity cost and $188.88 per MW/d - $1 MWh straight charge and deferral of the rest.

Duke Energy Ohio – Petition for like program – case pending

7