Draft Ohio Nuclear Subsidy Bill Appears To Leave Retail Suppliers With Unrecoverable Costs?
April 05,2019
A version of a draft bill being circulated in Ohio to provide nuclear subsidies in Ohio would require electric distribution companies to collect costs of the program from delivery customers; however, it appears to leave retail suppliers with unrecoverable costs
We note that the draft bill is not final, has not been introduced, and may still be further revised. Talk concerning the bill is that it would essentially eliminate current clean energy programs (such as the alternative energy portfolio standard which retail suppliers are subject to and which are addressed on the supply side of the bill) and the nonbypassable energy efficiency programs charged under delivery rates (which only large customers may avoid)
However, the language of a draft version of the bill seemingly eliminates the requirement for customers to pay an RPS compliance charge, but only eliminates for the distribution company the alternative energy compliance obligation, and does not eliminate the RPS obligation for retail suppliers, as more fully discussed below. If the intent of the bill is to be competitively neutral with respect to retail suppliers, we do not believe the language in the reviewed draft meets this intent
The draft bill would establish a clean air program (nuclear subsidy) to be paid for by all delivery customers
Notably, the draft would relieve customers who pay the nuclear subsidy from paying any cost related to the alternative energy standards (RPS) program
While the draft would reduce the alternative energy standards baseline for an, "electric distribution company," to account for load paying the nuclear subsidy (essentially ending the RPS obligation for such load), no such provision would reduce the alternative energy standards baseline for an, "electric services company," which is a term that includes retail suppliers
The apparent unrecoverable costs for retail suppliers arise from the interaction of the following provisions.
First, the draft provides, "Each retail electric customer of an electric distribution utility in this state shall pay a per-account monthly charge, which shall be billed and collected by each electric distribution utility and remitted to the state treasurer for deposit into the Ohio clean air program fund, created under section 3706.46 of the Revised Code."
The draft further provides, "A customer required to pay the [clean air] monthly charge under this section shall be exempt from paying costs associated with the requirements under sections 4928.64 and 4928.66 of the Revised Code, unless the customer opts, in accordance with section 3706.471 of the Revised Code, to pay those costs in addition to the charge imposed under this section."
Notably, 4928.64 requires retail suppliers to meet various alternative energy requirements (e.g. RPS)
Then, in an amendment to R.C. 4928.644, relating to the alternative energy compliance load baseline, the draft provides, "For an electric distribution utility, neither baseline shall include the load and usage of a customer who is subject to the monthly charge established under section 3706.47 of the Revised Code [the clean air program] unless or until the customer opts to pay the charge associated with compliance with section 4928.64 of the Revised Code." [emphasis added]
However, the draft bill does not provide for any adjustment to the baseline for an "electric services company"
So while the electric distribution utility's alternative energy baseline (and therefore obligations) would no longer include load which pays the nuclear charge (who are exempt from the RPS charge), there is no similar provision reducing a retail supplier's alternative energy baseline and attendant obligations, but retail supplier customers who pay the nuclear charge (to the EDC) would not be required to pay RPS compliance costs to the supplier
The draft also would create a program by which a customer could avoid the nuclear charge, as well as the RPS charge (and an otherwise nonbypassable energy efficiency charge), by committing, under a three year agreement, to satisfy part of their demand from a "clean air resource"