y Workshop JJ

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
[email protected]
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
[email protected]
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
[email protected]
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© 2013 McNees Wallace & Nurick LLC
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Presentation Overview
 Shopping Opportunities
 Value Available from RTO Programs
 Opportunities to Help Satisfy Ohio’s Portfolio Mandates and Avoid Riders
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© 2013 McNees Wallace & Nurick LLC
www.mwn.com
Shopping Opportunities
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© 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/
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© 2013 McNees Wallace & Nurick LLC
www.mwn.com
Value Available from RTO Programs
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© 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
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© 2013 McNees Wallace & Nurick LLC
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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
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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
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© 2013 McNees Wallace & Nurick LLC
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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
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© 2013 McNees Wallace & Nurick LLC
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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
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© 2013 McNees Wallace & Nurick LLC
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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
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© 2013 McNees Wallace & Nurick LLC
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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
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© 2013 McNees Wallace & Nurick LLC
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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)
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© 2013 McNees Wallace & Nurick LLC
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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
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© 2013 McNees Wallace & Nurick LLC
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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: [email protected]
• Kevin Murray: [email protected]
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© 2013 McNees Wallace & Nurick LLC
www.mwn.com
Opportunities to Help Satisfy Ohio’s Portfolio Mandates and Avoid Riders
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© 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))
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© 2013 McNees Wallace & Nurick LLC
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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))
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© 2013 McNees Wallace & Nurick LLC
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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%
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© 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%
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© 2013 McNees Wallace & Nurick LLC
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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
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© 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
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© 2013 McNees Wallace & Nurick LLC
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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
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© 2013 McNees Wallace & Nurick LLC
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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/
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© 2013 McNees Wallace & Nurick LLC
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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/
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© 2013 McNees Wallace & Nurick LLC
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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/
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© 2013 McNees Wallace & Nurick LLC
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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/
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© 2013 McNees Wallace & Nurick LLC
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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/
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© 2013 McNees Wallace & Nurick LLC
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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/
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© 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
[email protected]
http://www.mwn.com/
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© 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
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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
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Competitive Bid - Schedule
10%
40%
70%
100%
2014
2015
2016
May 31, 2017
www.dpandl.com
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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
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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
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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
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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
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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
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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
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DP&L Business Rebate Programs
The Dayton Power & Light Company
43
2014 Rebate Programs
Rapid
Custom
www.dpandl.com
New
Construction
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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
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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
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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
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