BEFORE THE
PUBLIC UTILITIES COMMISSION OF OHIO
In the Matter of the Application of )
Monongahela Power Company )
for Approval of Transition Plan, )
Pursuant to 4928.31, Revised Code ) Case No. 00-02-EL-ETP
and for the Opportunity to Receive )
Transition Revenues as Authorized )
Under 4928.31 to 4928.40, )
Revised Code )
STIPULATION AND RECOMMENDATION
Rule 4901-1-30, Ohio Administrative Code ("OAC"), provides
that any two or more parties to a proceeding may enter into a
written or oral stipulation covering the issues presented in such
proceeding. This document sets forth the understanding of the
parties who have signed below (the "Signatory Parties" or
"Parties"), who recommend that the Public Utilities Commission of
Ohio ("Commission") approve and adopt, as part of its Opinion and
Order, this Stipulation and Recommendation resolving all of the
issues in the above-captioned proceeding on the application of
Monongahela Power Company, dba Allegheny Power ("Monongahela
Power" or "the Company"), pursuant to Ohio Revised Code 4928.31
for approval of Monongahela Power's transition plan and for the
opportunity to receive transition revenues as authorized by Ohio
Revised Code 4928.31 to 4928.40. This Stipulation and
Recommendation is a product of lengthy, serious, arm's-length
bargaining among the Signatory Parties (who are capable,
knowledgeable parties) with the participation of the Commission's
Staff, which negotiations were undertaken by the Signatory
Parties to settle this proceeding. This Stipulation and
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Recommendation is supported by adequate data and information; as
a package, benefits customers and the public interest; promotes
early and effective competition and the development of a
competitive marketplace; represents a just and reasonable
resolution of all issues in this proceeding; violates no
regulatory principle or practice; and complies with and promotes
the policies and requirements of Ohio Rev. Code Chapter 4928.
While this Stipulation is not binding on the Commission, it is
entitled to careful consideration by the Commission, where, as
here, it is sponsored by parties representing a wide range of
interests, including the Commission's Staff.<F1> For the purpose of
resolving all issues raised by Monongahela Power's application
and the parties' filings in this transition plan proceeding, the
Signatory Parties and each of them stipulate, agree, and
recommend as follows:
I. PARTIES
This Stipulation and Recommendation is entered into by and
among Monongahela Power, its successors and assigns, and such
other parties as are signatory hereto. All of the parties fully
support this Stipulation and urge the Commission to accept and
approve it. A party may become a Signatory Party to this
Stipulation and Recommendation after its filing by filing a
letter or memorandum with the Commission, so stating.
II. GENERATION TRANSITION CHARGE
Monongahela Power will not impose any generation transition
charge ("GTC") on any switching customer.
<F1>Staff will be considered a party for purposes of entering into
this Stipulation by virtue of O.A.C. Rule 4901-1-10(C).
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III. OTHER STRANDED COSTS
Monongahela Power shall not recover any of its other
stranded costs contained within its filing, except for regulatory
assets and educational expenses hereinafter discussed.
IV. FROZEN RATES AND MARKET DEVELOPMENT PERIOD
For customers on the Company's Rate Schedule C with a demand
greater than 300 kw, Rate Schedules CSH, D, K, P, and street
lighting, the market development period shall be a three year
period and end December 31, 2003. For all customers on Company
Rate Schedule C with a demand of 300 kW and below and Rate
Schedules A and B, the market development period shall be five
years in length and shall end on December 31, 2005. For either
Schedule B customers and/or Schedule C customers having demands
of 300 kW and below, the market development period can be
terminated at any time by the Company making a filing with the
Commission showing a 20% switching rate or effective competition.
The calculation of whether the 20% shopping level has been
satisfied will be measured based upon load for the year 2000
period. For purposes of determining whether 20% of customers
have shopped, only those customers who switch after January 1,
2001, will be counted. Rates shall be frozen for the respective
market development periods. Whenever the Company's unbundled
transmission rate changes during the market development period,
the unbundled distribution rate shall be recalculated such that,
after the rate adjustment, the sum of the new unbundled
transmission rate and the new unbundled distribution rate shall
equal the sum of the unbundled transmission rate and the
unbundled distribution rate in effect immediately prior to the
rate adjustment. This adjustment will be made consistent with
the methodology and rate determinants used by the Company for
unbundling in its transition case, as approved by the Commission.
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Ohio Revised Code 4828.40(B)(2) provides that the market
development period shall not end earlier than December 31, 2005,
unless, upon application by the electric utility, the Commission
authorizes an earlier termination date for one or more customer
classes based upon a finding that there is a 20 percent switching
rate of load by the customer class or that effective competition
exists in the utility's certified territory. By this
Stipulation, Monongahela Power, supported by the other Signatory
Parties, applies to the Commission for authorization of a market
development period termination date for industrials and large
commercial customers of December 31, 2003, based upon the
agreement to forego the recovery of transition costs beyond that
date (see Ohio Revised Code 4928.38).
V. RESIDENTIAL RATE DISCOUNT
Monongahela Power shall provide the 5% residential
generation rate discount on the generation component, including
the RTC component during the market development period. The
Company may account for the discount in any appropriate manner,
including but not limited to, accounting for the discount from
year 2000 revenues.
VI. REGULATORY ASSET TRANSITION CHARGE
The Parties agree and recommend that a regulatory asset
transition charge ("RTC") for shopping customers be established
at the rate of 0.8 mill/kwh ($0.0008) for the market development
periods for the respective customers. Accordingly, the RTC would
end for industrial and large commercial customers at December 31,
2003, and would end for residential and small commercial
customers at December 31, 2005. The accounting treatment for
regulatory assets will be determined by the Company.
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VII. TRANSFER OF ASSETS
The Parties agree and recommend that the Company be
permitted and allowed to transfer its generation assets at book
value on or after January 1, 2001, to an affiliate or other party
without any further or additional PUCO review or action
necessary, including any review or action that may have been
necessary relating to the transfer of transmission, distribution,
or ancillary service provided by such generating assets. There
will be no netting or adjustments to the RTC or other rates
related to any such transfer.
VIII. UNBUNDLING AND NON-DISCRIMINATORY DECLARATION
All Parties agree that Monongahela Power Ohio retail
customers exercising customer choice, irrespective of their
supplier, shall receive service under the same transmission and
distribution tariff. Further, the Ohio transmission rate shall
be based on the FERC-approved open access transmission tariff
("OATT") for the Company with transmission obtained from
Allegheny's control area at unbundled Ohio transmission rate
based on the OATT or under provisions of a regional transmission
entity, as applicable.
Monongahela Power shall provide distribution service within
their service territory on a basis which is just, reasonable, and
not unduly discriminatory to retail customers or suppliers of
electric energy, including suppliers of distributed generation.
The distribution services provided to each retail customers or
supplier of electric energy shall be comparable in quality and
price and subject to the same terms and conditions to those
services provided by Monongahela Power to any similarly situated
retail customer, itself or any affiliate.
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Monongahela Power and/or its affiliates will provide
transmission service for the delivery of all power, including
transmission of default service power and transmission of power
for both affiliated and non-affiliated energy service providers,
only under its pro-forma transmission tariff. Monongahela Power
and/or its affiliates will comply with the OASIS and Standards of
Conduct requirements promulgated by FERC for the delivery of all
power.
It is agreed that the unbundled generation component
includes transmission and distribution losses. All suppliers are
to provide the T&D losses.
Allegheny affiliates shall be permitted to compete
throughout the State of Ohio in providing services/products.
The Parties agree that the unbundled tariffs attached hereto
as Exhibit 1 should be approved by the Commission and filed by
the Company as part of its implementation of the Transition Plan.
IX. SHOPPING CREDITS
The shopping credits during the market development period
shall equal the unbundled generation component of the rates less
0.8 mill/kwh as detailed on Exhibit 2.
X. TAX ISSUES
The Parties acknowledge that Monongahela Power and many
customers in Ohio are faced with higher taxes on the sale of
electricity, including Monongahela Power customers, as a result
of SB 3. The Company agrees to proactively assist any of the
other parties in this proceeding in seeking legislative changes
from the Ohio Legislature so that the Monongahela Power and its
customers do not pay increased taxes.
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The Parties agree that all additional taxes resulting from
SB 3 shall be deferred as a regulatory asset by Monongahela Power
for up to two years from the date of incurrence, with carrying
costs at 9%. The Parties agree that if the Legislature has not
lowered said taxes to Monongahela Power customers or otherwise
resolved the issue within two years, such difference shall be
addressed by the Commission through accounting procedures,
refunds or an annual surcharge or credit to customers, or through
other appropriate means, to avoid placing the financial
responsibility for the difference upon the electric utility or
its shareholders.
XI. OPERATIONAL SUPPORT ISSUES
The Parties agree to adopt the provisions of the Supplier
Services Tariff filed by Monongahela Power as part of its
Transition Plan filing. To the extent that operational support
issues are not resolved by this Stipulation or by Monongahela
Power's filed Supplier Services Tariff, the Parties agree that
Monongahela Power will adopt the result of the Commission's
generic operational support process except for the provisions
listed below as Items A through J, which the Parties agree should
be approved for Monongahela Power. The Parties also recognize
that the electric generation deregulation market is evolving and
maturing and that while this Operational Support Issue agreement
in this Stipulation is accepted and appropriate at this time, it
may not be appropriate or acceptable in the future. All parties
reserve the right to seek changes to operational support
provisions in the future as the market evolves, but no party
shall seek review on the provisions of Monongahela Power's
Supplier Services Tariff or the below issues during the market
development periods, other than changes resulting from
Monongahela Power's involvement with an RTO as required under
this Stipulation. While no party shall seek Commission review on
the below items during the market development period, this shall
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not prohibit any participation of a party in any Company-
initiated filing.
A. Meter Reading & Billing-Subject to Section XIII,
Monongahela will continue to perform bi-monthly meter
reading and billing for customers.
B. Interval Meters-Monongahela's threshold for installing
interval meters to be 300kW unless Monongahela Power
determines a lower threshold is appropriate, in which
case the Company agrees to make a filing to lower the
threshold.
C. Return to Standard Offer Rate-For any commercial and
industrial customer that returns to the Standard Offer
Rate or frozen rate of Monongahela Power during the
market development periods, such commercial and
industrial customers shall remain with Monongahela
Power for a 12-month continuous period. The Parties
agree that during the market development period
residential customers that take generation services
from the company during any part of May 16 through
September 15 must remain a customer through April 15 of
the following year before they switch to another
supplier (minimum stay). Non-aggregated residential
customers will be permitted to return two times to the
default tariffs, before being required to choose a
tariff with a minimum stay period. Following the
market development period, Standard Offer service will
be provided at market prices. The Company agrees to
provide residential customers who are on a minimum stay
requirement a 30 days notice prior to the end of the
minimum stay period. The Company may be authorized by
the Commission to offer a come and go rate, an exit
fee, or other options for customers to switch from the
Company before the end of the Company's minimum stay
requirement, if any. These options are at the
discretion of the Company.
D. Energy Imbalances-Monongahela Power will determine
supply and consumption imbalances, as described in its
Suppliers Services Tariff filed in this proceeding.
E. Utility Consolidated Rate Ready Billing-Monongahela
Power agrees to provide consolidated Rate Ready Billing
on January 1, 2001.
F. Consolidated Utility Bill Ready Billing- Monongahela
Power agrees to provide consolidated Bill Ready Billing
on January 1, 2001.
G. Supplier Consolidated Billing-Beginning July 1, 2001
for C & I customers with a maximum demand greater than
300kW and July 1, 2002 for remaining customers,
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Monongahela will permit Supplier Consolidated Billing,
subject to operating constraints.
H. Electronic Data Requirements-An electronic form of
communication shall be exchanged between the Company
and a certified supplier using electronic transmission
methodologies compliant with the consensus plan for
Electronic Data Exchange prepared by the OSPO
Electronic Data Exchange Working Group.
I. Task Force-Monongahela Power agrees to work with any
Commission-sponsored task force established on
technical and operational issues that impact the
Company.
J. Purchase of Receivables-Monongahela Power and suppliers
are permitted to negotiate an agreement to have the
billing party purchase the receivables of the other
party.
XII. TRANSMISSION RTO MATTERS
Monongahela Power (and its assigns and successors) shall
satisfy the requirements of FERC Order 2000 and comply with
Section 4928.12, Ohio Revised Code. The Company further agrees
that it will turn over operational control of its transmission
facilities to a FERC-approved regional transmission organization
("RTO") by December 31, 2001. The Company shall make all
necessary filings with FERC in sufficient time to permit its
compliance with these commitments. Notwithstanding the above
commitments, Monongahela Power may, at its election, file an
application seeking authority from the Commission to extend the
date by which it is obligated hereunder to turn over operational
control of its transmission facilities to a FERC-approved
regional transmission organization ("RTO"). In prosecuting such
application before the Commission, Monongahela Power agrees that
it shall be required to demonstrate that the requested extension
is in the public interest, is consistent with the policy
objectives in Section 4928.02, Ohio Revised Code, and is made
necessary by reasons beyond Monongahela Power's reasonable
control.
<PAGE>
The Company agrees that it shall participate in reciprocity
discussions with regard to interregional transmission
transactions in order to try to eliminate or reduce any
transmission rate pancaking in Ohio. The Company also agrees it
will participate with FERC in this effort. Further, Monongahela
Power agrees to participate in any FERC proceeding filed by an
RTO located in Ohio or by an Ohio utility with regard to
addressing reciprocity and interface/seam issues. Monongahela
Power also agrees to participate in any PUCO proceedings or
collaborations that address intrastate/seam issues. Monongahela
Power recognizes that resolution of these issues is critical to a
fully functioning retail market in Ohio and will endeavor to
propose and resolve issues as promptly as possible.
Monongahela Power shall file with the appropriate regulatory
authority or authorities for a determination of which of its
facilities are transmission facilities or which are distribution
in accordance with the seven (7) factor test set forth in FERC
Order No. 888, 61 Fed. Reg. 21,540, 21,620 (1996), or any
applicable successor test. The filing shall take place no later
than March 31, 2001. Monongahela Power will confer with the PUCO
regarding its seven (7) factor test prior to filing it, and will
convene a meeting to discuss the filing with other interested
parties that request such a meeting.
XIII. METERING AND BILLING
Monongahela Power hereby agrees that it shall permit others
to provide metering and/or billing in its service territory prior
to the Commission's investigation on or before 2003 as provided
in SB 3. Monongahela Power agrees that others may provide
metering and/or billing for commercial and industrial customers
over 300kW load beginning on July 1, 2001. All other customers
may begin on July 1, 2002, subject to operating constraints. The
metering and billing credits to customers shall be based on the
cost schedule attached hereto as Exhibit 3, for which the Parties
request Commission approval. For those customers not electing
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metering and billing from another party and currently receiving
bi-monthly meter reading and billing from the Company, the
Company shall continue its bi-monthly meter reading and billing.
XIV. CONSUMER EDUCATION
The Parties recognize and acknowledge that the available
dollars for consumer education in the Monongahela Power service
territory are limited due to the small size of that territory and
relatively small number of customers. Accordingly, the Parties
hereby agree that the Company shall contract with Dollar Energy
Fund to administer a territory-specific community outreach
program. This community outreach program shall endeavor to
educate all customer classes. The Parties agree that the
educational costs, both for the statewide and local efforts,
estimated to be $330,000 over the market development period, are
to be deferred as a regulatory asset at the rate of 9%. Company
reserves the right to seek recovery through an appropriate rate
proceeding.
Pursuant to the Commission's Rules, Monongahela Power will
form a service territory-specific advisory group (local education
group) which will have input on the goals and messages of the
service territory-specific customer education plan and ensure
that the plan is consistent with the overall theme of the
statewide plan. The service territory-specific advisory group
will be comprised of members representing customer class
diversity, comparable to the members of the statewide advisory
group.
XV. UNIVERSAL SERVICE/LOW INCOME
The current Monongahela Power PIPP tariff rate rider shall
be the rate for the Universal Service Fund Rider until such time
as a different rate is proposed by the Ohio Department of
Development and approved by the Commission. The Universal
Service Fund Rider and Energy Efficiency Fund Rider will be that
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proposed by the Ohio Department of Development and approved by
the Commission.
XVI. ACCOUNTING
The Parties agree that the Company needs no further approval
for accounting treatment to implement this Stipulation and
Transition Plan. The Parties agree that as part of an Order in
this case the Commission should, to the extent necessary, grant
the necessary accounting authority for Monongahela Power's
regulatory books and records to allow the provisions of this
settlement to be implemented. The two new regulatory assets of
increased taxes and educational expenses have been separately
identified and the Parties have had an opportunity for hearing in
this proceeding. Regulatory assets created or covered pursuant
to this Stipulation are in compliance with any other necessary
requirements.
XVII. TRANSITION PLAN
The Parties agree and recommend that the Monongahela Power
Transition Plan, as filed and modified herein, should be approved
by the Commission. The Parties recommend that the Commission
make all necessary findings to approve the Transition Plan.
XVIII. OTHER CONDITIONS
Monongahela Power shall seek no waiver of the PUCO rules
respecting Code of Conduct without providing notice to the
Parties to this Stipulation as to the specific waiver sought and
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the grounds therefor, and shall adhere to the Code of Conduct
Rules.
In arms-length bargaining, the parties have negotiated terms
and conditions that are embodied in this Stipulation and
Recommendation. This agreement resolves a variety of difficult,
complicated issues that would otherwise be resolved only through
expensive, complex, protracted litigation, which would have the
effect of slowing the development of a competitive marketplace.
This Stipulation and Recommendation contains the entire agreement
among the Signatory Parties, and embodies a complete settlement
of all claims, defenses, issues, and objections in this preceding
period. Any objections to Monongahela Power's transition plan or
motions filed by the Signatory Parties that are inconsistent with
this Stipulation shall be deemed withdrawn upon approval by the
Commission of this Stipulation and Recommendation. The Signatory
Parties agree that the transition costs and resulting transition
charges and other unbundled components of the Tariff schedules
recommended by this Stipulation and Recommendation are supported
by the record in this case, and are just and reasonable under
Ohio Rev. Code Chapters 4909 and 4928 including but not limited
to 4928.34, 4928.39 and 4928.40. The Signatory Parties agree
that this Stipulation and Recommendation is in the best interests
of the public and of all parties, and urge the Commission to
adopt it.
This Stipulation and Recommendation is submitted for
purposes of this case and should not be understood to reflect the
positions which the Signatory Parties would have taken if all of
the issues in the proceeding had been litigated. As with most
stipulations reviewed by the Commission, the willingness of the
Signatory Parties to sponsor this document jointly is predicated
on the reasonableness of the Stipulation and Recommendation taken
as a whole.
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This Stipulation and Recommendation is not to be relied upon
in any other proceedings, except as necessary to enforce the
terms of this Stipulation and Recommendation. The parties agree
that if the Commission rejects all or any part of this
Stipulation, or otherwise materially modifies its terms, any
adversely affected party shall have the right within thirty (30)
business days of the Commission's order, either to file an
application for rehearing or to withdraw from the Stipulation by
filing a notice with the Commission. The Signatory Parties agree
to, and intend to support the reasonableness of, this Stipulation
and Recommendation before the Commission and in any appeal from
the Commission's adoption or enforcement of this Stipulation and
Recommendation. If not fully adopted by the Commission or if
rejected by the Supreme Court of Ohio, the Stipulation and
Recommendation shall not prejudice any of the positions taken by
any party on any issue before the Commission in any other
proceeding and shall not be admissible evidence in this or any
other proceeding.
In the event this Stipulation and Recommendation is rejected
in whole or in part by the Commission or an appellate court, the
Signatory Parties recommend that the Transition Plan recommended
by this Stipulation and Recommendation be approved as Monongahela
Power's Interim Plan.
IN WITNESS WHEREOF, the undersigned parties agree to this
Stipulation and Recommendation as of this ____ day of June, 2000.
The undersigned parties respectfully request the Commission to
issue its Opinion and Order approving and adopting this
Stipulation.
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MONONGAHELA POWER COMPANY OHIO PARTNERS FOR AFFORDABLE
ENERGY
By_______________________ By___________________________
THE STAFF OF THE PUBLIC
UTILITIES COMMISSION OF OHIO STRATEGIC ENERGY, L.L.C.
By____________________________ By____________________________
OHIO CONSUMERS' COUNSEL EXELON ENERGY
By____________________________ By____________________________
INDUSTRIAL ENERGY USERS-OHIO PP&L ENERGY PLUS CO., LLC
By____________________________ By____________________________
THE OHIO MANUFACTURERS' OHIO MARKETER'S COALITION
ASSOCIATION
By____________________________ By____________________________
OHIO COUNCIL OF RETAIL COLUMBIA ENERGY SERVICES CORP.
MERCHANTS and COLUMBIA ENERGY POWER
MARKETIING CORP.
By____________________________ By____________________________
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AMERICAN MUNICIPA: POWER-OHIO KROGER COMPANY
By____________________________ By_____________________________
OHIO RURAL ELECTRIC COOPS and NATIONAL ENERGY MARKETERS
BUCKEYE POWER ASSOCIATION
By____________________________ By______________________________
OHIO ENVIRONMENTAL COUNCIL CORPORATION FOR OHIO
APPALACHIAN DEVELOPMENT
By____________________________ By_______________________________
OHIO DEPARTMENT OF MIDATLANTIC SUPPLY
DEVELOPMENT ASSOCIATION
By____________________________ By_______________________________
