Jim Sconyers
jim_scon@yahoo.com
304.906.6628
Remember: Mother Nature bats last.
--- On Fri, 2/27/09, Ned Ford Ned.Ford@FUSE.NET wrote: From: Ned Ford Ned.Ford@FUSE.NET Subject: Ohio DP&L settlement - Summary of Case To: CONS-SPST-GLOBALWARM-CHAIRS@LISTS.SIERRACLUB.ORG Date: Friday, February 27, 2009, 11:19 AM
On Monday, February 23rd Sierra Club settled an Electric Security Plan case with Dayton Power and Light (DP&L), along with industrial, commercial, residential, low income and local government representatives and the Ohio Environmental Council. This case resulted from passage of Senate Bill 221 in May of 2008. The Sierra Club's primary goal was to ensure fulfillment of the energy efficiency and renewable energy requirements of SB 221. The case involved important rate reforms and other issues, some of which affect our basic strategy to improve the financial rewards for DP&L to meet and/or exceed the energy saving provisions of the new law and to maximize renewable resource use.
DP&L sells about $1 billion worth of electricity each year, about 9% of Ohio's $11 billion electric spending. SB 221 requires DP&L (and the other regulated electric companies) to use energy efficiency programs to reduce their gross sales one third of one percent in 2009. The reduction goal increases each year until 2019 when new annual savings should increase 2% each year thereafter. The settlement does not change the company's requirement under SB221, but provides strong assurances that the savings will occur as stated. (About 12% of Ohio's electricity is sold by municipally owned public power companies or co-ops, which are not affected by SB 221 or State regulation).
DP&L has agreed to a customer advisory group which will provide ongoing recommendations to improve program performance and cost-effectiveness. The impact will not be determined until after the year's end, but this settlement should cause DP&L to spend about $5 million on efficiency programs in 2009, which can be expected to cause about $15 million in customer cost savings, spread over some future years. Some of the savings will be retained by the company or shared with the company, depending on your perspective, to compensate for the loss of expected sales. Program costs are generally paired with avoidable costs for electricity generation, and are therefore not a direct cost to the utility, but rather replace customer costs for fuel and operation and maintenance with the cost of the efficiency programs.
SB 221 also requires each Ohio regulated electric company to provide 0.25% of it's generation from renewable energy in 2009 (rising to 12.5% in 2025), but since no commercial wind exists in Ohio in 2009, the first year requirements will be met with purchases of renewable electricity from nearby states.
DP&L is the smallest of the four companies directly affected by SB 221, and was the last to file a new plan. Duke settled it's ESP case last October along similar lines, although the Duke settlement includes an incentive payment for overcompliance, which we strongly support as a good economic deal for Duke customers and the environment. DP&L proposed cost recovery for efficiency programs in a different manner and was not interested in defining a plan for overcompliance, but agreed to some changes we proposed to keep that possibility open in the future.
DP&L is one of the two major Ohio utilities which have some good wind resources in their service area, and apparently plans to develop some of those resources in the next few years. DP&L's plan includes provisions for net metering of customer-generated renewable power, and grid modifications to facilitate renewable energy. Terms for those elements of the plan were improved in the settlement.
This case was advanced through a very effective alliance of consumer and environmental organizations which developed last year when rules to implement SB 221 were developed. This alliance has allowed sharing of analytical resources, and has probably added considerable speed to the high pressure negotiations. The alliance, led by Ohio Consumers' Counsel Janine Migden-Ostrander, a Sierra Club member, one time Ohio Chapter Vice Chair, and the Club's attorney for approximately 26 utility interventions in the 1990's, has substantially enhanced Ohio's move toward a sustainable and affordable energy future.
Electric utility efficiency programs are well known in parts of the U.S. but are slow in coming to the lower Midwest coal producing states. In the last year Illinois, Ohio, Michigan and Pennsylvania have embarked along similar paths. Illinois and Ohio have the strongest laws, which will take them to the level of efficiency activity that the strongest states presently have. Saving this much electricity will be enough to eliminate all new growth of greenhouse gases from electricity generation in these states, and perhaps much more, depending on the economy and how well the public and the regulators come to understand the economic benefits of these programs.
For more information contact:
Ned Ford Energy Advisor Sierra Club, Ohio Chapter 513/600-4200 Ned.Ford@fuse.net
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