Allegheny Power 2011 Annual Report Download - page 142

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On September 22, 2011, the NJBPU ordered that JCP&L hire a Special Reliability Master, subject to NJBPU approval, to evaluate
JCP&L's design, operating, maintenance and performance standards as they pertain to the Morristown, New Jersey underground
electric distribution system, and make recommendations to JCP&L and the NJBPU on the appropriate courses of action necessary
to ensure adequate reliability and safety in the Morristown underground network. On October 12, 2011, the Special Reliability Master
was selected and on January 31, 2012, the project report was submitted to the Company and NJBPU Staff. On February 10, 2012,
the NJBPU accepted the report and directed the Staff to present recommendations on March 12, 2012, on actions required by
JCP&L to ensure the safe, reliable operation of the Morristown network.
Pursuant to a formal Notice issued by the NJBPU on September 14, 2011, public hearings were held on September 26 and 27,
2011, to solicit public comments regarding the state of preparedness and responsiveness of the local electric distribution companies
prior to, during and after Hurricane Irene. By subsequent Notice issued September 28, 2011, additional hearings were held in
October 2011. Additionally, the NJBPU accepted written comments through October 31, 2011 related to this inquiry. On December
4, 2011, the NJBPU Division of Reliability and Security issued a Request for Qualifications soliciting bid proposals from qualified
consulting firms to provide expertise in the review and evaluation of New Jersey's electric distribution companies' preparation and
restoration to Hurricane Irene and the October 2011 snowstorm. Responsive bids were submitted on January 20, 2012, and the
report of selected bidder is to be submitted to the NJPBU 120 days from the date the contract is awarded. On December 14, 2011,
the NJBPU Staff filed a report of its preliminary findings and recommendations with respect to the electric utility companies' planning
and response to Hurricane Irene and the October 2011 snowstorm. The NJBPU has not indicated what additional action, if any,
may be taken as a result of information obtained through this process.
OHIO
The Ohio Companies operate under an ESP, which expires on May 31, 2014. The material terms of the ESP include: generation
supplied through a CBP commencing June 1, 2011; a load cap of no less than 80%, which also applies to tranches assigned post-
auction; a 6% generation discount to certain low income customers provided by the Ohio Companies through a bilateral wholesale
contract with FES (FES is one of the wholesale suppliers to the Ohio Companies); no increase in base distribution rates through
May 31, 2014; and a new distribution rider, Rider DCR, to recover a return of, and on, capital investments in the delivery system.
The Ohio Companies also agreed not to recover from retail customers certain costs related to transmission cost allocations by PJM
as a result of ATSI's integration into PJM for the longer of the five-year period from June 1, 2011 through May 31, 2015 or when
the amount of costs avoided by customers for certain types of products totals $360 million dependent on the outcome of certain
PJM proceedings, agreed to establish a $12 million fund to assist low income customers over the term of the ESP and agreed to
additional matters related to energy efficiency and alternative energy requirements.
Under the provisions of SB221, the Ohio Companies are required to implement energy efficiency programs that will achieve a total
annual energy savings equivalent to approximately 166,000 MWH in 2009, 290,000 MWH in 2010, 410,000 MWH in 2011, 470,000
MWH in 2012 and 530,000 MWH in 2013, with additional savings required through 2025. Utilities were also required to reduce peak
demand in 2009 by 1%, with an additional 0.75% reduction each year thereafter through 2018.
In December 2009, the Ohio Companies filed the required three year portfolio plan seeking approval for the programs they intend
to implement to meet the energy efficiency and peak demand reduction requirements for the 2010-2012 period. The Ohio Companies
expect that all costs associated with compliance will be recoverable from customers in 2012. The PUCO issued an Opinion and
Order generally approving the Ohio Companies' three-year plan, and the Ohio Companies are in the process of implementing those
programs included in the Plan. OE fell short of its statutory 2010 energy efficiency and peak demand reduction benchmarks and
therefore, on January 11, 2011, it requested that its 2010 energy efficiency and peak demand reduction benchmarks be amended
to actual levels achieved in 2010. Moreover, because the PUCO indicated, when approving the 2009 benchmark request, that it
would modify the Ohio Companies' 2010 (and 2011 and 2012) energy efficiency benchmarks when addressing the portfolio plan,
the Ohio Companies were not certain of their 2010 energy efficiency obligations. Therefore, CEI and TE (each of which achieved
its 2010 energy efficiency and peak demand reduction statutory benchmarks) also requested an amendment if and only to the
degree one was deemed necessary to bring them into compliance with their yet-to-be-defined modified benchmarks. On May 19,
2011, the PUCO granted the request to reduce the 2010 energy efficiency and peak demand reductions to the level achieved in
2010 for OE, while finding that the motion was moot for CEI and TE. On June 2, 2011, the Ohio Companies filed an application for
rehearing to clarify the decision related to CEI and TE. On July 27, 2011, the PUCO denied that application for rehearing, but clarified
that CEI and TE could apply for an amendment in the future for the 2010 benchmarks should it be necessary to do so. Failure to
comply with the benchmarks or to obtain such an amendment may subject the Ohio Companies to an assessment of a penalty by
the PUCO. In addition to approving the programs included in the plan, with only minor modifications, the PUCO authorized the Ohio
Companies to recover all costs related to the original CFL program that the Ohio Companies had previously suspended at the
request of the PUCO. Applications for Rehearing were filed by the Ohio Companies, Ohio Energy Group and Nucor Steel Marion,
Inc. on April 22, 2011, regarding portions of the PUCO's decision, including the method for calculating savings and certain changes
made by the PUCO to specific programs. On September 7, 2011, the PUCO denied those applications for rehearing. The PUCO
also included a new standard for compliance with the statutory energy efficiency benchmarks by requiring electric distribution
companies to offer “all available cost effective energy efficiency opportunities” regardless of their level of compliance with the
benchmarks as set forth in the statute. On October 7, 2011, the Ohio Companies, the Industrial Energy Users - Ohio, and the Ohio
Energy Group filed applications for rehearing, arguing that the PUCO'S new standard is unlawful. The Ohio Companies also asked
the PUCO to withdraw its amendment of CEI's and TE's 2010 energy efficiency benchmarks. The PUCO did not rule on the
Applications for Rehearing within thirty days, thus denying them by operation of law. On December 30, 2011, the Ohio Companies