Allegheny Power 2013 Annual Report Download - page 141

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Pursuant to a formal Notice issued by the NJBPU on September 14, 2011, public hearings were held in September 2011 to solicit
comments regarding the state of preparedness and responsiveness of New Jersey's EDCs prior to, during, and after Hurricane
Irene, with additional hearings held in October 2011. Additionally, the NJBPU accepted written comments through October 28, 2011
related to this inquiry. 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
selected a consultant to further review and evaluate the New Jersey EDCs' preparation and restoration efforts with respect to
Hurricane Irene and the October 2011 snowstorm, and the consultant's report was submitted to and subsequently accepted by the
NJBPU on September 12, 2012. JCP&L submitted written comments on the report. On January 24, 2013, based upon
recommendations in its consultant's report, the NJBPU ordered the New Jersey EDCs to take a number of specific actions to
improve their preparedness and responses to major storms. The order includes specific deadlines for implementation of measures
with respect to preparedness efforts, communications, restoration and response, post event and underlying infrastructure issues.
On May 31, 2013, the NJBPU ordered that the New Jersey EDCs implement a series of new communications enhancements
intended to develop more effective communications among EDCs, municipal officials, customers and the NJBPU during extreme
weather events and other expected periods of extended service interruptions. The new requirements include making information
regarding estimated times of restoration available on the EDC's web sites and through other technological expedients. JCP&L is
implementing the required measures consistent with the schedule set out in the above NJBPU's orders.
OHIO
The Ohio Companies primarily operate under an ESP, which expires on May 31, 2014. The material terms of the ESP include:
• Generation supplied through a CBP;
• A load cap of no less than 80%, so that no single supplier is awarded more than 80% of the tranches, 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, 2016 or when
the amount of costs avoided by customers for certain types of products totals $360 million, subject to the outcome of certain PJM
proceedings. The Ohio Companies also 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.
On April 13, 2012, the Ohio Companies filed an application with the PUCO to essentially extend the terms of their ESP for two
years. The ESP 3 Application was approved by the PUCO on July 18, 2012. Several parties timely filed applications for rehearing.
The PUCO issued an Entry on Rehearing on January 30, 2013 denying all applications for rehearing. Notices of appeal to the
Supreme Court of Ohio were filed by two parties in the case, Northeast Ohio Public Energy Council and the ELPC. While briefing
has been completed, the matter has not yet been scheduled for oral argument.
As approved, the ESP 3 plan continues certain provisions from the current ESP including:
• Continuing the current base distribution rate freeze through May 31, 2016;
• Continuing to provide economic development and assistance to low-income customers for the two-year plan period at
levels established in the existing ESP;
• A 6% generation rate 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);
• Continuing to provide power to non-shopping customers at a market-based price set through an auction process; and
• Continuing Rider DCR that allows continued investment in the distribution system for the benefit of customers.
As approved, the ESP 3 plan provides additional provisions, including:
• Securing generation supply for a longer period of time by conducting an auction for a three-year period rather than a one-
year period, in each of October 2012 and January 2013, to mitigate any potential price spikes for the Ohio Companies'
utility customers who do not switch to a competitive generation supplier; and
• Extending the recovery period for costs associated with purchasing RECs mandated by SB221 through the end of the
new ESP 3 period. This is expected to initially reduce the monthly renewable energy charge for all non-shopping utility
customers of the Ohio Companies by spreading out the costs over the entire ESP period.
Under SB221, the Ohio Companies are required to implement energy efficiency programs that achieve a total annual energy savings
equivalent of approximately 1,211 GWHs in 2012 (an increase of 416,000 MWHs over 2011 levels), 1,726 GWHs in 2013, 2,306
GWHs in 2014 and 2,903 GWHs for each year thereafter through 2025. The Ohio Companies were also required to reduce peak
demand in 2009 by 1%, with an additional 0.75% reduction each year thereafter through 2018. On May 15, 2013, the Ohio Companies
filed their 2012 Status Update Report in which they indicated compliance with 2012 statutory energy efficiency and peak demand
reduction benchmarks.