Anyone else seeing the proposed changes to FirstEnergy's Schedule GS in Ohio? They're looking at restructuring the demand charges for small commercial accounts under 100kW. The rate case filing shows they want to move from a single demand charge to a two-part structure with on-peak and off-peak components. This could significantly impact our smaller clients who don't have sophisticated load management. I'm in Youngstown so we see a lot of Ohio Edison accounts. Has anyone run preliminary calculations on the impact?
FirstEnergy rate case - Schedule GS changes effective 2013
Jim, I've been following this closely since we have some clients with operations in both Ohio and Indiana. The two-part demand structure is similar to what Duke Energy implemented here in Indianapolis last year. From our analysis, customers with relatively flat load profiles will see increases of 8-12%, but those with good load factor could actually see savings. The key is the on-peak window they're proposing - 1 PM to 6 PM weekdays. Are you seeing any indication of time-of-use options for these accounts?
This sounds familiar to what Duke did here in the Carolinas around 2010. The devil is in the details with these demand restructures. Make sure you're looking at the coincident vs non-coincident demand methodology. Duke's implementation had some quirks where the billing demand calculation changed mid-year and caught a lot of people off guard. Also check if there's a minimum bill provision that might kick in for low-usage months.
We're seeing similar moves across the Midwest. Here in Wisconsin, WE Energies just filed for a rate case that includes demand charge restructuring for Schedule Cg-1 accounts. The regulatory trend seems to be pushing more sophisticated rate structures down to smaller commercial customers. I think the utilities are trying to better align costs with usage patterns, but it's definitely making our job more complex. Jim, have you seen any indication of when the Ohio commission might rule on this?
Linda, the PUCO hearing is scheduled for February 14th. I've been reviewing the testimony and it looks like the industrial intervenors are pushing back pretty hard on the demand charge changes. The Ohio Manufacturers Association filed some pretty compelling evidence that this could hurt economic development. Derek, you mentioned minimum bill provisions - that's exactly what I'm worried about. FirstEnergy's proposal includes a minimum monthly charge that's 40% higher than current levels.
I'm dealing with something similar here in Georgia with Georgia Power's Schedule GSD-1 modifications. The minimum bill increase is the killer for a lot of small commercial accounts - restaurants, small retail, etc. We've calculated that about 30% of our clients in that rate class would see their minimum monthly charges go from around $45 to $75, regardless of usage. That's a significant hit for businesses that are seasonal or have variable operations.
Lee brings up a good point about seasonal businesses. In Indiana, we've found that the new demand structures really penalize accounts with high seasonality. A landscape contractor who uses irrigation pumps for three months a year can get hit with demand charges based on their peak summer usage even in winter months when they're barely using any power. The ratchet provisions in some of these new tariffs are brutal.
Update on Wisconsin - WE Energies got partial approval for their demand charge restructure. The PSC knocked down the minimum bill increase but approved the two-part demand structure. Implementation starts in July. Jim, any word on how Ohio came out? I know the February hearing happened but haven't seen the final order yet.