BEFORE the PUBLIC UTILITIES COMMISSION of OHIO in The

BEFORE THE PUBLIC UTILITIES COMMISSION OF OHIO In the Matter of the Commission's ) Investigation of Ohio's Retail Electric ) Case No. 12-3151-EL-COI Service Market. ) Reply Comments of the Retail Energy Supply Association Date: April 5, 2013 Introduction The Retail Energy Supply Association ("RESA")' is a broad and diverse group of retail energy suppliers who share the common vision that competitive retail energy markets deliver a more efficient, customer-oriented outcome than a regulated utility structure. RESA timely filed initial comments in this proceeding and hereby files these reply comments. The members of RESA again applaud the Public Utilities Commission of Ohio ("Commission") for initiating the instant proceeding. With Ohio's manufacturing and industrial base in the early stages of a rebound from the economic downturn, now is an ideal time for the Commission to take stock of current market rules to determine whether additional actions can be taken to increase the benefits of competitive retail markets to businesses and residents in the state. Further, it is prudent for the Commission to take the steps necessary to complete the electric restructuring process in Ohio, initially enabled by the General Assembly. Removing legacy barriers to a fully functional competitive retail electric market helps to ensure that Ohio maintains a supportive economic climate for its current and future businesses and residents. For these reasons, RESA enthusiastically supports the Commission's initiative and submits these reply comments in order to assist the Commission's evaluation of "the vitality of the competitive retail electric service markets" and "the extent to which barriers may exist to a consumer's means to choose a retail electric service that meets their needs." 2 'RESA's members include: Ameren Energy Marketing DBA Homefield Energy; Champion Energy Services, LLC; ConEdison Solutions; Constellation NewEnergy, Inc.; Direct Energy Services, LLC; Energetix, Inc.; Energy Plus Holdings LLC; Exelon Energy Company; GDF SUEZ Energy Resources NA, Inc.; Green Mountain Energy Company; Hess Corporation; IDT Energy, Inc.; Integrys Energy Services, Inc.; Just Energy; Liberty Power; MC Squared Energy Services, LLC; Mint Energy, LLC; NextEra Energy Services; Noble Americas Energy Solutions LLC; PPL EnergyPlus, LLC; Reliant and TriEagle Energy, L.P. The comments expressed in this filing represent the position of RESA as an organization but may not represent the views of any particular member of RESA. 21n the Matter of the Commission's Investigation of Ohio's Retail Electric Service Market, Case No. 12-3151-EL- COl, Entry at 1, 2 (December 12, 2012). Through its reply comments, RESA addresses several salient topics addressed in the numerous initial comments that were filed. RESA's silence on any particular topic should not be construed as its agreement with those comments. Commission Authority A number of commentators argue that some of the issues raised are outside the Commission's authority or that certain suggestions cannot be accomplished under the current statutory framework. 3 These comments should not dissuade the Commission or inhibit it from moving the competitive market forward. The Commission has the authority to examine the retail electric service market in fuii. 4 Moreover, the Commission possesses the clear ability to remedy regulatory defects, eliminate economic and competitive barriers, and remove service bottlenecks in the electric retail marketplace. 5 While the Commission may ultimately need to work with the Ohio General Assembly to enact statutory revisions for certain structural changes and to end the hybrid system currently in place for default service, it is reasonable for the Commission to use modifications. The potential need for legislative action to enhance Ohio's markets is no reason to forego an honest and transparent assessment of the state of those markets, nor should it prevent the Commission from taking action to appropriately and immediately address the barriers impeding the further development of Ohio's retail electric marketplace. Similarly, the Commission should not be influenced by arguments that this review is premature because Ohio is only in the early stages of developing its retail electric service market 'For example, The Cleveland Electric Illuminating Company, Ohio Edison Company and The Toledo Edison Company (collectively "FirstEnergy") Initial Comments at 11-13, 25, and 29-30; Ohio Power Company Initial Comments at 15-16, 23, and 25-26; Industrial Energy Users-Ohio ("IEU-Ohio") Initial Comments at 28-30 and 32; and FirstEnergy Solutions Corp. ("FES") Initial Comments at 20-22 and 24-25. 4See, for example, Sections 4905.04, 4905.05, 4905.06, 4928.02, 4928.06(A), and 4928.143(B)(2)(d), Revised Code. 51d. in much of the state. 6 That argument is simply incorrect. The original law opening Ohio's retail electricity market became effective thirteen years ago in 1999 and was followed by a change in the structure of utility provided electricity supply and the addition of alternative energy and conservation components in 2008 through Senate Bill 221 ("SB 221"). If any Ohio utility territories are viewed as still being in the early stages of development over a decade after the initial law was passed, it can do nothing but bolster the argument that the Commission should be investigating the causes of the delays in market growth. In addition, the General Assembly is currently reviewing the effectiveness of the energy efficiency, peak demand reduction, and alternative energy standards created by SB 221. As such, it would appear that the General Assembly clearly recognizes the prudency of reviewing the status of the Ohio marketplace and how it can be enhanced to benefit customers and other stakeholders as we approach the five-year anniversary of the effective date of SB 221. RESA is grateful to this Commission for its leadership and for a number of decisions handed down over the past two years that helped to push the Ohio market forward in significant ways. 8 These positive changes are bringing new suppliers and products to the market and improving choice and value for customers. More can be done, however, to reduce uncertainty 60ffice of the Ohio Consumers' Counsel ("0CC") Initial Comments at 3-4. 'Pending Ohio Senate Bill 58 has been referred to the Senate Public Utilities Committee and the Chairman of that committee is holding general hearings on the energy efficiency, peak demand reduction, and alternative energy mandates in SB 221. 8For instance, the Commission adopted a compensation level for Columbus Southern Power Company and Ohio Power Company (collectively, "AEP-Ohio" or "Ohio Power") that encouraged further development of the competitive electric marketplace in AEP Ohio's service territories, and the Commission approved a modified electric security plan pursuant to which competitive bidding for AEP Ohio's standard service offer load will begin. Also, AEP Ohio will develop an electronic system for CRES providers to access customer data, and AEP Ohio's customer switching fee was reduced. See, respectively, In the Matter of the Commission Review of the Capacity Charges of Ohio Power Company and Columbus Southern Power Company, Case No. 10-2929-EL-UNC, Opinion and Order (July 2, 2012); and In the Matter of the Application of Columbus Southern Power Company and Ohio Power Company for Authority to Establish a Standard Service Offer Pursuant to Section 4928.143, Revised Code, in the Form of an Electric Security Plan, Case Nos. I 1-346-EL-SSO, et al., Opinion and Order (August 8, 2012) and Entry on Rehearing (January 30, 2013). and increase the sustainability of the competitive markets in 2015 and beyond. 9 While the positive steps the Commission has taken to date are growing the market, additional advancements, several of which RESA proposes in this proceeding, are needed to ensure that Ohio's energy policy and economic climate are attractive to both prospective and existing employers looking to increase investment in the state. When considering that Pennsylvania just surpassed 2 million shopping customers, without the assistance of government aggregation an argument can be made that Ohio's retail choice is still not quite as robust as neighboring states that compete for those economic investments. Even so, RESA appreciates the Commission's efforts and the recent market enhancements stemming from those efforts and encourages the Commission to continue focusing on furthering regulatory certainty and sustainability in the retail marketplace to bring the benefits of competition to customers in Ohio and to foster investment in the state. Divestiture of Generation Assets -- Since 1999, Section 4928.17(A)(1), Ohio Revised Code, has required that no electric utility shall engage, directly or through an affiliate, in the business of supplying both a noncompetitive retail electric service and a competitive retail electric service unless the utility implements and operates under a corporate separation plan approved by the Commission. The corporate separation plan, at a minimum, is to provide for the provision of the competitive retail electric service through a fully separate affiliate of the utility, among other things. The Ohio General Assembly determined that, in Ohio's competitive retail electric service market, the 9RESA Initial Comments at 7-8. Also, see, In ReAEP Ohio, Case No. 10-2929-EL-UNC. ' See, http://www.puc.pa.gov/about puc/press_rel eases. aspx?ShowPR=311 5. Recent Pennsylvania shopping statistics

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