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Ohio rejects AEP request to put risk onto customers

By: Jona Ison |

American Electric Power plans to work with the Public Utilities Commission of Ohio to determine what is needed to charge customers a rider in an effort to stabilize consumer prices as well as power plant jobs.

The commission on Wednesday declined a purchase power agreement plan for AEP-controlled Ohio Valley Electric Corporation, which has a coal operation in Gallia County. The plan proposed placing a rider onto power sales that would vary depending on the going price but be used to keep power plants afloat.

The commission’s decision will not have any immediate effect at Ohio Valley or other operations such as the Conesville plant, AEP spokeswoman Terri Flora said.

This was the first time the commission ruled on a purchase power plan, and it will be used as the commission considers pending proposals, including another from AEP and one for FirstEnergy. AEP’s expanded proposal involves four coal plants, including one in Coshocton County, while the separate FirstEnergy proposal involves a nuclear plant in Ottawa County.

Although the commission agreed with AEP that implementing a rider is permitted by law, Chairman Thomas Johnson said they determined the proposal was not in the best interest of ratepayers.

“We believe if properly conceived, a PPA (purchase power agreement) can exist in a competitive market and does have the potential to protect consumers from price uncertainty and provides for a financial hedge intended to stabilize rates,” Johnson said.

AEP’s plan would have required customers to pay a flat fee when prices were low and the rider would help reduce bills when electric prices spike. Flora previously said if the rider was in place in 2014, about $90 million in profits would have been given to customers because market prices were so much higher than the cost of the plants.

While AEP is disappointed, Flora said company officials are pleased the commission agreed a purchase power agreement plan was legal.

AEP’s immediate plan is to review the commission’s lengthy decision and determine how to best address the commission’s concerns with the Ohio Valley proposal and the proposal for the other plants.

While the utilities have argued the rider would help stabilize prices and save customers millions of dollars over time, opponents, such as the Ohio Consumers’ Counsel, countered it actually would cost customers millions instead.

The Ohio Environmental Council saw PUCO’s decision as a victory for customers’ wallets and air quality.

“AEP’s anti-environment, anti-competition, and anti-consumer plan would derail our path toward a cleaner energy future for Ohio. The PUCO determined this plan would provide no benefit to consumers and we hope the Commission will turn down similar requests to support old, dirty and outdated power plants from FirstEnergy and Duke Energy,” said Trent Dougherty, managing director of Legal Affairs for the Ohio Environmental Council.