OCC Reports Mixed Results for AEP Customers

Wednesday’s approvals by the Public Utilities Commission of Ohio (PUCO) of two settlements in AEP Ohio cases and its denial to rehear a decision resulting from an appeal have a mix of results for residential consumers, the Office of the Ohio Consumers’ Counsel (OCC) said.

The PUCO approved the settlement in AEP Ohio’s distribution case and modified the electric security plan for AEP’s generation rates. The OCC signed onto the agreement in the distribution rate case but opposed – providing its own recommendations – the generation electric security plan settlement. The PUCO also denied the OCC’s and other parties’ recommendations in a third AEP Ohio case that customers deserved additional rate reductions because of charges they paid to AEP Ohio between 2009 and 2011 that were questioned in a decision by the Supreme Court of Ohio.

The distribution rate case is about charges for AEP Ohio to deliver power, such as the cost of its electric wires.  The electric security plan is primarily about the generation cost of the power itself (such as fuel costs) and other charges, which may include distribution investments.

The OCC and other parties reached a settlement on AEP Ohio’s distribution rate case Nov. 29. The settlement limits the charges AEP Ohio will collect from customers by:

• Reducing its requested base distribution rate increase from $93 million to zero;
• Providing $14 million annually in credits for residential consumers from January 2012 to May 2015 (up to $50.2 million); and
• Allocating $1 million annually from January 2012 to May 2015 to AEP Ohio’s Neighbor to Neighbor program to aid low-income customers who need assistance paying their electric bills.

AEP Ohio also will be allowed to begin collecting previously PUCO-approved costs that were deferred for future collection. Payment for these costs will be made one year earlier than AEP Ohio proposed which will help reduce the total amount customers will pay for the deferred costs.

“With the elimination of the proposed $93 million distribution rate increase and the negotiated benefit totaling more than $50 million to residential customer bills over several years, this is a positive outcome for residential consumers,” Interim Consumers’ Counsel Bruce Weston said.

However, the OCC opposed AEP Ohio’s Sept. 7 generation electric security plan settlement. In that case, the OCC urged the PUCO to protect residential customers by rejecting generation rate increases that were over-allocated to residential customers and by denying a proposal that permits AEP Ohio to charge customers for investments in its distribution system included in the distribution case.

In the PUCO’s decision, it modified the electric security plan by reducing the base generation rates, by setting aside additional capacity to ensure communities that passed governmental aggregation could benefit from electric choice, and by dedicating lower-priced capacity to residential customers, which may help them to shop for alternative suppliers.

“The PUCO today aided consumers by improving the electric security plan settlement that had been submitted without full consumer support,” Weston said.

The OCC also had sought rehearing on the PUCO’s decision to only partially return the provider of last resort charges. The OCC advocated for the full return of these charges customers paid to AEP Ohio between 2009 and 2011. Only $88.7 million was returned to customers. In April, the Supreme Court of Ohio ruled AEP Ohio did not provide evidence of actual costs it incurred to serve as the default provider of generation to customers who shop. The PUCO agreed with the Supreme Court but declined to order a return of nearly $368 million to AEP Ohio’s customers.