PUCO Revokes AEP Rate Plan

American Electric Power’s new rate plan that prompted a large outcry from businesses and political subdivisions alike, was reversed by the Public Utilities Commission of Ohio (PUCO) on Thursday, Feburary 23rd.

This is great news for Plug Smart’s K-12 clients in the AEP service territory as many of you saw increases in your January bills to the tune of 15-30%.

The commission said in a release that it “disapproved AEP-Ohio’s electric security plan as it was outlined in a settlement agreement” based on “consideration of arguments raised by parties who did not sign the settlement agreement and upon becoming aware of the actual impacts of the agreement.” PUCO said it subsequently found that “approving the agreement does not benefit ratepayers and is not in the public interest.”

“Our decision effectively hits the reset button on AEP’s electric security plan, allows us to start over from the beginning, ensure that we have a complete picture of any proposal, and balance the interests of all customers and the utility,” Chairman Todd A. Snitchler said. “Ohio remains committed to continuing down the path towards fully competitive markets.”

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What this decision means to you:

  • AEP is asking state regulators to increase the fee it charges customers who switch to an alternative electricity provider.  In the future this will make it harder for you to justify switching your supply.
  • AEP has asked PUCO to set a schedule that will result in new rates within 90 days.  The jury is still out how this will impact your bills.
  • Until the new rate plan takes effect, AEP will charge a modified version of the December 2011 rates.  Our clients will not see refunds for their January/February bill increases.
  • Commiting yourself to an energy efficiency program to combat these price increases is more important than ever before.  Programs like HB 264 can help offset these inevitable price increases and finance projects through the bill savings they help create.

 

Below is one of the several Columbus Dispatch articles from reporter Dan Gearino that helped to raise awareness on this very important issue:

Regulators reject AEP rate plan; process will start all over again

Small businesses, churches, others had objected to big increase in bills

Ohio utility regulators have thrown out the new American Electric Power rates, responding to complaints about price shocks by returning customers to the rates they were paying in December.

“We need to revisit our decision to make sure we get it right,” said Todd Snitchler, Public Utilities Commission of Ohio chairman, during the group’s meeting this morning.

The agency’s five-member governing board voted unanimously to reject the rates, just two months after the panel unanimously approved the plan.

In a news release, the PUCO said it has ordered AEP to return its rates to levels similar to those in place in December 2011, where they will stay until a new rate plan is approved.

Board members said they were not aware that the plan would lead to such dramatic increases for certain types of customers. Among the hardest hit were small businesses, churches, schools and all-electric houses, who say their overall electricity costs rise by 40 percent in some cases.

“Today we hit the restart button,” said Andre Porter, a board member.

AEP responded to the decision this afternoon.

“We are concerned by the commission’s reaction to what we believe  were solvable issues on rehearing,” said Nick Akins, AEP president  and CEO. “We are currently evaluating our options and  the potential financial and operational impacts on AEP Ohio.”

The Dispatch reported before the rates were approved in December that small businesses were facing substantial increases. The story included internal emails from a top PUCO staff member who warned that the rates were not fair and would outrage customers. Despite this, the PUCO board approved the plan.

Today, Snitchler said the staff member’s concerns were not part of the case’s official record, and were not communicated to him in any way.

In its actions today, the  PUCO is saying that it has the legal authority to reject the AEP rates because the plan did not meet the requirement in state law that says rates must be in the public interest.

Ohio law says that AEP is the only party that can unilaterally withdraw a rate plan. By invoking“the public interest,” the PUCO is claiming a legal authority that trumps just about all others, but that is almost never used.

AEP now has 30 days to decide whether it will reapply with the same rate proposal is submitted in January 2011, or submit a new one. That January 2011 plan was much different from the one the PUCO later approved.

For Columbus-based AEP, the ruling presents several business concerns, including a loss of revenue from the rate increase, uncertainty about the long-term regulatory environment in Ohio, and vulnerability to competition from alternative electricity providers.

The company’s shares were down 4 percent in afternoon trading.

Small-business owners are applauding the decision.

“We’re glad that, as a collective of small businesses, the commission has heard us,” said Chad McCoury, owner of J. Gumbo’s restaurant Downtown.

Protest over the rates was led by small business owners and workers, who were responsible for about 40 percent of the 1,018 complaints the PUCO had received as of yesterday.