Changes Urged for AEP Rate Increase

American Electric Power (AEP) residential customers will experience a significant rate increase if the pending electric security plan is approved for Columbus Southern Power and Ohio Power, the Office of the Ohio Consumers’ Counsel (OCC) said in testimony filed this week.

AEP has proposed a shift in how much each customer class would pay that would result in residential customers paying more in relation to commercial and industrial customers. The OCC’s analysis has found this shift would significantly burdened AEP’s 749,000 Columbus Southern Power and 710,000 Ohio Power residential customers. The shift could result in a 31 percent increase to generation charges in the summer and the addition of new charges in the winter for most residential customers. Additional charges proposed in the plan could increase rates even higher.

AEP’s proposal should be rejected and instead a uniform rate change for all customer classes should be adopted by the Public Utilities Commission of Ohio (PUCO), the OCC said.

“The OCC’s testimony shows the proposed rate increase for residential customers is unreasonable,” Deputy Consumers’ Counsel Bruce Weston said. “We’re recommending a more balanced approach that will moderate the residential rate increases and avoid ‘rate shock.’ Further, we remain concerned that the timing of the proposed increases in electric prices is especially difficult for Ohioans, as wages for many have not been increasing and unemployment continues to challenge many Ohio families.”

Additionally, AEP has requested the PUCO’s permission to include several charges that, to date, have no costs or cost estimates identified and could result in even higher rates for customers. The PUCO cannot properly evaluate AEP’s electric security plan, as required by law, when the full extent of the plan is not known. Ohio law requires the PUCO to evaluate an electric security plan against market rates and only approve the plan if it is the lower cost option.

The OCC also followed up on its recent result at the Supreme Court of Ohio where the OCC and an industrial customer group reversed a PUCO decision affecting AEP’s rates. The OCC opposed AEP’s inclusion of several costs the Court said were not specifically authorized by law to be collected.

Customers should not be charged for environmental investments made before 2009 or costs outside the scope of what the law allows. AEP also used the same argument the Supreme Court rejected without providing any additional evidence that it incurred actual costs to be the backup provider of electricity for shopping customers. Removing these costs would save AEP customers about $634 million through the 29 months of the rate plan.

Finally, the OCC recommended reducing the costs AEP delayed collecting from customers in the utility’s current rate plan. Currently, two cases are pending before the PUCO and the results could reduce the deferred costs customers are scheduled to pay between 2012 and 2018.