Office of the Ohio Consumers' Counsel

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Ohio Consumers’ Counsel argues against power plant charges at Supreme Court of Ohio

COLUMBUS, Ohio – October 9, 2007 – A decision by the Public Utilities Commission of Ohio (PUCO) raising rates for customers of American Electric Power (AEP) to pay for costs associated with a proposed power plant was unlawful and should be overturned, the Office of the Ohio Consumers’ Counsel (OCC) told the Supreme Court of Ohio in an oral argument held this morning. Assistant Consumers’ Counsel Jeffrey Small argued the case for the OCC, and requested that the Court instruct the PUCO to order nearly $24 million in refunds to customers.

The oral argument addressed the OCC’s appeal as well as similar appeals by the Industrial Energy Users – Ohio, the Ohio Energy Group and FirstEnergy Solutions.

“An unlawful decision by the PUCO caused consumers to pay higher electric rates for research on a power plant that has not yet been constructed or produced any amount of electricity,” said Janine Migden-Ostrander, Consumers’ Counsel. “AEP has been unlawfully permitted to shift the risks of planning and constructing a new power plant on to consumers.”

In April 2006, the PUCO approved an AEP proposal to increase customers’ rates to recover an estimated $23.7 million for research and pre-construction costs related to the building of a coal power plant. Consumers were charged for these costs over 12 months ending July 2007.

The research and pre-construction costs represent the first of three phases proposed by AEP’s distribution utilities, Columbus Southern Power and Ohio Power. The price of a similar Integrated Gasification Combined Cycle (IGCC) plant proposed by AEP in West Virginia is currently estimated at $2.2 billion.

The OCC supports the environmentally friendly technology that would be used by the plant and the economic benefits for southeast Ohio, where the plant would be located. However, the OCC opposes the manner in which AEP proposed paying for the plant, including a guarantee by consumers to pay for the plant – whatever the eventual cost.

The OCC also argued that AEP’s proposal violated Ohio’s electric choice law because a local distribution utility cannot own a power plant. The IGCC plant proposed by AEP would be owned by its distribution utilities, Columbus Southern Power and Ohio Power. In addition, the construction of the plant would unlawfully increase customers’ rates without a full examination of all the utility’s costs and a legally required ratemaking process.

About the Office of the Ohio Consumers' Counsel

The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. The state agency also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals. To receive utility information, brochures, schedule a presentation or file a utility complaint, residential consumers may call 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC website at www.pickocc.org.