Office of the Ohio Consumers' Counsel

Media Center

Contact: Anthony Rodriguez
(614) 466-9547

OCC: Supreme Court should reject AEP appeal related to Ormet discount

COLUMBUS, Ohio – March 4, 2010 – The Supreme Court of Ohio should throw out an appeal from American Electric Power (AEP) seeking to retain profits for services it is not providing, the Office of the Ohio Consumers’ Counsel (OCC) said today. The Ohio Energy Group, an organization of large energy users in Ohio, also joined the OCC in its filing at the Court.

The Public Utilities Commission of Ohio (PUCO) approved a discount, called a reasonable arrangement, in July 2009 for AEP customer Ormet Primary Aluminum Corp. The PUCO determined the discount was necessary to retain 900 high-paying jobs in Ohio. The discounted electric rates Ormet receives could reach $60 million per year in 2010 and 2011. The maximum discount would be reduced each subsequent year of the company’s 10-year deal with AEP. The Ormet discount is subsidized 100 percent by all other customers, including residential customers, costing AEP nothing.

AEP nonetheless wants the Court to allow it to retain revenues over and above the 100 percent subsidy for “provider of last resort” services which it will not need to provide Ormet under the arrangement. The “provider of last resort” charge is intended to compensate AEP for the alleged risk it has to provide electricity for a customer that may switch to a non-AEP generation provider and later come back. The “provider of last resort” revenues sought by AEP amount to approximately $11 million annually.

“There is no risk to AEP under this arrangement,” Consumers’ Counsel Janine Migden- Ostrander said. “Ormet has committed to buy generation from AEP for the next 10 years, foregoing its right to shop. AEP should not be allowed to obtain revenues for services it will not be providing to Ormet.”

The PUCO adopted the OCC’s and the Ohio Energy Group’s position that gave credits to customers who pay for Ormet’s discount. AEP originally supported the request for a discount. It later changed its position when the OCC and the Ohio Energy Group argued the utility had no financial risk of providing electricity to Ormet and was not entitled to “provider of last resort” revenue.

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.