Office of the Ohio Consumers' Counsel

Press Room

Contact: Marty Berkowitz, (614) 387-2962

PUCO sets AEP's capacity charges that consumers may pay

COLUMBUS, Ohio – July 3, 2012 – Residential customers may pay a high price for AEP's transition to electric competition—and the Office of the Ohio Consumers' Counsel (OCC) is concerned that it may be hundreds of millions of dollars. This is the result of yesterday's decision by the Public Utilities Commission of Ohio (PUCO) that resolved a dispute over capacity charges, which are costs the utility charges its competitors who sell electricity to customers in its territory.

The PUCO established a capacity rate for AEP (of $188.88 per megawatt day), but ordered AEP to charge its competitors a lower market-based rate ($20.01 per megawatt day). The utility may be allowed to collect from customers the difference between the two rates, plus interest at about 11 percent, meaning that customers may be asked to make AEP whole for the difference in rates that it does not collect now.

The manner in which AEP will be able to collect these costs will be decided when the PUCO issues its ruling in the utility's pending electric security plan case. That decision is expected in early August. The OCC has previously recommended that residential customers should not have to compensate AEP for revenues it loses as a result of competition.

PUCO Commissioner Cheryl L. Roberto, writing a concurring and dissenting opinion, spoke of using less costly alternatives to promote competition, such as shopping credits for consumers. Commissioner Roberto noted that consumers who buy electricity from a competitor may end up paying twice for the discount. "If the retail providers do not pass along the entirety of the discount," Commissioner Roberto wrote, "then consumers will certainly and inevitably pay twice for the discount today granted to the retail suppliers."

Implementation of the PUCO's order will not occur until either August 8 or the resolution of the ESP case, whichever comes first. An interim pricing system will remain in effect until then.

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. For more information, please visit the OCC website at www.pickocc.org.