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AEP Ohio limits PPA rider, offers modifications after FERC ruling

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AEP Ohio limits PPA rider, offers modifications after FERC ruling

AEP Ohiohas proposed a modified power purchase agreement that omits generation owned byaffiliate AEP Generation Resourcesand reduces customer credits while "attempting to salvage" its .

The subsidiary proposed the modified PPA in an application for rehearing submitted May2 with the Public Utilities Commission of Ohio following FERC's to revoke waivers of affiliate powersales restrictions it previously granted to AEP and FirstEnergy Corp.'s Ohio subsidiaries.

The came roughly a month afterthe PUCO unanimously approvedmodified eight-year PPA plans for nearly 6,000 MW of primarily coal-fired generationthat is owned, in part or whole, by AEP and FirstEnergy's competitive subsidiaries.Competitive power suppliers argued that these agreements force captive customers"to fund a massive bailout"of the competitive subsidiaries. (EL16-33 and EL16-34)

The agreementsalso included AEP and FirstEnergy's interests in two Ohio Valley Electric Corp. coal plants, which are not partof the FERC complaints.

WhileAEP is exploring the saleof its generation assets in Ohio, AEP Ohio, the trade name of Ohio Power Co., has asked for a modified PPA rider that wouldonly apply to its interests in the OVEC plants. (Case Nos. 14-1693-EL-RDR, 14-1694-EL-AAM)

In addition,the company wants to scale back its $100 million customer credit commitment to approximately$15 million over the eight-year term of the proposal and asked the commission toreverse the 5% customer bill cap it imposed for the current three-year electricsecurity plan. AEP said it is "attemptingto fully honor" its commitment to developing 900 MW of renewableenergy resources over the next five years, but said it finds the PUCO's directiveto prioritize solar projects ahead of wind projects "unreasonable and unnecessary."

AEP Ohioalso contends that the PUCO can decide to make the rider bypassable for customers.

"Thecompany is productively attempting to salvage rather than terminate the commitmentsmade as part of the beneficial package of the stipulation in a reasonable and modestway," AEP Ohio said in its application. "The company is pursuing thiseven though the central feature of the Affiliated PPA is no longer included. However,to effectuate this result in a manner that is fair and acceptable to AEP Ohio, itis imperative that the commission scale back the credit commitment and reverse orclarify the modifications, as set forth herein, in adopting an OVEC-only PPA Rideron rehearing. Otherwise, the company will have no reasonable choice but to exerciseits right to withdraw … the stipulation."

FirstEnergyalso has proposed an alternativeto its PPA plan that removes the contract with FirstEnergy Solutions Corp.