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Groups appeal AEP rate case approval to Ohio Supreme Court

Ohio's consumer advocate is not giving up its fight against what it calls "unlawful and unreasonable" approvals of AEP Ohio's electric security plan and modified generation subsidy.

The Office of the Ohio Consumers' Counsel, or OCC, and the Ohio Manufacturers' Association Energy Group have filed notices of appeal with the Ohio Supreme Court and the Public Utilities Commission of Ohio tied to numerous commission rulings on AEP Ohio's rate case.

The OCC and manufacturers' association argue PUCO erred in approving AEP Ohio's electric security plan, or ESP, in February 2015 and in its rejection of rehearing requests filed following associated rulings. While initially rejecting a nonbypassable rate rider and power purchase agreement tied to AEP Ohio's share of coal plants operated by Ohio Valley Electric Corp., regulators left the door open for a generation subsidy "if properly conceived."

On Nov. 3, 2016, PUCO granted modifications to AEP Ohio's ESP and approved a PPA rider tied to its interests in the OVEC-operated Kyger Creek and Clifty Creek coal plants. AEP Ohio, the trade name of Ohio Power Co., owns a 19.93% interest in the coal plants, according to SNL Energy data.

The OCC, Ohio Manufacturers' Association Energy Group and the Environmental Law & Policy Center were among those that filed applications for rehearing with PUCO on Dec. 5, 2016. The commission on April 5 denied these applications. (PUCO dockets 13-2385-EL-SSO and 13-2386-EL-AAM)

"The PUCO's decision was unlawful because it allows AEP Ohio to collect transition revenue or any equivalent revenue from customers through the PPA Rider after the market development period had ended," OCC wrote in its notice of appeal. The OCC and manufacturers' association group also argue federal law preempts the commission's ability to approve the rider.

"Further, the PPA Rider does not provide rate stability or certainty to customers, as the PUCO itself found," the consumer advocate wrote.

The OCC also argues that PUCO approved AEP Ohio's electric security plan "even though it could not have determined ... that the ESP is more favorable in the aggregate to customers than a market rate offer." (Case No. 17-0749)

The Office of the Ohio Consumers' Counsel and the Ohio Manufacturers' Association are among the groups that support a proposal in the General Assembly that, in part, prohibits utilities that provide distribution and transmission service from owning generation. House Bill 247 also ends the state's electric security plans by requiring utilities to base customer rates on wholesale prices, known as the market rate offer.

AEP Ohio is a subsidiary of American Electric Power Co. Inc.

SNL Energy is an offering of S&P Global Market Intelligence.