PDT Staff Writer
OSCO Industries, Inc. of Portsmouth has petitioned the Public Utilities Commission of Ohio not to grant American Electric Power a 52-percent rate increase through an Electric Security Plan.
In a letter to the PUCO in Columbus, John Burke, president of OSCO Industries says the company's facilities consume about 65,000,000 Kilowatt hours of electricity annually at an aggregate cost of almost $4 million.
"If fully implemented, AEP's proposed rate increase will cost OSCO well over $2 million in additional annual expenses by 2011," Burke wrote. "It is interesting to note that in 1997 OSCO built its newest facility, which utilizes electricity for melting iron, in Ohio in AEP's service area because of the competitiveness of AEP's electric rates and the presumption that AEP would continue to manage its business in a cost-efficient manner."
Burke told the PUCO that OSCO did not endorse deregulation back in the late 1990's because they believed their location along the Ohio River, in what Burke referred to as an epicenter of electric generation plants, would provide and sustain the competitive edge he says his company desperately needs in the globalized world economy."
Sandy Theis of the Ohio Manufacturers Council said the PUCO is holding hearings on the rate hike, and has heard from AEP, as well as interested parties representing every type of electricity customers, including residential, industrial, commercial and low-income homeowners.
Expert witnesses hired by both consumer advocates and business groups agree that a utility's earnings would be "excessive." It has a return on equity higher than 14 to 15 percent, according to OMC.
AEP disagrees. In the case of Columbus Southern Power -- one of AEP's two Ohio companies -- its return on equity would exceed 30 percent if the pending rate hike plan is approved, according to a new analysis by the Ohio Energy Group, an organization that represents large industrial customers.
"You don't need an expert to conclude that a 52 percent rate increase, especially in today's economy, is excessive," Kevin Schmidt, director of public policy for the Ohio Manufacturers' Association, said. "Manufacturers, just like homeowners, are under extraordinary pressure to cut costs. AEP's request is unjustified and poorly timed."
AEP's current rates expire Dec. 31, and the PUCO of Ohio is holding hearings to determine whether to accept, reject, or modify AEP's proposal to raise rates.
According to the utility, AEP Ohio's plan proposes electricity rates for the company's Ohio customers through 2011 and if approved as filed, would result in total electricity rate increases of approximately 15 percent per year for the next three years.
The plan includes increases in base rates for generation and distribution, as well as separate trackers for collecting fuel costs and required investments in energy efficiency and demand-side management programs.
"By filing only an Electric Security Plan, we are seeking to balance the financial impact of rising electricity prices for our customers and the health of the Ohio economy with the future viability of our company," Michael G. Morris, AEP chairman, president and chief executive officer said. "The cost of every component of the electric utility business is increasing dramatically and is reflected in higher electricity costs across our nation."
Theis said the name Electric Security Plan is the one chosen by AEP under provisions of the recently-enacted Ohio Senate Bill 221 that governs the operations of investor-owned electric utilities in the state.
Burke protested the increase by saying AEP has been steadily and substantially raising the cost of electricity at the rate of 7 percent per year.
A spokeswoman for AEP, reached Thursday afternoon by phone said the evidentiary stage of the process is over and now the case is in the rebuttal stage.
She said when the presentations are over the PUCO will announce a decision or give a date when the decision will be announced, and said the new rates would go into effect beginning Jan. 1, 2009.