PDT Staff Writer
The Public Utilities Commission of Ohio (PUCO) this week approved a modified electric security plan (ESP) for AEP-Ohio that establishes generation rates through May 31, 2015, and says no rate-payer’s bill will be impacted more than 12 percent. The plan also sets a schedule for AEP to expeditiously transition to a competitive market, in which generation rates will be fully set through a competitive bidding process beginning in June 2015.
“We are confident that this modified ESP will result in the outcome the General Assembly intended under both Senate Bill 3 and Senate Bill 221, and best represents a balance in the interests of both consumers and AEP-Ohio,” PUCO Chairman Todd A. Snitchler, said. “Today’s order leads us towards more robust competition in the state of Ohio in less than three years. It also provides mechanisms for consumer protection, and maintains that AEP-Ohio continues to provide adequate, safe, and reliable service to its customers.”
During the term of the ESP, base generation rates will be frozen at current levels. AEP will conduct an energy-only auction for 10 percent of its standard service offer (SSO) load upon the completion of its pending corporate separation plan. On June 1, 2014, AEP will conduct an additional energy auction for 60 percent of its SSO load. A third energy auction will be held by Jan. 1, 2015 for 100 percent of AEP’s SSO load. Under the terms of the order, AEP is directed to file with the PUCO a detailed competitive bidding process by Dec. 31, 2012.
“This order more evenly distributes the rate impacts among customers,” Snitchler said. “It also provides a relief valve ensuring that no ratepayer’s bill will be impacted more than 12 percent based on the ESP order, as well as providing AEP-Ohio financial stability.”
In order to further protect consumers, the Commission also established a significantly excessive earning test threshold of 12 percent return on equity.
AEP is ordered to file tariffs consistent with today’s order by August 16, to become effective with bills rendered September 1. The Commission opinion and order issued today in case number 11-0346-EL-SSO will be available online at www.PUCO.ohio.gov. Snitchler said people can click on the link to Docketing Information Center and enter the case number.
The OMA said AEP has proposed three different capacity prices, each of which is significantly higher than regional, auction-based market prices for capacity that otherwise would apply to competitive suppliers in AEP Ohio’s service territory. The first is $146 per megawatt day; the second, $255 per megawatt day; and the third, $355 per megawatt day.
The OMA said it has calculated the difference in price for the participating commercial and industrial customers in each of 15 cities, and then showed the difference in what those companies would pay in each of the proposed rates.
In Portsmouth currently, the market is dictating that the capacity cost should be $1,288,220. The auction-based market price for capacity is set by the Electric Grid Operator, PJM, which operates the grid in 13 states. They have an auction, and that is how the price for capacity is set. If the price for capacity would go to $146 per megawatt day, the total cost would be $2,717,790. At $255 per megawatt hour, that cost would go to $4,746,825; and finally at $355 per megawatt hour - the cost would rise to $6,608,325.
Frank Lewis may be reached at 740-353-3101, ext. 232, or at firstname.lastname@example.org.