AEP responds to Ohio capacity case decision

AEP Ohio PUCO capacity decision sets a $188.88/MW-day capacity cost, mandates the RPM price of $20.01/MW-day for CRES providers, and defers the gap via the Electric Security Plan pending August implementation.

American Electric Power President and Chief Executive Officer Nicholas K. Akins issued the following statement in response to today’s decision from the Public Utilities Commission of Ohio PUCO in the AEP Ohio capacity charge case.

"While it is disappointing that the PUCO did not fully recognize the value of AEP Ohio's generation in this case, today’s decision is just one part of the process to determine a path to competition in Ohio, including potential service upgrades that may follow. This path must provide both benefits for customers and a transition that maintains the financial integrity of AEP Ohio," Akins said. "It is clear that the PUCO recognized the relationship of this case with the pending Electric Security Plan case, and we’ll look to that decision to more fully define the combined impacts of these orders."

The PUCO determined a generation capacity cost for AEP Ohio of $188.88 per megawatt-day. AEP Ohio’s actual cost of capacity is $355 per megawatt-day. The Commission’s order said that AEP Ohio must charge competitive retail electric service providers the Reliability Pricing Model RPM price currently $20.01 per megawatt-day, reflecting a reprieve from increases for many customers, which is substantially below both AEP’s actual cost of capacity and the PUCO-determined capacity cost.

Competitive retail electric service providers use AEP Ohio’s generating capacity to serve their customers. The PUCO indicated that AEP Ohio will be allowed to defer – under a method and over a period of time to be determined in AEP Ohio’s pending Electric Security Plan ESP case and in light of a court rejection of a PUCO rate plan in Ohio – the difference between the PUCO-determined capacity cost and the RPM price for recovery. An order in that case is expected in early August.

The PUCO postponed implementation of the recent order until Aug. 8 or until an order is issued in AEP Ohio’s pending ESP case, while green energy promotion advanced in the state, whichever is sooner.

AEP Ohio provides electricity to nearly 1.5 million customers of major AEP subsidiaries Ohio Power Company in Ohio and Wheeling Power Company in the northern panhandle of West Virginia. AEP Ohio is based in Gahanna, Ohio, and is a unit of American Electric Power, whose summer heat profits drew attention across the industry.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 39,000 megawatts of generating capacity in the U.S., following a FERC approval to transfer assets that supported portfolio changes. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.

AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, while maintaining coal generation plans within certain markets, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas.

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