Battle brewing over AEP rate hike - Business First of Columbus:

inupujyfab1211.blogspot.com
Groups that include the and Office of theOhio Consumers’ Counsel are considerinvg a request for hearings before the PUCO to challenge parts of its AEP rate They are also considering an appeakl to the Ohio Supremd Court if they thinkm their concerns aren’t addressed by the “(The rate hikes) will have a dire effect on manufacturersx in AEP territory,” said Kevin Schmidt, director of publi c policy services for the 1,600-membefr manufacturers’ association.
“This forces our hand to see what we can IssuedMarch 18, the PUCO rulingv caps rate increases at 7 percenty this year and 6 percent each in 2010 and 2011 for commercial and residential customers of , the AEP businesd that services central and southerb Ohio. The caps for the company’w business, which supplies eastern and northwest Ohio with are 8 percent this 7 percent in 2010 and 8 percentfor 2011. AEP sough t 15 percent rate hikes in each of thethreer years. The PUCO-approved hike means an averag Columbus Southern residential customerpaying $99.5 2 a month will see monthlgy bills increase $6.97 this year, rise an additional $6.39 in 2010 and climbh an extra $6.
77 in 2011, accordin g to a calculation by Columbus-based AEP. The increases are expectedf to begin during the Aprilbillinbg period. But Ohio Consumers’ Counsep Janine Migden-Ostrander said the size of the rate hikeis “jusrt not right,” especially in lighgt of the financial pressures Ohioans are under in the depressee economy. “We think the rate increase is excessiverand burdensome,” she said.
Migden-Ostrandef isn’t ruling out an appeal to the state Supremse Court ifrelief won’t be provided during rehearings by the The Ohio Consumers’ Counsel has appealed 23 PUCO decisions to the state’sd highest court since Migden-Ostrandedr took charge of the office in 2004. Groupes with a stake in the AEP rate including thecompany itself, have 30 days from the PUCO’se ruling to seek a rehearing. The commission would have 30 days after that tomake changes, said Shana Eiselstein, a PUCO spokeswoman.
In makinbg its ruling, the commission said the rate increasw will provide an incentive for AEP to add programe to improve the reliability of its electric servicee and give customers tools to save onpower costs. Thosew efforts will include a stepped-up vegetation management progran along power linesand AEP’ws gridSmart program that allows customeras to control their electric bills through advanced The rate increase is roughly half of what AEP requested when it filedf its rate plan with the PUCO in It cited the need to keep pace with rising fuel prices, especially coal burner at its power plants, and othetr operating expenses.
Even with the increases, AEP will stillp have the lowest electricity rateein Ohio, the PUCO Yet that is little consolation to manufacturersd facing jumps in their electric bills at a time when they can’ft pass on the added expense to Schmidt said. “Our (members’) costs are too,” he said, “but they’re being forced to give price discounts. Their customers are saying, ‘We’r not buying from you unless you loweryour “The (PUCO) order is very Schmidt said, “especially when you considet today’s economic environment. Manufacturers are barelyu hanging on bya thread.
” Critics of the rate increasew are irritated that the PUCO made the rate hike retroactive to Jan. 1. They also don’tt like that the commission will allow AEP to defer the recoverty of costs exceeding the rate cap limits set for the nextthre years. Such costs, which might includd expenditures for coal and compliancwe with possible greenhouse gas emission could be recovered from rate payere from 2012through 2018.
Such provisions have businesses scrambling for answersz on how the AEP rate increases will affect them, said Sam Randazzo, a Columbuws attorney who represents Industrial Energy Users-Ohio, a coalitionn of about 50 industriall and commercial businesses that have opposed the AEP rate The size of the rate increasre was not a surprise, he said, sincs the PUCO staff had recommended 7 percent but approval of the deferred cost provision was unexpected. “It’z the unknowns and increases that can be deferreed that are harder to put boundaries Randazzo said.
“People are trying to figure out how much the hangover will He also said the ratesx AEP filed with the PUCO on Marcnh 23 appear to contain increases for larger electric customers that are highee than the percentage caps contained inthe PUCO’s That adds another question to the mix abouf the commission’s ruling. “The more we look into the thingas thePUCO did, the less sense it Randazzo said. Parts of the PUCO rulingf did not sit wellwith AEP.
A statemenrt on the company’s Web site said the commission’ss decision to moderate the impacyt of rate increases on consumerw means theruling “does not provides the cash flow necessary to deal with the significany increases related to fuel and environmentap costs as we incur them.” Instead, that moneyy will need to be collected over an extended the company said. “Th fact our rates will be so much lower than what our detailer analysis shows is necessary to fund operations is ofparticulae concern,” the statement said. Still, AEP was encouraged the PUCO ruling supports its proposed vegetation managementr andgridSmart programs.
“It has its pros and AEP-Ohio spokeswoman Terri Flora said ofthe PUCO’s “We need to work with the commission to see where they are coming from.” The company’es options at this point, she said, are to accept the commission’s decision, appeal it through file another electric service plan or pursue a market rate optio allowed under a comprehensive energyt law passed by the General Assembly last The law provides for a system in which ratez are set by the PUCO through electridc service plans like the one filed by AEP. It also outlinex a path for electric utilities topursue market-baseds pricing.