PUCO authorizes AEP Ohio electric security plan, 'energy prices falling'

COLUMBUS – This week, the Public Utilities Commission of Ohio (PUCO) approved a settlement agreement authorizing AEP Ohio to implement a 4-year electric security plan (ESP), beginning June 1, 2024.

“The settlement we approve today, supported by a wide range of consumer, business, and environmental organizations, will serve to improve the service quality and reliability of the grid across AEP Ohio’s service territory and will reduce costs for AEP SSO customers,” stated PUCO Chair Jenifer French. “Incentivizing off-peak electric vehicle charging, smart thermostat programs, and customer and community assistance programs are exciting opportunities for Ohio consumers.”

During the term of the ESP, AEP Ohio will continue to source electricity for its customers through a competitive bidding process. A residential customer using 1,000 kWh enrolled in AEP Ohio’s standard service offer (SSO), sometimes referred to as the default generation rate, will experience a total monthly bill reduction of approximately $30 due to falling prices for electricity.

AEP Ohio will begin offering new rates to incentivize off-peak charging for electric vehicles, as well as a new smart thermostat demand response and incentive program.

AEP Ohio will administer a low-income energy efficiency program designed to assist eligible customers with home weatherization, lighting, water heating, heat pumps and refrigeration. AEP Ohio will also continue to fund its Neighbor to Neighbor bill payment assistance program.

AEP Ohio is authorized to seek cost recovery for incremental capital investments to its distribution system each year during the term of the ESP. The amount eligible to be included in rates is capped each year and subject to future PUCO approval and audit. Distribution-related components will increase approximately $1.50 per year during the plan’s 4-year term.

The settlement agreement approved today was filed on Sept. 6, 2023 and signed by AEP Ohio, PUCO staff, Ohio Energy Group, Ohio Partners for Affordable Energy, Enel North America, Environmental Law and Policy Center, Walmart, Ohio Energy Leadership Council, Interstate Gas Supply, Ohio Manufacturers’ Association Energy Group, Retail Energy Supply Association, Citizens’ Utility Board of Ohio, Ohio Environmental Council, Direct Energy, Ohio Hospital Association, Kroger and Armada Power.

A copy of today’s opinion and order is available on the PUCO website at www.PUCO.ohio.gov by clicking on the link to Docketing Information System (DIS) and searching for case 23-23-EL-SSO.

The Public Utilities Commission of Ohio (PUCO) is the sole agency charged with regulating public utility service. The role of the PUCO is to assure all residential, business and industrial consumers have access to adequate, safe and reliable utility services at fair prices while facilitating an environment that provides competitive choices. Consumers with utility-related questions or concerns can call the PUCO Call Center at (800) 686-PUCO (7826) and speak with a representative. 

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From another perspective

PUCO approves billion-dollar rate increase for AEP Ohio consumers 

By J.P. Blackwood
Public Affairs Liaison
Office of the Ohio Consumers’ Counsel

This week, the PUCO approved yet another increase for AEP consumers, just two weeks after the PUCO saddled consumers with increased transmission charges that add about $10 per month to the typical consumer’s bill. Today’s PUCO order approved AEP’s billion-dollar Electric Security Plan (ESP) that could potentially add an additional $8 per month to AEP consumers’ bills.

AEP’s customers are struggling to pay ever increasing rates for utility service. Before these increases, AEP already led all other Ohio electric utilities in the number of disconnections for non-payment.

The case was resolved by a settlement agreement. OCC participated in settlement negotiations, but opposed the final version of the settlement. OCC’s opposition to the settlement is spelled out in its Initial Brief and Reply Brief in the case. 

Here are links:

12/1/23 Initial Brief: https://dis.puc.state.oh.us/DocumentRecord.aspx?DocID=8a858bad-323a-4ed…  

12/23/23 Reply Brief: https://dis.puc.state.oh.us/DocumentRecord.aspx?DocID=a160f99f-1b1b-444…;

Here is a statement from Ohio Consumers’ Counsel Maureen Willis followed by some bullet points highlighting OCC’s opposition:

“Under AEP’s electric security plan there is much security for AEP and little for residential consumers. Such plans, like AEP’s billion-dollar security plan, favor utilities over consumers. AEP’s residential consumers are hurting with the highest disconnection rates in the state.”

Highlights of OCC’s Concerns with Today’s PUCO-approved rate increase:

• AEP fails to fully demonstrate how its billion-dollar plan will improve reliability.

• AEP’s shareholders benefit from the high profits built into the electric security plan.  (Higher than the national average)

• AEP is charging consumers millions to improve service reliability.  At the same time, 

• AEP had asked to provide less reliable service (longer and more frequent outages).
The plan forces all consumers to pay for some energy efficiency products when they are already available in the competitive market (where non-participants do not subsidize those who choose to participate).
The plan lacks transparency and accountability.

Excerpts:

“The Joint Stipulation and Recommendation (‘Settlement’), will increase charges to consumers by nearly $1 billion throughout the term of AEP’s new electric security plan (‘ESP V’).  The Settlement harms consumers and the public interest and violates important regulatory principles and practices. To protect consumers from paying unjust and unreasonable charges that line the pockets of AEP’s shareholders, the Settlement should be rejected.

AEP claims that the Settlement is necessary to ensure reliability for consumers. But neither AEP nor any other party can identify why reliability warrants the Settlement’s excessive increases in charges to consumers.

AEP repeatedly states that the Settlement’s provisions for increased spending on vegetation management, grid maintenance, and reductions in peak capacity usage directly benefit consumers by increasing reliability. However, by AEP’s own account, it has met or exceeded all its reliability metrics for the last three years while ESP IV recovery cap rates were in effect, and consumers were satisfied with service reliability.  Given that AEP is claiming to already meet the reliability metrics, not one of the settling parties, including AEP and the PUCO Staff, has provided any evidence to support or explain why the Company cannot continue to meet its reliability obligations without the Settlement’s enormous increased costs (averaging more than $200 million dollars annually over the course of the Settlement).

The Settlement over-charges and under serves the consumers of Ohio. It allows AEP too much profit – profits that are well beyond the average of similar utilities. It contains inefficient, ineffective, and under-funded programs which ultimately only benefit AEP’s shareholders. The Settlement should be rejected.”  (pages 1-2)

“The Settlement provides for $12 million annually ($48 million over four years) to fund residential energy efficiency programs. OCC continues to object to these programs as described in the Settlement based upon two major issues: 1) the funding for the programs is paid for only by residential consumers, not shareholders, and 2) the Settlement does not provide for proper oversight of administration of these programs.”
 
“OCC witness Tinkham testified that the Settlement does nothing to specifically address the affordability of consumers’ essential electric utility service. Nor does the Settlement address the unreasonably large number of AEP service disconnections that occurred in previous years….

According to OCC witness Tinkham, AEP’s 2022 to 2023 annual disconnection reports demonstrate that, even without the increased consumer charges proposed in this case, electric service is becoming less affordable for AEP consumers. In fact, AEP disconnected more than double the number of residential consumers of the electric distribution utility with the second highest disconnection rate. The PUCO should refuse to accept the Settlement, which will increase rates for residential consumers, until it includes provisions to protect consumers from the unreasonable level of disconnections by AEP.” 

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