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AEP CEO Sees Wide Support For Ohio Legislation Authorizing OVEC Nonbypasable Recovery, To Move On Regulated New Generation Next

CEO Doesn't Expect Legislation Requiring "Market Rate Offer" To Go Very Far

July 28, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

During an earnings call, AEP CEO Nicholas Akins provided a legislative update, telling investors that the company sees a wide range of support for legislation allowing nonbypasable recovery of Ohio Valley Electric Corporation costs.

"In an effort to ensure long-term generation for Ohio customers with reduced pricing volatility and economic development benefits for the state, AEP Ohio has been actively engaged with a variety of stakeholders to introduce legislation that will enable this to occur," Akins said

"The two primary components of our proposed Ohio restructuring legislation include not only the recovery of OVEC, per a legislative solution, and also clarity on regulated recovery for the building of new generation if the PUCO determines a need," Akins said

"With respect to OVEC, House Bill 239 with a companion bill in the Senate calls for the owners of OVEC to receive recovery of OVEC through billing of customers or customer credits when market prices are above cost. The legislation would take the PUCO's actions of approving recovery for AEP, which needs to be re-approved every few years via the ESP, and make it last for the remainder of the life of the plants through 2030. The bill would provide benefits to all OVEC utility co-owners in the state. So it's obviously something that's supported by the other utilities, and we expect hearings to resume when the legislature returns from summer recess in September, followed with a vote in the House and the Senate. The OVEC bill seems to have wide range of support at this point," Akins said

Specifically, House Bill 239 would require nonbypasable treatment for OVEC costs/credits, with output sold into the wholesale markets

"Once we have an outcome of the OVEC legislation, we expect the legislature to consider a bill to provide clarity on regulated recovery for the building of new generation. This restructuring legislation, certainly, will have more hurdles to overcome with opposing parties, but AEP believes there are several compelling reasons why this should be considered that would benefit the State of Ohio and our customers," Akins said

Asked about proposed legislation (HB 247) that would prohibit utilities and affiliates from owning generation and would require default service to be served via a market rate offer, Akins said, "I don't think that legislation is going to go very far."

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