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Ohio Utility Seeks To Divest Last Remaining Power Generating Asset
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AEP Ohio (Ohio Power Company or "the Company") has filed at the PUC of Ohio to transfer its interests in Ohio Valley Electric Corporation
(OVEC) to an affiliate
OVEC has not been used for default service since full auction-based SSO was implemented, and OVEC costs had been billed on a nonbypassable basis. However, recent legislation relieved customers of these nonbypassable charges
AEP Ohio said that the proposed transfer would, "complet[e] the final step in the Company’s full legal
corporate separation."
AEP Ohio noted that the recent passage of Ohio House Bill 15 defines an electric distribution
utility as not owning or operating any generating assets.
"In addition, House Bill 15’s repeal of the net cost
recovery associated with OVEC also cements AEP Ohio’s desire to divest its OVEC power
entitlements – especially in light of that repeal’s retroactive implementation that (to date) has
resulted in AEP Ohio absorbing a substantial under-recovery that existed as of HB 15’s effective
date," AEP Ohio said
AEP Ohio is specifically seeking approval to complete the divestiture of its
OVEC contractual entitlements and limited (4.3%) equity interest
AEP Ohio proposes to divest its OVEC entitlements through a two-step transaction. In the first
step, AEP Ohio will assign its obligations under the OVEC Inter-Company Power
Agreement (ICPA) to AEP Ohio’s parent company,
American Electric Power Company, Inc. (“AEP Parent”). In the second step, AEP Parent will
immediately assign its obligations to AEP Genco. AEP Parent will remain responsible for the
financial and other obligations of AEP Genco under the ICPA and OVEC will release AEP Ohio
from its obligations under the ICPA.
The consideration for the transfer
shall be the assumption by AEP Parent and AEP Genco of all OVEC-related liabilities of AEP
Ohio.
No cash consideration will be provided.
"[T]he Company respectfully requests that
the Commission approve the transfer by December 31, 2025,
so that AEP Ohio can transfer its
OVEC entitlements as soon as possible after the approvals, and by year-end if possible, thus
allowing AEP Ohio to finally achieve the full structural corporate separation envisioned since the
original corporate separation mandate was originally adopted in 1999," AEP Ohio said
AEP Ohio said that, "if AEP Ohio is not permitted to transfer the OVEC entitlements, it may not be acting consistently with its status
as an 'electric distribution utility' and be unable to offer a standard service offer at all."
AEP Ohio said, "given that the OVEC contractual entitlements have proven to
be more of a financial liability than an asset -- OVEC’s plants have operated in the red year over
year for more than a decade and are burdened by significant environmental liabilities -- AEP
Ohio’s proposal to transfer the entitlements in exchange for an assumption of all OVEC-related
liabilities by AEP Parent is reasonable. As these circumstances show, the transfer of the OVEC
ICPA interests is in the best interest of AEP Ohio and its customers, who also will not be harmed
by this transaction since they are no longer obligated to pay any of the net costs of the OVEC
entitlements (and are no longer entitled to any revenue for OVEC power)."
Case 12-1126-EL-UNC, 25-1039-EL-ATR
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November 3, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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