AEP Ohio Files Tariff to Maintain Some POLR Charges, Make Charges Nonbypassable

Columbus Southern Power and Ohio Power are seeking to continue the collection of POLR charges -- with the charges now being made fully nonbypassable for individual end users -- in submitting tariffs to comply with a recent PUCO order which directed the utilities to, "back out the amount of the POLR charges authorized in the ESP [electric security plan] Order."

See 10/4 story for discussion of PUCO's order on POLR charges

The AEP companies filed two sets of compliance tariffs in response to the order. In AEP Ohio's recommended tariffs, AEP Ohio has only reduced the POLR charge, "to the level that existed prior to the 2009 ESP Order, as established in the Commission's 2005 Rate Stabilization Plan Order in Case No. 04-169-EL-UNC." The AEP companies alternatively filed tariffs completely removing all POLR charges, but interpret the Commission's order as allowing the continued collection of POLR charges at the levels established in the Rate Stabilization Plan Order.

Notably, AEP Ohio's recommended tariff would make the POLR charges strictly nonbypassable for individual customers (with only governmental aggregations permitted to bypass the POLR charge in exchange for returning to a market-based SSO).

AEP Ohio argued that continuation of the POLR levels from the 2005 RSP Order is permitted since the PUCO ordered the utilities to, "back out the amount of the POLR charges authorized in the ESP Order," suggesting that any amount authorized prior to the ESP order may remain.

Furthermore, the AEP companies noted that PUCO found that, "AEP Ohio's increased POLR charges authorized as a part of the ESP Order are insufficiently supported by the record on remand," [emphasis by AEP Ohio], suggesting that the prior "existing" POLR rates from the RSP order were not altered. Finally, AEP Ohio cited language from the remand order finding that AEP Ohio had, "failed to present evidence of its actual costs and has not justified recovery of the POLR charges at the level reflected in its existing rates" [emphasis by AEP Ohio].

"In this context, the Remand Order's key finding that AEP Ohio should 'back out the amount of the POLR charges authorized in the ESP Order' has clear meaning. It makes little sense to conclude that 'backing out' an amount from a charge should be interpreted to mean that the charge should be eliminated. It also makes little sense to conclude that removing the 'amount of the POLR charges authorized in the ESP Order' as being elimination the entire POLR charge," AEP Ohio said.

Industrial Energy Users-Ohio protested the recommended tariffs as plainly inconsistent with the PUCO's remand order.

"The Commission found that the Companies failed to justify POLR charges on any basis and were ordered to remove the POLR charges. The Commission further found that the issue of bypassability was moot since customers would not have a POLR charge to concern them if they returned to SSO service," IEU-Ohio said of the remand order.

"[T]he notion that the Commission's use of the term 'back out' as a justification for leaving amount in the rates is completely inconsistent with the balance of the Order on Remand and the decisions that preceded that Order. The only POLR charge authorized in the ESP is found in the March 18, 2009 Opinion and Order, and it authorized the collection of $152 million. The Commission has repeatedly indicated that the POLR charges should be removed unless the Companies had a legal basis for them. The Commission on May 4, 2011 directed the Companies to remove the POLR charges. When it directed revised tariffs be filed on May 25, 2011, it directed that the POLR charges, not some portion, be collected subject to refund. In the Order on Remand, it found that the Companies had failed to demonstrate any factual or legal basis for continuing to collect a POLR charge. At this point, there is no ambiguity as to what POLR charges are in the ESP and that the Commission ordered the POLR charges to be removed," the industrials said.

Furthermore, IEU-Ohio argued that the ESP order did not simply add costs to the existing POLR rates, but rather established a new revenue requirement based on costs adjudicated in the ESP order. Thus, there is no "underlying" POLR charge apart from that authorized in the original ESP order which PUCO has now eliminated, the industrials said.

"The ... argument that the ESP approved an increase in POLR charges ignores what the Commission ordered in the Rate Stabilization Plans ('RSP') and the current ESP for OP and CSP. As the Commission will recall, the revenues the Companies were authorized to collect in the RSPs were for regional transmission organization administrative costs and recovery of deferred construction work in progress. In contrast, the Commission's March 18, 2009 Opinion and Order authorized identifiable POLR charges for CSP and OP based on a formula that produced a 'cost' of $152 million annually. The POLR tariffs subsequently approved by the Commission were designed to produce that same $152 million annually. Thus, there is no basis for stating that the increase in POLR charges had any connection to the pre-ESP charges in the RSPs," IEU-Ohio argued.