PUCO Denies Nonbypassable Rider for Plant Closure Costs at Ohio Power

The Public Utilities Commission of Ohio has denied Ohio Power's request (10/4/10) for a nonbypassable rider to recover the closure costs of Unit 5 of the Philip Sporn Generating Station (10-1454-EL-RDR).

"[T]he Commission finds that there is no statutory basis upon which to grant recovery of the closure costs for Sporn Unit 5," PUCO said.

"As Staff and most of the interveners note, the costs associated with the closure of Sporn Unit 5 do not fall within any of the provisions of Section 4928.143, Revised Code. Although OP implies that a broad interpretation of Section 4928.143(B)(2)(c), Revised Code, is warranted, that section provides for the establishment of a nonbypassable surcharge for the life of an electric generating facility, only if certain criteria are met. Upon consideration of these criteria, we find that Section 4928.143(B)(2)(c), Revised Code, does not authorize recovery of costs associated with the closure of Sporn Unit 5. Sporn Unit 5 was constructed long ago and, therefore, was not newly used and useful on or after January 1, 2009, as required by the statute. Neither was Sporn Unit 5 sourced through a competitive bid process or subject to a determination of need by the Commission, which are additional criteria found in Section 4928.143(B)(2)(c), Revised Code," the Commission added.

Although Section 4928.143(B)(2)(c), Revised Code, provides that the Commission may consider the effects of any decommissioning, deratings, and retirements, the Commission is permitted to do so only before a surcharge is authorized pursuant to that section, rather than under any circumstances.

Although AEP Ohio's former electric security plan allowed the utility to bring the issue of closure costs before the Commission, PUCO said that, apart from considering whether electric security plan rates are more favorable than expected market rates, "[t]he Commission must also determine whether the costs to be recovered under the ESP are authorized by statute."

"With respect to the closure costs for Sporn Unit 5, we find no statutory basis within Section 4928.143, Revised Code, or anywhere else in the Revised Code," PUCO said.

"Additionally, the Commission notes that OP's recovery of the closure costs would be contrary to the state policy found in Section 4928.02(H), Revised Code. That policy requires the Commission to avoid subsidies flowing from a noncompetitive retail electric service to a competitive retail electric service. OP seeks to establish a nonbypassable charge that would be collected from all distribution customers by way of the PCCRR [Plant Closure Cost Recovery Rider]. Approval of such a charge would effectively allow the Company to recover competitive, generation-related costs through its noncompetitive, distribution rates, in contravention of the statute," PUCO held.