PUCO Confirms Use of Unblended Fuel Rates at AEP Ohio

The Public Utilities Commission of Ohio ordered AEP Ohio to use unblended Fuel Adjustment Clause (FAC) rates for its former Ohio Power and Columbus Southern Power territories for the second quarter of 2012.

The FAC rates constitute a portion of the bypassable generation rate.

While PUCO had previously ordered the use of separate FAC rates unique to each pre-merger territory, AEP Ohio sought to blend the FAC rates, stating that blended FAC rates more accurately reflect its fuel costs going forward as a merged company. AEP Ohio said that that many systems and financial data have changed since the merger of the operating companies occurred at the end of 2011, such that AEP Ohio is no longer able to determine the actual fuel costs separately by rate zone.

Although PUCO did previously confirm its approval of the merger, independent from the merger's inclusion in a now-rejected electric security plan (ESP), PUCO noted that in its approval of the merger, it noted that any proposed rate adjustments as a result of the merger would be considered in the "ESP 2" cases.

Furthermore, PUCO noted that AEP Ohio's application in the merger case states that Columbus Southern Power and Ohio Power, as a merged company, will continue to provide service to customers within their pre-merger certified territories in accordance with their respective rates and terms and conditions in effect until such time as the Commission approves new rates and terms and conditions.

"On that basis, we find that it is appropriate at this time for AEP-Ohio to maintain separate FAC rates for the second quarter of 2012 that reflect the pre-merger certified territories of CSP and OP. Any adjustments to the FAC rates as a result of the merger should be proposed by AEP-Ohio in the ESP 2 cases," PUCO ordered.