Industrials Charge AEP Ohio FERC Filing Meant to Protect Capacity Compensation Against Unfavorable Court Ruling

A filing by Ohio Power Company at FERC is meant to preserve a favorable revenue stream for AEP to the extent an Ohio court overturns a decision by the Public Utilities Commission of Ohio, Industrial Energy Users-Ohio charged in a FERC filing.

American Electric Power Service Corporation, on behalf of its utility affiliate Ohio Power Company (collectively, "AEP"), has sought FERC approval of an appendix to the PJM Reliability Assurance Agreement that specifies the wholesale charges to be assessed to Competitive Retail Electric Service (CRES) providers in Ohio for the Fixed Resource Requirement (FRR) capacity that Ohio Power is required to make available under Schedule 8.1 of Section D.8 to the RAA, with such appendix reflecting the state compensation mechanism adopted by PUCO. As previously reported, PUCO granted Ohio Power authority to recover capacity costs of $188.88/MW-day, but limited the amount charged to CRES providers to the RPM clearing price, with any difference deferred for future recovery to the extent not recovered in a nonbypassable stability rider.

Noting that the PUCO capacity case is currently on appeal to the Ohio Supreme Court, Industrial Energy Users-Ohio charges that by seeking to place the PUCO-approved rates on file at FERC, "AEP is scrambling before this Commission [FERC] to find a way to legitimize what the Ohio Commission has done and to fend off efforts by injured customers to block the Ohio Commission's unauthorized actions."

"It is clear that AEP prefers the outcome approved by the Ohio Commission (higher electric bills) and is looking to do whatever it takes to preserve this outcome, while attempting to keep open its options to move to preempt Ohio's role in defining compensation for generation capacity service available to CRES providers in the event the Ohio Supreme Court determines that the Ohio Commission's actions are outside the law. AEP wants the Ohio Commission to have jurisdiction only if the Ohio Commission indulges AEP's demands, and wants this Commission to have jurisdiction if the Ohio Commission does not," Industrial Energy Users-Ohio charged.

Industrial Energy Users-Ohio argued that AEP does not have authority to file a proposed amendment to the PJM RAA under Federal Power Act Section 205, and that AEP's requested relief must be denied because the relief exceeds the scope of FERC's statutory authority.

The Retail Energy Supply Association also protested the filing, particularly what RESA said was, "AEP's attempt to establish a right to impose retroactive charges on CRES providers."

"AEP's cover letter also states the following: '[t]o account for [the possibility that the Ohio State Courts overturn the order implementing the state compensation mechanism], AEP alerts the Commission and CRES providers that if Ohio Power ultimately is unable to recover some or all of the portion of the FRR costs that were allocated to retail customers under the Ohio Cost Deferral Recovery Order, AEP reserves the right to file to amend the RAA appendix in an effort to recover those costs from CRES providers, or to file a new wholesale FRR charge under Section 205," RESA noted.

The Public Utilities Commission of Ohio supported AEP's proposed appendix to the RAA, stating, "The adoption of the proposal ... will avoid the need for the Supreme Court of Ohio to opine on the meaning of the RAA and further will avoid arguments claiming that there is some sort of jurisdictional dispute between the two [FERC and the Ohio Commission].

Docket No. ER13-1164