FERC Grants Inclusion of AEP Ohio Capacity Mechanism in Federal Tariff

FERC has granted AEP Ohio's request to accept an Appendix to the PJM Reliability Assurance Agreement (RAA) to reflect the Public Utilities Commission of Ohio's adoption of a state compensation mechanism for capacity provided by AEP Ohio under the Fixed Resource Requirement plan.

The appendix, AEP Ohio said, is merely intended to reflect the Public Utilities Commission of Ohio's adoption of the state compensation mechanism.

However, AEP Ohio's original language had been protested by industrials, who had argued that part of PUCO's adopted state compensation mechanism consisted of a retail rate component, and therefore FERC lacked jurisdiction to approve the charge or include it in a wholesale tariff. Notably, industrials protested that inclusion of the state compensation mechanism in a federal tariff could lead parties to claim preemption of any revisions ordered to the mechanism by an Ohio court, as PUCO's order on the state compensation mechanism is under appeal

AEP Ohio's original filing would have included in the RAA appendix a compensation rate of $188/MW-day, which reflects the aggregate of the lower capacity rate charged directly to retail suppliers, and deferred amounts collected through retail rates.

AEP Ohio later said that it would agree to revise the language of its appendix to remove the $188/MW-day reference. Specifically, AEP Ohio said that the only charge for which AEP seeks FERC acceptance, through the appendix, is the wholesale component of the Ohio state compensation mechanism; e.g., the adjusted final zonal PJM Reliability Pricing Model (RPM) rate in effect for the "rest of PJM" region. It agreed to language purporting to limit the appendix to that provision.

On that basis, FERC approved AEP Ohio's appendix consistent with this revision agreed to by AEP Ohio.

While some parties had protested an effective date of August 8, 2012 for the RAA appendix (the date of PUCO's ruling) as retroactive, FERC found that date to be in accordance with the RAA.

Docket No. ER13-1164