Ohio Rejects Expansion of AEP Rate Caps, But...

The Public Utilities Commission of Ohio yesterday rejected AEP Ohio's request to expand the rate impact caps applicable to rates under its electric security plan, but also said it could not yet adjudicate many issues with regard to the rate impact from the transition to auction-based default service, and sought more information before ruling on additional issues.

As previously reported, AEP Ohio is transitioning to 100% auction-sourced default service (with 100% auction-based SSO starting January 1, 2015, click here for related story today on updated schedule). In the electric security plan order adopting this transition, PUCO did adopt a 12% rate impact cap on certain rate elements of the electric security plan.

In response to concerns about rate shock from the transition to market-based rates, AEP Ohio proposed to extend this rate impact cap to the energy prices from the Standard Service Offer auctions.

PUCO rejected this proposal.

"Turning to AEP Ohio's proposal to expand the customer rate impact cap, we find that AEP Ohio's proposal should be rejected. AEP Ohio's proposal not only exceeds the scope of the rate impact mechanism that was explicitly limited in scope in the ESP II proceeding, but also it fails to address our concerns about the cross subsidies amongst tariff classes. In addition, we think that the expansion of the rate impact cap would ignore the problems associated with AEP Ohio's historic, non-market based rate design," PUCO said.

However, PUCO said that additional information is necessary, "to ensure customers are prepared for any changes that may occur as a result of market based pricing, particularly AEP Ohio's winter usage customers."

"Currently, there is not enough information for the Commission to properly determine a means to mitigate any rate impacts that these winter usage customers may face," PUCO said.

PUCO therefore directed AEP Ohio to file:

(a) A description of the expected rate design for each customer class, including winter residential customers, for auction based rates. This description should include a comparison between the expected market based design with the current rate design, and identify and areas where there may be potential adverse impacts for customers.

(b) Schedules for each customer class that identify billing determinants, which should be broken down by applicable rate blocks and seasons. AEP Ohio should include the current and proposed rates and revenues, as well as any resulting increases or decreases.

(c) Provide potential rate impacts for each customer class as a result of the implemented auction format in the CBP [competitive bid plan] proceeding, representing all customer sizes and load factors.

(d) Identify any options that would mitigate adverse impacts that may result from implementing the CBP auction retail rate design.

Case No. 13-1530-EL-UNC