Ohio Staff Oppose AEP Ohio Proposal for "Reregulating" Generation

AEP Ohio's sought Power Purchase Agreement Rider amounts to "reregulating" the company's generation, reversing the course of prior PUCO orders, Public Utility Commission of Ohio Staff said in a post-hearing brief in AEP Ohio's electric security plan proceeding.

AEP Ohio had proposed the PPA rider, which would be nonbypassable, to address its retained interest in the Ohio Valley Electric Corporation (OVEC), which was not divested. AEP Ohio's share of OVEC would be sold into PJM with costs or credits allocated to all customers.

Staff, reiterating concerns raised in testimony (click here for prior story), said that, "AEP-Ohio is near the 'finish line' of full competition, and will soon become a 'wires only' company that no longer sells electricity to Ohio ratepayers."

"However, before it even reaches the 'finish line', AEP-Ohio asks to the Commission to reverse course and begin 'reregulating' some of AEP-Ohio's generation assets. The PPA rider will move AEP-Ohio in the exact opposite direction of market-based competition. It would provide AEP-Ohio a guaranteed revenue stream for its generation assets, irrespective of market forces. This includes a return on equity for AEP-Ohio and the other OVEC Sponsoring Companies. Further, AEP-Ohio would receive this nonmarket-based cost recovery despite the fact it will no longer sell electricity to Ohio ratepayers," Staff said.

"Staff is concerned that going down the PPA rider path may ultimately be a mistake. Not only would it defeat the whole point of AEP-Ohio's ESP II Case, it will also invite all Ohio EDU's to seek guaranteed cost recovery for generation assets that are not committed to Ohio ratepayers and are not regulated by the Commission," Staff said.

Staff also continued to offer support for a purchase of receivables program as modified by Staff recommendations.

Most notably, as more fully discussed in our prior story (click here), Staff recommends that the POR program include a supplier-specific discount rate, rather than AEP Ohio's proposed 0% uncollectibles discount and nonbypassable charge for uncollectibles.