AEP Waiting on Capacity Performance, Ohio PPA Clarity Before Deciding on Merchant, Retail Supplier Business

AEP is awaiting further clarity on Ohio's acceptance of purchased power agreements and the outcome and pricing of PJM's capacity performance proposal at FERC before making a decision on the future of its merchant generation business, which includes its competitive retail supplier, executives said during an earnings call.

As previously reported, AEP is conducting a strategic review of the merchant business.

The Public Utilities Commission of Ohio has ruled that a PPA rider sought by AEP Ohio to support affiliated merchant generation is legal, but denied any recovery of costs via the rider at this time, citing a lack of benefits, though PUCO's decision only addressed AEP's share of OVEC, and not additional plants for which AEP sought a PPA in a separate proceeding, which continues to be evaluated before PUCO.

AEP executives said that they need to see how the PPA process develops in Ohio, highlighting as a milestone a forthcoming decision addressing a similar mechanism proposed by FirstEnergy, to inform their decision on the merchant business. Executives also said that they are waiting for FERC's decision on PJM's capacity performance proposal, and pricing under the proposal if adopted.