AEP Ohio Seeks To Use Owned Generation To Serve Default Service Load

AEP Ohio has sought PUCO approval of an extension of its electric security plan that would include the use of its entitlements in the Ohio Valley Electric Corporation (OVEC) generation to serve Standard Service Offer (SSO) customers (Case 16-1852-EL-SSO)

AEP Ohio is seeking an extension of its ESP through May 2024; the current term ends in May 2018.

Under the extension, AEP Ohio proposes to transition from using the OVEC entitlement as the basis for a nonbypassable financial hedging mechanism implemented through the nonbypassable PPA Rider, to instead using it to serve SSO customers and recovering OVEC costs through bypassable SSO rates pursuant to §4928.143(B)(2)(a), Ohio Rev. Code.

AEP Ohio would reduce the amount of power procured through its competitive auctions for SSO service by the amount of its OVEC entitlements, beginning June 1, 2017.

AEP Ohio's entitlements in OVEC equate to 354 MW of Unforced Capacity, and would amount to 12% of AEP Ohio's SSO (with the SSO competitive auctions procuring 12 fewer tranches of full requirements service for each delivery year)

The cost of the OVEC entitlements would be blended with the competitive auction rates to establish bypassable retail generation and retail capacity rates.

Otherwise, AEP Ohio proposes to maintain the same schedule and mix of auction-sourced full requirements contracts for SSO -- with one-third of the auction-procured load served on 12-month contracts; one-third on 24-month contracts, and one-third on 36-month contracts (as noted, the auction-procured SSO load would be reduced by 12% versus the current practice).

Click here for a schedule of proposed AEP Ohio SSO procurements, including term lengths

AEP Ohio's proposed ESP extension also includes its previously filed proposal to introduce a bypassable Competition Incentive Rider (CIR) as an addition to the SSO non-shopping rate above the auction price, the purpose of which is to incent shopping and recognize that there may be costs associated with providing retail electric service that are not reflected in SSO bypassable rates. The revenue collected from the CIR will then be refunded to all customers through the SSO Credit Rider (SSOCR). Per a stipulation, AEP Ohio filed a proposed level for the bypassable CIR based on a PUCO Staff analysis, with such level being $0.62/MWh.

AEP Ohio is also seeking authority to develop renewable generation in the future, with costs recovered on a nonbypassable basis (and costs/benefits of such generation allocated to all customers).