PUCO Denies AEP Ohio's Sought Finding Of A "Need" For 900 MW Of Utility-Developed Renewables, Denies Nonbypassable Charge

The Public Utilities Commission of Ohio issued an order denying AEP Ohio’s request for a finding of need for at least 900 MW of renewable generating facilities, during the long-term forecast report (LTFR) planning period, based on the resource planning projections submitted by the Company, pursuant to R.C. 4928.143(B)(2)(c).

AEP Ohio had sought a finding of such a need as part of a long-term forecast. Such forecast proceeding has been consolidated with an application by AEP Ohio for approval of renewable energy purchase agreements totaling 400 MW of nameplate capacity solar energy (see details on the application here)

"After thoroughly considering the evidence of record presented in these matters, the Commission finds that, under any of the parties’ offered views on the definition of 'need,' AEP Ohio has not demonstrated a need for the introduction of new renewable generation resources," PUCO said

PUCO found customer surveys presented by AEP as purportedly showing an unmet desire for renewable power (and therefore a need) to be, "unreliable and insufficient."

"The Commission finds that aspects of the survey selection process render the survey results unreliable for purposes of determining need in accordance," PUCO said

"As to residential and small C&I customers, the Commission is not persuaded that the survey results reflect a statistically valid, random sample of residential and small C&I customers and their demand for renewable energy," PUCO said

PUCO next addressed the economic benefits asserted to accrue to AEP Ohio customers, and the economic and social benefits alleged to accrue to the communities where the proposed facilities would be constructed and operate.

"Without making an assessment of the purported benefits, economic and social, the Commission finds it compelling that such projected financial benefits and social advantages, if true, are not unique to AEP Ohio as an investor or owner and operator of the renewable generation facilities," PUCO said

"Similarly, the Commission rejects the Company’s claim that at least 900 MW of renewable generation would ameliorate certain market failures. All facets of the electric energy and capacity markets, including regulators, the utility industry, competitive suppliers, and competitive generation developers, continually monitor the markets and work to ensure retail electric utility customers the benefits of competitive markets and reliable electric service. As the Commission considers AEP Ohio’s arguments and those of intervening parties, we are not persuaded that the energy or capacity markets have, in fact, failed, as AEP Ohio asserts. We agree with the opposing intervenors that, generally, the PJM markets are reliable, efficient, and reflective of a diverse generation resource mix. Furthermore, the record evidence demonstrates that Ohio’s residential, commercial, and industrial customers who desire energy sourced from renewable generation facilities have available options from which they may select renewable energy service," PUCO said

With PUCO finding that a need has not been established for 900 MW of renewables, AEP Ohio may not implement a nonbypassable charge under R.C. 4928.143(B)(2)(c) for such development

PUCO stressed that, "Nothing in our decision today precludes AEP Ohio (or its affiliates) from investing in the Willowbrook or Highland projects and pursuing the projects’ claimed social and economic benefits through means other than a nonbypassable surcharge under R.C. 4928.143(B)(2)(c)."

Having denied the finding of a need for the reasons stated above, PUCO found it unnecessary to render a decision on the larger question of how to define a "need"

In terms of defining a need, PUCO noted that, "AEP Ohio raises several factors that it believes are relevant to the determination of need based on its resource planning projections. Namely, AEP Ohio advocates that additional renewable energy is desired by AEP Ohio customers and that the renewable energy facilities will be beneficial to the economy of the community where the facilities are constructed and to the state of Ohio"

The Commission addressed AEP Ohio’s case for need based on purported customer preferences and economic and social benefits, "although, in light of our conclusions ... we merely assume, without deciding, that such factors are relevant to the determination of need," PUCO said

Case 18-501-EL-FOR