PUCO Dumps AEP’s Ohio Coal Bail Out

The Public Utility Commission of Ohio has told AEP that is will not allow the company to lock Ohio rate payers into power purchase agreements with AEP’s uncompetitive coal burners.  FirstEnergy also has a similar bail out plan pending before PUCO.

The Public Utilities Commission of Ohio made history Wednesday in a ruling refusing to allow AEP Ohio to saddle ratepayers with extra charges to subsidize the continued operation of a 1950s-era coal-fired power plant that it owns along with FirstEnergy and other state utilities.

The decision to reject AEP’s request for a subsidy — immediately applauded by some consumer and environmental groups — sends a shot over the bow of FirstEnergy’s similar proposal and could jeopardize the continued operation of the Davis-Besse nuclear power plant and the W.H. Sammis coal-fired power plant on the Ohio River.

The Cleveland Plain Dealer goes on to explain:

The Ohio Consumers’ Counsel has opposed the PPA proposals offered by both utilities. And it lost no time Wednesday arguing that the real issue in the case is the impact on home electric bills.

“AEP’s customers already pay the highest electric rates in the state.  Ohioans pay higher rates on average than consumers in 31 other states,” said OCC spokesman Scott Gerfen.

“Ohio’s electric utilities want the protection of more government regulation but consumers need the protection of more competition to lower their electric bills in this era of historically low energy prices.

“It’s time to end the electric utilities’ slow march to competition and adopt the competitive markets that Ohio lawmakers envisioned in 1999.”

Still, Wednesday’s ruling is not absolutely a death knell for power purchase agreements, despite the hosannas issued by other consumer groups and some environmental organizations soon after the ruling.

In fact the PUCO order declares that the concept of a PPA in a marketplace that is supposed to be free of state regulation is legal under Ohio law.

What the order says is that the commission could find no benefit to customers in allowing the PPA as it was proposed by AEP Ohio.

“Although the magnitude of the impact of the proposed PPA rider cannot be known to any degree of certainty, the Commission agrees with the Ohio Consumers’ Counsel, the Industrial Energy Users-Ohio and other intervenors that the evidence of record reflects that the rider may result in a net cost to customers, with little offsetting benefit from the rider’s intended purpose as a hedge against market volatility,” the ruling asserts.

Unlike the WV PSC, PUCO is interested in protecting electric customers.  As time goes on, the WV Harrison (FirstEnergy) and Mitchell (AEP) deals will look worse and worse, compared with PUCO’s wise decision.

 

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