Approval of AEP Rate Plan Could Mean Rate Increases

The Office of the Ohio Consumers’ Counsel (OCC) says customers will see hundreds of millions of dollars in new rate increases following a decision Wednesday by the Public Utilities Commission of Ohio (PUCO) to authorize a new American Electric Power (AEP) rate plan.  Under the law, AEP has the right to now consider whether or not to accept the modified plan.

The new electric security plan will affect how much customers pay for their electric bills for the next several years and beyond. The OCC opposed AEP’s proposal, saying that residential customers would be charged unreasonable rates.  OCC made numerous proposals for protecting consumers in the case.

“Ohio consumers, who have faced challenges in a difficult economy, should be benefiting from historically low prices in the electricity market,” Ohio Consumers’ Counsel Bruce J. Weston said. “Unfortunately, Ohioans will be asked to pay dearly for AEP’s transition to competition. That’s unfair.”

According to the OCC, the most significant increases to customers are a result of the retail stability rider approved by the PUCO at a rate greater than what was requested by the company.  The retail stability rider charge will be added to customers’ bills to compensate AEP for money it could lose due to electric competition. As of May 2012, approximately 15 percent of residential customers have chosen to shop for their electricity by switching to a competitive electric supplier, according to AEP.  The PUCO ordered AEP to charge residential customers the largest portion of these charges even though residential consumers are currently the least likely to take advantage of electric competition.  All residential customers, regardless of whether they take advantage of competitive electric offers, will pay this charge.

The effect of the charges in the PUCO order is still under analysis by the OCC.

In 2011, more than 72,500 AEP customers faced disconnection for an inability to pay their electric bills. An additional 163,000 AEP customers paid their bills with some form of bill payment assistance, such as PIPP Plus or through arrangements with the utility.