PUCO denies AEP Ohio request to charge customers out of market generation costs

PUCO denies AEP Ohio request to charge customers out of market generation costs

COLUMBUS, OHIO (Nov. 21, 2019) – The Public Utilities Commission of Ohio (PUCO) today issued its opinion and order denying AEP Ohio’s request to impose a nonbypassable charge on all of its customers for the purpose of underwriting its financial support for certain electric generating facilities.

Ohio law requires that prior to authorizing any such charge, the PUCO must first determine the associated electric generation facilities are needed based upon resource planning projections.

In its order, the Commission found AEP Ohio did not demonstrate the need for the facilities, regardless of which of the competing definitions of need were used to evaluate the proposed charge. Having determined that the necessary demonstration of need was lacking, the Commission concluded that its authority to approve the proposed charge is also lacking.

In its application, AEP Ohio argued that the facilities were needed because its customers indicated they desired them, as well as to realize the purported economic benefits resulting from the facilities, and to correct alleged market failures. However, the Commission found these arguments to be without merit, citing numerous deficiencies in its analysis. The Commission also noted that Ohio’s current legal framework and options available in the retail electric marketplace provide ample opportunities for customers to act on their electric generation supply, price and technology preferences.

“Today’s decision is not about any particular generating technology. Rather, it is about what must be demonstrated by an electric distribution utility before Ohio law might allow the PUCO to approve the proposed charge,” stated PUCO Chairman Sam Randazzo. “Indeed, Ohio’s ‘customer choice’ framework provides AEP Ohio customers with the individual right to do directly what the proposal would have compelled all such customers to do regardless of their individual preferences.”

Finally, the Commission noted that nothing in its order precludes the project developers, AEP Ohio or its affiliates from pursuing development of the generating facilities. Further, the Commission noted that the recently enacted House Bill 6 makes the proposed electric generation facilities eligible to seek financial support from the Renewable Energy Fund.

Ohio law requires electric distribution utilities to annually file reports with the PUCO detailing, among other things, forecasts of energy supply and demand over a 10-year period. On Sept. 19, 2018, AEP Ohio filed an amendment to its long-term forecast report. On Sept. 27, 2018, AEP Ohio filed an application seeking approval of the inclusion of two solar energy resources totaling 400 MW in the company’s renewable generation rider.

A copy of today’s opinion and order is available on the PUCO’s Docketing Information System (DIS) by searching for case 18-501-EL-FOR.