PUCO staff: AEP request exceeds law

Columbus Ohio AEP - Commercial Energy Deregulation Information
By  Dan Gearino The Columbus Dispatch Thursday May 10, 2012 3:51 PM

“American Electric Power is asking for a rate increase that exceeds the level allowed by state law, according to a testimony released by the Public Utilities Commission of Ohio staff.

The staff concludes that the AEP plan would be more expensive than a rate based on market prices, which would go against a provision in state law.

The PUCO’s five-member board can decide whether to accept or reject the findings of its staff. The staff’s advice is now part of the case’s record and other participants will have chance to respond.

Robert Fortney, the staff member who wrote one of the key parts of the testimony, doesn’t explicitly urge the board to accept or reject the plan. He says the findings are technical in nature.

He also notes that the AEP plan has some benefits that cannot be quantified and that the board should take those benefits into account.

AEP is highlighting the benefits that cannot be quantified, such as the company’s commitment to switch to market-based prices over several years.

The proposal “provides important and substantial benefits to the consumer that cannot be precisely quantified as part of a mechanical formula,” Pablo Vegas, AEP Ohio president and chief operating officer, said in a statement.

The Columbus-based utility wants to raise rates by about 5 percent right away, with smaller increases in the following years.

In addition to raising rates, the AEP proposal seeks to increase the “capacity charge” that competitors to pay to use the utility’s lines.

Hisham Choueiki, a PUCO staff member, recommends that AEP’s charge should be much lower than what AEP is proposing. As with Fortney’s testimony, the board can decide to accept or reject Choueiki’s conclusions.

The issue of capacity charges is one of the most controversial parts of the case, with AEP saying that it is being forced to give away an asset and competitors saying that AEP wants to hold its customers hostage to higher prices.

Vegas said that the capacity charge sought by competitors would be 90 percent less than the amount AEP needs to cover the costs of maintaining the system. …”

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