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AEP Ohio files motion for relief and expedited ruling

by on February 28, 2012

AEP Ohio filed today with the Public Utilities Commission of Ohio (PUCO) a motion for relief and request for expedited ruling related to the Commission’s Feb. 23 order, specifically regarding generation capacity charges.

Upon rejecting the settlement agreement, the PUCO recognized that the case to determine a capacity charge that competitive retail generation suppliers would pay AEP Ohio needed to proceed independently and that a procedural schedule would be established. While a more permanent decision remains pending regarding the appropriate capacity charge, AEP Ohio is requesting interim relief and an expedited ruling in order to avoid undue prejudice, in the form of substantial and adverse financial impacts.

“AEP Ohio has committed significant capital investment in its Ohio generation fleet under what was a regulated environment to serve our customers’ generation needs,” said [Nick Akins], AEP president and chief executive officer. “The settlement agreement allowed AEP Ohio a reasonable transition to market over a period of time. Without that transition, we will basically be giving the capacity we built to competitive suppliers for the taking.”

The company estimates that if it is required to flash cut to RPM-priced capacity this year, it would cause the company’s projected 2012 earnings to drop by 27 percent and produce a return on equity (ROE) of 7.6 percent. Projected earnings for 2013 also would drop significantly by 67 percent and produce an ROE of 2.4 percent.

In the filing, AEP Ohio is asking the PUCO to maintain the status quo of what was proposed and in place for 2012 by the previously approved stipulated agreement pending an expedited resolution of the proceeding. In that agreement, AEP Ohio was to provide a percentage of its generation capacity to competitive retail suppliers at the deeply discounted RPM price.

The company also has proposed another alternative to the Commission that would permit RPM-priced capacity for any customer that has shopped for generation supply to date, while allowing AEP Ohio to use a reduced cost-based rate for new shopping, pending resolution of the proceeding.

“We feel these proposed interim solutions give the Commission alternatives to dealing with the capacity issue fairly and without prejudice until the proceeding can be resolved,” said Joe Hamrock, AEP Ohio president and chief operating officer. “Making AEP Ohio flash cut to RPM-priced capacity would have a significant financial impact on AEP Ohio and cause uncertainty and instability for our customers, the company and its investors.”

AEP Ohio has proposed a procedural schedule for resolution of this case that fully submits the record for decision in 60 days and a decision on the proceeding within 90 days.

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