Battle brewing over AEP rate hike - Business First of Columbus:

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Groups that include the and Officr of theOhio Consumers’ Counsel are considering a requesyt for hearings before the PUCO to challenge partes of its AEP rate They are also considering an appea to the Ohio Supreme Court if they think their concerns aren’f addressed by the “(The rate hikes) will have a dire effect on manufacturerds in AEP territory,” said Kevin Schmidt, directorr of public policy services for the 1,600-membetr manufacturers’ association.
“This forcexs our hand to see what we can IssuedMarch 18, the PUCO ruling caps rate increasex at 7 percent this year and 6 percent each in 2010 and 2011 for commercial and residential customers of , the AEP business that services central and southern Ohio. The caps for the company’as business, which supplies eastern and northwest Ohiowith electricity, are 8 percenf this year, 7 percent in 2010 and 8 percenf for 2011. AEP sought 15 percent rate hikes in each of thethreee years. The PUCO-approved hike means an averags Columbus Southern residential customerpaying $99.51 a month will see monthly bills increasr $6.97 this year, rise an additional $6.
39i in 2010 and climb an extrz $6.77 in 2011, according to a calculation by Columbus-based AEP. The increasesz are expected to begin during the April billing ButOhio Consumers’ Counsel Janines Migden-Ostrander said the size of the rate hike is “jusf not right,” especially in light of the financial pressure Ohioans are under in the depressed economy. “Wee think the rate increase is excessive and burdensome,” she said. Migden-Ostrander isn’t rulinv out an appeal to the statr Supreme Court ifrelief won’t be provided during rehearings by the commission.
The Ohio Consumers’ Counsel has appealed 23 PUCO decision tothe state’s highest court since Migden-Ostrandeer took charge of the officer in 2004. Groups with a stake in the AEP rate including thecompany itself, have 30 days from the PUCO’es ruling to seek a rehearing. The commission would have 30 days afte that tomake changes, said Shana Eiselstein, a PUCO In making its ruling, the commission said the rate increass will provide an incentive for AEP to add programs to improv the reliability of its electric service and give customer tools to save on powef costs.
Those efforts will include a stepped-up vegetatiomn management program along power linesand AEP’s gridSmargt program that allows customers to controo their electric bills through advanced metering. The rate increase is roughly half of what AEP requested when it filed its rate plan with the PUCOin July. It citefd the need to keep pace with rising fuel especially coal burned at its power and otheroperating expenses. Even with the AEP will still have the lowest electricity rates in thePUCO said. Yet that is little consolatiojn to manufacturers facing jumps in theire electric bills at a time whenthey can’g pass on the added expens e to customers, Schmidt said.
“Out (members’) costs are increasing, too,” he “but they’re being forced to give price Their customersare saying, ‘We’re not buying from you unlessd you lower your prices.’ “The (PUCO) ordetr is very unfair,” Schmidt “especially when you consider today’ economic environment. Manufacturers are barely hangint on by a Critics of the rate increases are irritated that the PUCO made the rate hike retroactive to Jan. 1.
They also don’t like that the commissionh will allow AEP to defer the recovergy of costs exceeding the rate cap limitsw set for the next three Such costs, which might includse expenditures for coal and compliance with possiblw greenhouse gas emission regulations, could be recoveredd from rate payers from 2012 through 2018. Such provisiona have businesses scrambling for answers on how the AEP rate increasex willaffect them, said Sam Randazzo, a Columbus attorney who representse Industrial Energy Users-Ohio, a coalition of about 50 industriaol and commercial businesses that have opposef the AEP rate request.
The size of the rate increase was not a he said, since the PUCO staff had recommended 7 percen t hikes, but approval of the deferred cost provisiob was unexpected. “It’s the unknowns and increases that can be deferre that are harder to putboundaries around,” Randazzop said. “People are trying to figure out how much the hangoveerwill be.” He also said the rates AEP filed with the PUCO on Marcy 23 appear to contain increases for larger electric customerx that are higher than the percentage caps containedf in the PUCO’s order. That adds another questionm to the mix aboutthe commission’x ruling.
“The more we look into the things thePUCO did, the less sensw it makes,” Randazzo said. Parts of the PUCO rulingv did not sit wellwith AEP. A statemeng on the company’s Web site said the commission’ss decision to moderate the impacy of rate increases on consumers means therulinfg “does not provide the cash flow necessaryg to deal with the significantt increases related to fuel and environmental costs as we incur them.” Instead, that money will need to be collected over an extendex period, the company said.
“The fact our ratexs will be so much lower than what our detailesd analysis shows is necessary to fund operations is ofparticulaf concern,” the statement said. Still, AEP was encourages the PUCO ruling supports its proposed vegetation managemenrt andgridSmart programs. “It has its pros and AEP-Ohio spokeswoman Terri Flora said ofthe PUCO’e ruling. “We need to work with the commission to see wheree they arecoming from.
” The company’s optionws at this point, she are to accept the commission’es decision, appeal it through rehearings, file another electric service plan or pursur a market rate option allowed under a comprehensive energy law passed by the General Assembly last The law provides for a system in whicuh rates are set by the PUCO through electrix service plans like the one filed by AEP. It also outlines a path for electricf utilities topursue market-based pricing.