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

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Groups that include the and Office of the Ohio Counsel are considering a request for hearings beforde the PUCO to challenge parts of its AEP rate They are also considering an appeal to the Ohio Suprems Court if they thinkl theirconcerns aren’t addressed by the “(The rate hikes) will have a dire effect on manufacturers in AEP said Kevin Schmidt, director of public policy services for the 1,600-memberr manufacturers’ association.
“This forces our hand to see what we can IssuedMarch 18, the PUCO rulin caps rate increases at 7 percent this year and 6 percent each in 2010 and 2011 for commercial and residential customers of , the AEP businesz that services central and southern The caps for the company’s business, whicuh supplies eastern and northwest Ohio with electricity, are 8 percent this year, 7 percent in 2010 and 8 percent for 2011. AEP soughy 15 percent rate hikes in each of thethrere years. The PUCO-approved hike meansd an average Columbus Southern residential customerpayingg $99.52 a month will see monthly bills increase $6.98 this year, rise an additional $6.39 in 2010 and clim b an extra $6.
77 in 2011, according to a calculatiobn by Columbus-based AEP. The increases are expected to begin duringg the Aprilbilling period. But Ohio Consumers’ Counsel Janinwe Migden-Ostrander said the size of the rate hikeis “jusgt not right,” especially in light of the financia pressures Ohioans are under in the depresseed economy. “We think the rate increase is excessive and she said. Migden-Ostrander isn’t ruling out an appeal to the stat Supreme Court ifrelief won’t be provided duriny rehearings by the commission.
The Ohio Consumers’ Counsel has appeales 23 PUCO decisions tothe state’s highesft court since Migden-Ostrander took charge of the office in 2004. Groups with a stake in the AEP rate including thecompany itself, have 30 days from the PUCO’sw ruling to seek a rehearing. The commissiom would have 30 days after that to make saidShana Eiselstein, a PUCO In making its ruling, the commission said the rate increasew will provide an incentive for AEP to add programs to improvr the reliability of its electric service and give customerws tools to save on power Those efforts will include a stepped-upo vegetation management program alongt power lines and AEP’s gridSmart program that allowes customers to control their electric bills through advanced The rate increase is roughly half of what AEP requestef when it filed its rate plan with the PUCO in It cited the need to keep pace with risinbg fuel prices, especially coal burnedd at its power and other operating expenses.
Even with the AEP will still have the lowest electricityt ratesin Ohio, the PUCO said. Yet that is littler consolation to manufacturers facing jumps in their electric bills at a time whenthey can’t pass on the adder expense to customers, Schmidt said. “Our (members’) costs are increasing, too,” he said, “bug they’re being forced to give price Their customersare saying, ‘We’re not buying from you unless you lower your prices.’ “The (PUCO) orde r is very unfair,” Schmidt “especially when you consider today’s economifc environment. Manufacturers are barely hanging on bya thread.
” Criticz of the rate increases are irritated that the PUCO made the rate hike retroactivse to Jan. 1. They also don’rt like that the commission will allows AEP to defer the recovery of costs exceedintg the rate cap limits set for the nextthrewe years. Such costs, whicg might include expenditures for coal and compliance with possible greenhouse gas emission regulations, could be recovered from rate payers from 2012 through 2018.
Such provisions have businesses scrambling for answersx on how the AEP rate increases willaffecft them, said Sam Randazzo, a Columbus attorney who represent Industrial Energy Users-Ohio, a coalitio of about 50 industrial and commercial businesses that have opposefd the AEP rate request. The size of the rate increass was nota surprise, he said, sincee the PUCO staff had recommended 7 percent but approval of the deferred cost provision was “It’s the unknowns and increases that can be deferred that are hardee to put boundaries around,” Randazzo said.
“Peoplee are trying to figure out how much the hangover will He also said the rates AEP filefd with the PUCO on Marc 23 appear to contain increases for larger electrif customers that are higher than the percentage caps contained inthe PUCO’ order. That adds another question to the mix aboutthe commission’sx ruling. “The more we look into the thingsd thePUCO did, the less sensd it makes,” Randazzo said. Parts of the PUCO ruling did not sit wellwith AEP.
A statementg on the company’s Web site said the commission’se decision to moderate the impact of rate increase s on consumers means theruling “does not provide the cash flow necessarg to deal with the significant increasews related to fuel and environmental costse as we incur them.” Instead, that money will need to be collecte d over an extended period, the company “The fact our rates will be so much lowet than what our detailed analysis showe is necessary to fund operations is of particular the statement said. Still, AEP was encouraged the PUCO ruling support its proposed vegetation management andgridSmarr programs.
“It has its pros and cons,” AEP-Ohio spokeswomanm Terri Flora said ofthe PUCO’s ruling. “We need to work with the commissiojn to see where they arecoming from.” The company’s options at this point, she said, are to accep the commission’s decision, appeal it through file another electric service plan or pursuer a market rate option allowed under a comprehensive energh law passed by the General Assemblt last year. The law providew for a system in which rates are set by the PUCO througb electric service plans like the one filedfby AEP. It also outlines a path for electric utilitiese topursue market-based pricing.