Advocate Slams AEP Proposal

By Paul Wilson, The Columbus Dispatch, Ohio

Nov. 21–American Electric Power sought permission to raise customer rates up to 73 percent over a three-year period starting in 2009, a consumer-advocacy group says.

The group, the Ohio Partners for Affordable Energy, also accused the Columbus-based utility of being “intellectually dishonest” in saying that enough competition exists to protect Ohio consumers.

AEP contested that assertion and said its proposal was aimed at capping increases to avoid “rate shock” experienced in other states when rates were deregulated. Deregulation is set to happen in Ohio without new legislation on Jan. 1, 2009.

The AEP plan came in a proposed amendment to Gov. Ted Strickland’s electricity regulation plan, according to documents obtained by David Rinebolt, executive director of the Ohio Partners for Affordable Energy.

AEP’s proposal, which failed to make it into the electricity bill that passed unanimously in the state Senate last month, would have allowed rates to jump as much as 20 percent a year between 2009 and 2011, with consent from the Public Utilities Commission of Ohio.

Rinebolt said the proposal is contrary to AEP’s contention that enough competition exists to keep Ohio rates down without rules to regulate prices. The utility has voiced that belief in its criticism of the Strickland plan.

“They’ve been dishonest in their comments that the market is competitive. It’s not,” said Rinebolt, whose group represents low-income residents and supports Strickland’s plan. “A 20 percent increase is not reflective of what a competitive market would give you.”

AEP, the Columbus-based utility with 1.4 million Ohio customers, disputed Rinebolt’s interpretation. The company said it wanted to limit possible increases, not lay the foundation for 20 percent price jumps.

“This is taking something out of context,” Melissa McHenry, AEP spokeswoman, said of Rinebolt’s statements. “It was not a proposal of a rate increase. The suggestion of such is disingenuous.

“We did provide amendment language to address concerns about the rate shock that was seen in states like Maryland and Illinois.”

Twenty percent increases in 2009, 2010 and 2011 would mean a total compounded increase of 73 percent, comparing 2007 rates to 2011 rates, Rinebolt said.

If the amendment had been enacted and the highest increases had taken place, AEP customers in central Ohio would have seen their average monthly bills jump from $98.63 a month this year to $170.43 a month in 2011, Rinebolt said. The same percentage increase would mean an increase from $135.93 to $234.88 a month for the average FirstEnergy customer in the Cleveland area.

FirstEnergy and the state’s other electric utilities proposed a similar amendment, but did not provide a limit on how high rates could go, according to documents obtained as a result of Rinebolt’s information request.

Strickland’s bill passed the Senate unanimously last month and is now in the House Public Utilities Committee, where hearings are scheduled to continue into January. It would require utilities to go to the Public Utilities Commission of Ohio to determine rates. But, if the utilities convince the PUCO that competition exists, they can let the market set rates.

Senators tweaked Strickland’s original proposal to say prices under either system must be “comparable” to what Ohioans pay for electricity on Feb. 1, 2008.

Ohio legislators voted in the late ’90s to begin deregulating the state’s electricity system.

paul.wilson@dispatch.com

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