Ohio customers of American Electric Power Co. could see an estimated 6 percent to 7 percent increase in their monthly bills during the first year of a new pricing plan beginning this fall that Ohio utility regulators approved Wednesday.
The three-year plan comes as the Columbus-based company transitions from decades as a regulated monopoly to a player in a competitive market. AEP’s 1.5 million customers in Ohio will be affected.
The Public Utilities Commission of Ohio decided Wednesday to freeze AEP’s base generation rate, which typically makes up the largest portion of a customer’s monthly bill. But customers will still see an increase to their bills starting in September because of other fees in the newly approved pricing plan and variables such as fuel costs.
Commission Chairman Todd Snitchler said the increase the first year is a rough estimate and increases the remaining two years of the plan are not yet known. Snitchler told reporters he couldn’t provide a dollar estimate because certain fees attached to bills would be determined by the new competitive market.
But no resident, business or other customer would be responsible for paying more than a 12 percent rate increase in their bill during the three-year period, he said. And if regulators see abnormalities in customers’ bills, the commission can go in and make additional adjustments to the rate plan, Snitchler said.
Ohio’s utility consumer advocate, the Ohio Consumers’ Counsel, was reviewing the plan Wednesday but said that customers could see “hundreds of millions of dollars” in new rate increases following the decision.
“Unfortunately, Ohioans will be asked to pay dearly for AEP’s transition to competition,” said Bruce Weston, who heads the consumer agency.
The commission approved a pricing plan for AEP in December, but revoked it in February after weeks of criticism from customers, including some school districts that said the plan would nearly double their electric bills. One small company complained of an increase of about $28,000 in annual electric bills.
“This order more evenly distributes the rate impacts among customers,” Snitchler said.
Commissioners also decided how AEP would recoup certain fees that its competitors will soon start paying the company to compete in its territory.
Regulators in July had set the fee at $188.88 per megawatt-day, but required AEP to charge suppliers a lower market-based price, currently $20.01 per megawatt-day. The commission had said AEP could recover the difference in the amount between the so-called capacity charges. On Wednesday, they said the total cost would be determined by how many people switch suppliers, and the difference would be assessed directly to AEP customers.
AEP president and chief executive officer Nicholas Akins said the company respected the commission’s decision to accelerate its move to full competition, but he emphasized the need for a “reasonable transition that maintains the health of AEP Ohio.”
Akins said in a written statement that the company’s proposed pricing plan included additional revenues that the commission denied.
“We are disappointed that the overall value in the Commission’s order falls short of the reasonable proposal the company offered,” Akins said.
AEP is one of the largest electric utilities in the United States, delivering electricity to more than five million customers in 11 states.
