Regulatory Updates by Region

PUCO Issues an Order in AEP’s ESP Case

On August 8, 2012, the Public Utilities Commission of Ohio (PUCO) issued an Order modifying and approving AEP’s Electric Security Plan (ESP) case. According to the Commission, the Order aims to move Ohio toward a more robust competitive market behind this utility.

The following are some key points from the Order that could/may impact your business:

Minimum Stay & 90-day Notice Requirements
Effective Jan. 1, 2015, the minimum stay requirements for C&I and residential customers will go away. The 90-day notice has gone away. Customers who have contracts with AEP-Ohio (or CRES/brokers on behalf of customers) will no longer need to submit written notifications to switch to competitive supply service.

Note about IDR Metering: As a result of the elimination of the 90-day notice, customers who meet the requirements for IDR metering should have an analog phone line installed prior to switching to a supplier, if possible, since the switch is now immediate and without a 3-month notice. If not, they could incur a manual meter-reading charge of $43/month from AEP.

Capacity Rules & Pricing
Capacity prices for customers who are being served by or switch to a competitive retail energy supplier (CRES) will be charged RPM (“reliability pricing model”) capacity prices, effective Aug. 8, 2012. This is a favorable outcome since RPM capacity prices are currently (and typically) lower than the price set by the approved AEP state compensation mechanism ($188.88/MW-day).

Capacity price differences between the $146/MW-day rates (that were in effect as of June 1, 2012) and the current RPM rates (which went into effect August 8, 2012), and the approved AEP state compensation mechanism of $188.88/MW-day, will be recovered through a non-bypassable rider called “RSR” or rate stabilization rider.

RSR Details

  • The RSR―which will be included in the wires-side charges for all customers, regardless of whether or not they switch to a CRES―will provide AEP with the ability to collect a target, but not guaranteed revenue (which was less than AEP wanted). The RSR will also recover costs for freezing base generation rates.
  • The RSR will be charged to customers on a per kwh basis by customer class and RSR amounts during the ESP term will be:

$3.50 MWh through May 31, 2014
$4.00 MWh starting June 1, 2014 through June 1, 2015

Note: $1.00 MWh of these above amounts will be directed toward paying down capacity cost deferral.

Next Steps
Ohio law requires AEP to accept or reject the PUCO’s order. On Aug. 26, AEP filed their tariffs to comply with the PUCO Order on their ESP. On Aug. 22, the PUCO approved the tariffs, which went into effect on the September 1 cycle. Please note that there is still rehearing in this case so there is a possibility that the order could change.


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