PUCO modifies and approves an electric security plan for AEP-Ohio

COLUMBUS, OHIO (March 18, 2009) – The Public Utilities Commission of Ohio (PUCO) today modified and approved an electric security plan (ESP) for American Electric Power-Ohio (AEP-Ohio). The ESP will be in effect through Dec. 31, 2011.

In approving the ESP today, the Commission is incenting AEP-Ohio to implement programs that give customers tools to save on their electricity costs and improve service reliability.

“We believe that it is essential for Ohioans to have tools available to them to lower their energy costs,” PUCO Chairman Alan R. Schriber stated. “Our expectation is that the rates we are approving today will go toward that initiative. Furthermore, we are aware of the company’s service reliability issues and our expectation is that significant improvements will be made to the infrastructure that AEP-Ohio employs to service its customers.”

During the ESP period, AEP-Ohio will phase-in authorized increases to customers’ generation rates. For Columbus Southern Power customers, these annual increases will be capped at 7 percent in 2009 and 6 percent in 2010 and 2011. Ohio Power customers will have increases capped at 8 percent in 2009, 7 percent in 2010 and 8 percent in 2011. Even with the increases approved today, AEP-Ohio will still have the lowest electricity rates in Ohio. The increases will result in the following generation rates per kilowatt hour (kWh):

The effective date of the new generation rates is Jan. 1, 2009. AEP-Ohio will be able to collect the difference of rates charged since Jan. 1, 2009 and rates authorized today by the Commission. The company will collect the difference in rates from customers through the end of 2009.

The Commission approved AEP-Ohio’s gridSMART program that will enable the company to improve reliability, reduce costs and allow customers to better control their electric bills through advanced metering technology. AEP-Ohio will recover the costs of implementing the program over the three-year ESP plan.

“The federal stimulus bill provides federal matching funds for smart grid projects like the one proposed by AEP-Ohio,” Chairman Schriber stated. “We are directing the company to take steps to apply for available federal funding as we believe the technology associated with smart grid can provide significant benefits to the company’s customers which include managing energy usage and energy costs.”

The Commission also approved the enhanced vegetation management program proposed in AEP-Ohio’s ESP application. Under the program, AEP-Ohio will move to a four-year cycle-based vegetation management program. The company will also employ additional resources and increase the level of vegetation management work performed. The company will recover the costs associated with this program. Initially the company will recover only the costs associated with the program. The program costs will be subject to an annual review and reconciliation by the Commission.

The Commission denied the other distribution system reliability programs proposed by AEP-Ohio in its ESP application, finding that only way to examine the full distribution system and its reliability is through a distribution rate case.

On May 1, 2008, Gov. Ted Strickland signed SB 221 into law, marking the one year anniversary of the date he outlined his Energy, Jobs, and Progress Plan to stabilize electricity prices, create jobs, and expand Ohio’s green energy industry. SB 221 took effect on July 31, 2008 and incorporates a system under which rates would be set by the PUCO and outlines a path for electric utilities to implement market-based pricing.

On July 31, 2008, AEP-Ohio filed an application for an ESP. The PUCO held five local public hearings in AEP-Ohio’s service territory at which 124 customers testified about the company’s application. The evidentiary hearing began on Nov. 17, 2008 and concluded on Dec. 10, 2008.   

AEP-Ohio must file tariffs consistent with today’s Commission opinion and order.

A copy of today’s Commission opinion and order is available at www.PUCO.ohio.gov. Click on the link to the Docketing Information System (DIS) and enter the case number 08-917-EL-SSO.

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08-917-EL-SSO

08-918-EL-SSO