AEP Ohio’s Electric Security Plan
Electric Security Plan 101
An electric security plan (ESP) is a rate plan for the supply and pricing of electric generation service. The PUCO approved AEP-Ohio’s first ESP in March 2009, setting gradual increases for the base price of electric generation through December 2011.
In 2012, the PUCO approved AEP-Ohio’s current ESP, which remains in effect until May 31, 2015. Under this plan, AEP-Ohio has auctioned 10 percent of its standard service offer (SSO) load, which provides electricity to its customers who have not selected an alternate supplier. In 2014, 60 percent of AEP’s SSO load will be sourced through competitive auctions, increasing to 100 percent in January 2015. On June 1, 2015, AEP-Ohio’s SSO load will be fully provided through competitive auctions. The ESP also directed AEP-Ohio to separate its generation assets from its distribution business.
What did AEP-Ohio request in its new ESP application?
On December 20, 2013, AEP-Ohio filed an application to establish a new electric security plan for the term June 1, 2015 through May 31, 2018.
AEP-Ohio proposes to use the competitive bidding process throughout the term of the ESP. Under the proposal, all of AEP-Ohio’s standard service offer load would continue to be sourced through a competitive bidding process.
In addition, the application contains provisions addressing distribution service, economic development, alternative energy resource requirements and energy efficiency requirements.
Because AEP-Ohio proposes to use a competitive bidding process to determine its standard service offer, rates cannot be known at this time. However, in its application, the company estimates that various customer classes will experience annual rate changes ranging from a 27 percent decrease to a 6 percent increase during the term of the ESP.
Does the PUCO consider public opinion?
In April 2014, the PUCO held five local public hearings to provide the public an opportunity to express their views regarding AEP Ohio’s electric security plan application. Hearings were held in Canton, Columbus, Lima and Marietta.
Customers may also submit comments online at www.PUCO.ohio.gov or by mail addressed to 180 E. Broad St., Columbus, OH 43215. Correspondence should include the case number 13-2385-EL-SSO.
What happens next?
An evidentiary hearing was held in June 2014. PUCO commissioners will review the case record, including hearing transcripts before issuing a decision in the case.
History of deregulation
A law enacted in 1999 restructured Ohio’s electric industry by changing the way customers shop for electricity. The law, which took effect January 2001, provided for a five-year market development period. During this time, the utilities’ rates were frozen to allow a competitive retail market to develop.
As the end of the market development period neared, there was a growing concern that an immediate shift to market-based rates in 2006 would not be in the best interest of customers. To minimize the effects of rate “sticker shock” and transition customers to market-based rates, the Public Utilities Commission of Ohio (PUCO) worked with Ohio’s electric utilities to develop rate stabilization plans.
The rate stabilization plans, along with other changes, eliminated market uncertainty and provided customers with stable rates. Most of these plans expired at the end of 2008. In 2008, the Ohio General Assembly passed Senate Bill 221 to keep electric rates stable going forward, create jobs, implement energy efficiency and expand Ohio’s renewable and advanced energy industry. The new law incorporated a new system under which rates would be approved by the PUCO beginning in 2009. Senate Bill 221 also outlined alternative paths for electric utilities to implement different forms of market-based pricing.
How can I learn more?
The entire case record, including the company’s application and accompanying testimony is available on the PUCO website here.