AEP plan for $10 hike in fee would be delayed

American Electric Power would postpone a proposal to increase its monthly billing fee by $10 per month but would gain a small rate increase as part of a wideranging settlement with state officials and others on a plan that would run through 2024.

The agreement, reached late last week, is between AEP, the Public Utilities Commission of Ohio staff and more than a dozen groups representing various interests.

A key participant, the Office of the Ohio

Consumers’ Counsel, did not sign on because of concerns that many provisions amount to open-ended cost increases for consumers. A spokesman for the office noted that AEP already has the highest household rates in the state among major electricity utilities, adding that many parts of the new plan will increase rates even more.

Meanwhile, AEP emphasized that the immediate rate increase is small, with a typical household bill rising by less than $1 per month next year.

“More than a dozen parties agreed that this settlement is a positive step forward for our customers and the state of Ohio,” said Scott Blake an AEP spokesman, responding to the criticism. “The agreement provides stable rates through 2024 and allows us to continue to bring advanced services and enhanced reliability to our Ohio customers.”

AEP did not provide estimates for rate changes beyond next year, saying it would come soon.

But the costs of some parts of the settlement cannot yet be estimated because they depend on decisions in other cases.

The plan would “lock-in subsidies for its power plants, subsidies for special interests, and various other charges,” said Dan Doron, a spokesman for the Consumers’ Counsel. The counsel’s office also pointed to AEP financial reports that show the company receives higher returns in Ohio than in any other part of its 11-state territory.

The 82-page settlement covers many issues, programs and charges that are part of AEP’s service in Ohio.

The parties involved in the settlement include business groups such as Ohio Energy Group, Industrial Users-Ohio, and the Ohio Manufacturers Association; environmental groups such as Environmental Law & Policy Center, Ohio Environmental Council, and Sierra Club; retail companies such at Wal-Mart and Kroger; and one consumer advocacy group, Ohio Partners for Affordable Energy; along with several others.

Some key parts of the settlement:

AEP would withdraw its request to increase the monthly billing fee from $8.40 per month to $18.40 per month, with a two-year phase-in. But the proposal is merely delayed. AEP says it will resubmit the idea as part of a separate plan by June 2020.

That 2020 proposal would be part of a distribution rate case, which give the PUCO an opportunity to review AEP’s costs and service quality. The settlement includes a commitment from AEP to enter into this process, which would be the first case of this type for the company since one filed in 2011.

AEP would have a new charge called the Renewable Generation Rider, which will be a placeholder to cover costs related to renewable energy projects. There would be no actual charge until specific wind and solar energy projects are approved, which would happen in separate cases.

AEP would spend up to $10.5 million to test so-called microgrids, which are systems that often use batteries and generators to make areas within the larger electricity grid self-sufficient.

An additional $10 million would be used for rebates and incentives to encourage development of electric-vehicle charging stations.

The PUCO’s fivemember governing board will review the settlement and the rest of the record in the case and approve, reject or partially approve the proposal. The PUCO often, but not always, approves plans in which its staff is one of the signing parties.

The next step is for various parties to submit briefs in support of, or in opposition to, the settlement. There is no schedule yet for how the case will proceed.