Critics ask PUCO to re-look at March 31 approval of AEP security plan

The PJM Power Providers Group (P3) and the Electric Power Supply Association (EPSA) in a joint request filed April 29 asked the Public Utilities Commission of Ohio to rehear its controversial March 31 approval of an Electric Security Plan for affiliates of American Electric Power (NYSE: AEP) that protects certain unregulated coal-fired capacity.

They offered a long list of alleged commission errors in the March 31 decision, including:

  • the commission erred by giving a Joint Stipulation and Recommendation, that covered a settlement among some of the parties to the case undue weight because it does not qualify as a true stipulation;
  • the commission’s approval of a power purchase agreement (PPA) for this capacity and the inclusion of that PPA under a rate rider for AEP customers in Ohio is unreasonable and unlawful because it represents a reversal by the commission from the General Assembly’s legislative directives to promote competition, a reversal that is solely intended to benefit the utility’s affiliate and parent corporation at the expense of ratepayers; and
  • the commission erred in holding that this Rider PPA is authorized by Ohio coder because the Rider PPA constitutes a “charge or credit.”

Said the two power groups: “The [PUCO] wrongly approved, for eight years beginning on June 1, 2016, the Power Purchase Agreement (“PPA”) Rider proposal submitted by Ohio Power Company (“AEP Ohio“). The Commission has erroneously concluded that the generation costs of AEP Ohio’s affiliate, AEP Generation Resources Inc., and AEP Ohio’s entitlement to the Ohio Valley Electric Corporation output can be passed through and imposed on AEP Ohio’s ratepayers. The Commission reached that conclusion despite multiple provisions of Ohio law to the contrary, strenuous concerns about the impact that this rider will have on the wholesale and retail markets, and the uncertainty of the rider’s impact on ratepayers.”

Competing power supplier Dynegy Inc. (NYSE: DYN) said in its own April 29 rehearing request that the March 31 AEP approval has several issues. “First, the Commission failed to address the unique harm to Dynegy that results from its decision to approve the Stipulation and the PPA Rider. Dynegy is a merchant generator that owns a number of coal- and-gas-fired generating units in Ohio, including ownership interests in certain units included in the Affiliate PPA. The impact of the Commission’s decision will unfairly impair Dynegy’s interest in these units. Second, the PPA Rider is unlawful as it runs contrary to multiple Ohio statutes as well as AEP Ohio’s open access distribution tariff. Third, the Commission was unreasonable and unlawful in failing to consider the objections of several intervenor parties that its level of oversight is insufficient to adequately safeguard against the serious risks posed by the PPA Rider. Finally, the Commission was unreasonable and unlawful in failing to substantively address the evidence in this proceeding that the PPA Rider will hurt ratepayers and the public interest, including evidence that the PPA Rider will harm competitive markets and discourage new generation from being sited in Ohio, evidence that the PPA Rider does not advance retail rate stability, and evidence that the PPA units will not close whether or not the PPA Rider is approved, obviating concerns over grid reliability and fuel diversity.”

The AEP share of coal plants protected by the PUCO-approved plan and where Dynegy has co-ownership are Stuart Units 1-4, Zimmer Unit 1 and Conesville Unit 4.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.