Ohio customers of American Electric Power Company Inc. (NYSE: AEP) would actually see their electricity rates drop by an average of 9 percent over three years under a plan the company has filed with thePublic Utilities Commission of Ohio.
AEP Ohio said Monday the plan would cover the period from June 1, 2015, through May 31, 2018, for customers who buy their power from the company. Rates are expected to remain flat over that three-year span for those who purchase electricity through competitive retail suppliers.
About 70 percent of AEP Ohio’s 1.5 million customers still buy their power from the company, while the other 30 percent have switched to other suppliers, said AEP spokeswoman Terri Flora.
The rate proposal is for the electric generation portion of a customer’s bill, which accounts for about 60 percent of the total, she told me. She said average customers using 1,000 kilowatt hours of electricity a month would see their monthly bill fall from the current $111 to $102 in the first year of the plan, $99 in the second year, and increase to $101 in the third year.
The proposed rates reflect what AEP expects to pay for power in competitively bid auctions in the marketplace, Flora said. The move to market-based rates is part of Ohio’s transition to deregulation of utility rates.
As I reported, the PUCO in August 2012 set a schedule in which AEP Ohio will make the transition from regulated rates to a competitive market in which generation rates will be set through competitive bidding beginning in June 2015.
As for its new rate proposal, AEP Ohio said it is filing early with the PUCO to provide customers, auction participants and retail electric suppliers with advanced notice about the company’s proposed auction schedule. That will help suppliers “develop more offers to benefit customers,” the company said in a press release.
The proposal also requests continuation of a charge on customers’ bills to pay for projects to improve the reliability of power service. It also seeks a new charge to allow AEP Ohio to recover the costs of creating new jobs, including power-line mechanics and construction support personnel, with a focus on hiring military veterans.
Jeff Bell covers the energy industry for Columbus Business First.