What does rivalry between AEP and FirstEnergy in Ohio mean for I&M and others?

Posted by Laura Arnold  /   June 26, 2013  /   Posted in American Electric Power (AEP), Indiana Michigan Power Company (I&M), Uncategorized  /   No Comments

Large industrial customers in Indiana have advocated for customer choice for some time. If there was unfettered customer choice in Indiana, what might that mean for other American Electric Power (AEP) operating subsidiaries like Indiana Michigan Power Company (I&M)? 

This article postulates:

One reason for the tension is that FirstEnergy and other companies are marketing aggressively in AEP territory, putting a squeeze on AEP’s sales. As of March, 49 percent of AEP’s customer base — based on electricity volume, not customer count — had switched to another provider. That figure is nearly double what it was in March of last year.

The industrial customers advocated that Indiana lawmakers study the issue of customer choice during the interim. Senate Enrolled Act (SEA) 560 urges Legislative Council to assign this topic to the Regulatory Flexibility Committee as follows:

SOURCE: ; (13)SE0560.1.7. -->     SECTION 7. [EFFECTIVE JULY 1, 2013]

(a) As used in this SECTION, "electric customer choice program" means a program under which a customer of any class located in the service area of an electric utility may purchase electricity from a provider other than the electric utility in the service area.

(b) As used in this SECTION, "legislative council" refers to the legislative council established by IC 2-5-1.1-1.

(c) As used in this SECTION, "regulatory flexibility committee" refers to the regulatory flexibility committee established under IC 8-1-2.6-4.   

(d) The legislative council is urged to assign to the regulatory flexibility committee the topic of electric customer choice programs.

    (e) If the topic described in subsection (d) is assigned to the regulatory flexibility committee, the regulatory flexibility committee shall issue a final report to the legislative council containing the regulatory flexibility committee's findings and recommendations, including any recommended legislation concerning the topic, in an electronic format under IC 5-14-6 not later than November 1, 2013.

(f) This SECTION expires December 31, 2013.

Although this section of SEA 560 urges the Legislative Council to assign the topic of electric customer choice to the Regulatory Flexibility Committee, Legislative Council at its 5/23/13 meeting did not explicitly assign this topic. See http://www.in.gov/legislative/pdf/LCR13-01_study_committee_topic_assignments.pdf

Apparently there were 140 different requests for study committee requests which were both statutory and from resolutions. Legislative Council, however, decided to only approve 58. They were very astringent and showed a preference for fewer studies. The Regulatory Flexibility Committee is a statutory committee which means that the chairman of the committee could still decide to allow a discussion of electric customer choice.

Watch this website for details or better yet, join IndianaDG Today!

Laura Ann Arnold

AEP wants the Public Utilities Commission of Ohio to force FirstEnergy to stop soliciting customers in AEP’s territory and to surrender the customers it already has in the territory.

Territory dispute latest tussle between AEP, FirstEnergy

By  Dan Gearino

The Columbus Dispatch Wednesday June 26, 2013 3:14 AM

The rivalry between Ohio’s two largest electric companies — American Electric Power and FirstEnergy — has flared this month with a battle before state regulators.

The dispute concerns the rules that must be followed if competitors want to solicit customers in AEP’s territory.

Columbus-based AEP filed paperwork last week asking the Public Utilities Commission of Ohio to force Akron-based FirstEnergy to stop soliciting customers in AEP territory and to surrender the customers it already has in the territory.

AEP took action after FirstEnergy balked at a request to provide the collateral needed to meet AEP’s credit requirements. That amount, whose dollar value has not been disclosed, is designed to cover costs if a supplier, such as FirstEnergy, goes out of business and the local utility, theoretically AEP, needs to step in and provide service.

The amount is based on a formula that includes market share and credit rating.The PUCO likely will take up the matter at its next meeting, on July 2, a spokesman said.

In response, FirstEnergy filed a formal complaint, the equivalent of a civil lawsuit.

“AEP Ohio’s unreasonable credit requirements impose immediate and irreparable harm,” FirstEnergy said in its complaint.

The conflict between the utilities has been simmering, and efforts to resolve it have been unsuccessful.

AEP said in a filing that, “While AEP Ohio made various attempts to informally resolve this issue, both before and during commission-assisted mediation, it is clear that (FirstEnergy) has no intention to provide any collateral.”

FirstEnergy says the rules for doing business in AEP territory make little sense, while AEP says its rival has refused to follow the law.

Both sides have some ammunition in this case, said Paul Ring, editor of Energy Choice Matters, a website that follows the unregulated energy industry.

FirstEnergy “has a legitimate complaint that the credit rules might be onerous, but I wouldn’t say they’re being singled out, and it’s not new to the market,” he said.

Last year, the two companies ran dueling television commercials in an attempt to influence a PUCO decision on an AEP rate proposal. Since then, though, the rivalry has not been nearly as public.

One reason for the tension is that FirstEnergy and other companies are marketing aggressively in AEP territory, putting a squeeze on AEP’s sales. As of March, 49 percent of AEP’s customer base — based on electricity volume, not customer count — had switched to another provider. That figure is nearly double what it was in March of last year.

dgearino@dispatch.com

@dispatchenergy

Post a Comment

Your email address will not be published. Required fields are marked *

*

* Copy This Password *

* Type Or Paste Password Here *

Copyright 2013 IndianaDG