RESA Applauds PUCO’s Pro-Competitive Decision in AEP-Ohio Case

July 3, 2012

Ohio, Pennsylvania

HARRISBURG, PA – The Retail Energy Supply Association (RESA) today applauded the Public Utilities Commission of Ohio (PUCO) for its dedication to promoting competition in the public interest in an order intended to put AEP-Ohio on a glide path toward full retail competition for electricity customers in the utility’s service territory.

In a July 2 order, PUCO approved a generation capacity pricing system through May 31, 2015 that will help to move AEP-Ohio to a fully competitive retail environment. The order rejected further use of a two-tiered capacity pricing construct in favor of a simpler single capacity price for all customers shopping with a competitive retail electricity supplier.

The Commission established a cost-based capacity price for AEP-Ohio, but allowed competitive suppliers serving shopping customers to pay AEP-Ohio for capacity at prices established by a competitive auction process overseen by PJM Interconnection, the regional grid operator that oversees the region’s competitive wholesale power market.

“This is a terrific outcome for electricity consumers in the AEP-Ohio service territory,” said David Fein, RESA’s president and Ohio state chairman. “This order clearly shows that Chairman Snitchler and the Commission recognize that assuring Ohio homeowners and businesses access to competitively priced electricity and innovative products and services will help the state's economy and jobs.”

Capacity charges are designed to ensure enough generation is available to ensure reliable operations of the power grid. AEP had sought to charge $355.72 per megawatt-day for generation capacity. PJM’s capacity auction has established capacity prices for the region of $20.01 per megawatt-day for 2012/2013, $33.71/megawatt-day for 2013/2014 and $153.89/megawatt-day for 2014/2015.

The PUCO’s order will allow AEP to ultimately collect a cost-based capacity price of $188.88 per megawatt-day. The difference between this cost-based capacity price and PJM’s marketbased capacity prices charged to shopping customers will be deferred for future collection from customers. The total amount deferred will depend on the number of AEP-Ohio customers who elect to shop for electricity and purchase from a competitive supplier. About 37 percent of AEP’s load has switched to an alternative supplier. The Commission said it would establish a recovery mechanism for the deferred capacity charges as part of AEP’s pending electric security plan rate case. An order in that proceeding is expected early next month.

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About RESA

RESA represents competitive energy suppliers dedicated to creating and sustaining vibrantly competitive electricity and natural gas markets for the benefit of consumers. RESA’s members include: Champion Energy Services, LLC; ConEdison Solutions; Constellation NewEnergy, Inc.; Direct Energy Services, LLC; Energetix, Inc.; Energy Plus Holdings LLC; Exelon Energy Company; GDF SUEZ Energy Resources NA, Inc.; Green Mountain Energy Company; Hess Corporation; Integrys Energy Services, Inc.; Just Energy; Liberty Power; MC Squared Energy Services, LLC; Mint Energy, LLC; NextEra Energy Services; Noble Americas Energy Solutions LLC; PPL EnergyPlus, LLC; Reliant; Stream Energy; TransCanada Power Marketing Ltd. and TriEagle Energy, L.P.. For more information about RESA please contact Tracy McCormick, Executive Director at (717) 566-5405.

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