Another Raw Deal Saddling Consumers with Risk of Uneconomic Power Plants
The Retail Energy Supply Association today issued the following statement in opposition to a proposed rate plan settlement that AEP Ohio has filed with the Public Utilities Commission of Ohio:
Once again the PUCO staff has agreed to a proposed settlement that protects the utility at the expense of Ohio’s electricity consumers and the state’s economy.
The stipulation between the PUCO staff and AEP Ohio would transfer considerable financial risk for several old coal burning power plants from AEP shareholders to central Ohio rate payers. Under the proposed settlement AEP Ohio would pay its non-regulated affiliate who owns the coal plants the full cost for running the coal plants plus more than a 10% return. If these old and inefficient plants lose money, Ohio rate payers would make up the losses. AEP Ohio’s affiliate has no loss and keeps the 10% return.
AEP Ohio states it believes the old coal plants will be profitable, but they do not believe it enough to put stockholder money in, that is why they seek ratepayer guarantees. AEP also seeks to have Ohio consumers pay for costly upgrades to convert the facilities to run on natural gas.
Forcing Ohio’s ratepayers to pay to bail out the utility’s inefficient power plants is a reversal of the pro-market, pro-consumer policies that PUCO has advanced in recent years. This is a bad bargain for Ohio, reversing the significant progress made over the past few years, and is wholly inconsistent with a competitive market and the value it brings to Ohio customers.