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Business & Economy

AEP wants to raise consumer costs in 2024, upping tacked on 'rider' charges

Electric cat
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AEP Ohio is asking the state’s public utility commission to let them increase costs to consumers in 2024, while consumer advocates who plan to oppose the request to state regulators argue the company has already taken its fair share.

The Public Utilities Commission of Ohio in 2021 approved a settlement to AEP’s request to increase delivery costs. And, the actual cost of electricity will send average bills up by nearly 30% beginning in June, following auctions setting the price.

If the PUCO approves AEP’s most recent Electric Security Plan application, it would increase costs for consumers each year between June 2024 and 2030. Consumers would see an annual average monthly increase of 2% on their bills, amounting to about $4 a month on a residential bill for a household using 1,000 kilowatts a month, according to the company.

Spokesperson Scott Blake said AEP Ohio will take that cash and invest $2.2 billion in upgrades to the electric grid that they say will make the grid more reliable and support the growth driving an increased need for electricity in central Ohio with new lines and substations. The application outlines increases to existing riders and the creation of new riders.

But AEP’s application also asks the state to raise the company’s return on equity, or net profits, to 10.65%. AEP’s 2021 base distribution rate settlement set the company return on equity at 7.28%. And consumer advocates say AEP already raised costs to fund grid improvements in their 2021 case.

J.P. Blackwood, a public affairs specialist with the Ohio Consumers’ Counsel, residential utility consumer advocates, said this is not the time to require consumers to increase company profits.

“Ohioans are already facing financial difficulties and soaring energy prices and inflation,” he said.

And, the company has already been granted increases to maintain its grid.

“AEP already charges for reliability in the base rates – that was determined by the rate case, and now it's suddenly, ‘OK, we need more,’” Blackwood said. “The cost of maintaining a reliable network is already calculated in the rate case.”

Blackwood said electric security plans are just another way of increasing costs, but outside of more stringent scrutiny from state regulators during a rate case, which he said functions well.

“It's a very, very good procedure. It's traditionally the way rates have been set. You take a look at a year of operations and you look at all of the utilities cost, all of their capital investments, all the things they need to get the electricity to their customers through the wires, you know, make sure the wires are working, the infrastructure's working, and the regulators are listening to the voice of the consumers and others. And then, looking at the data set, they decide what they think is a reasonable price, and that's the rate case,” Blackwood said. "But, in an ESP, the utilities get to cherry pick what they want to consider. And that is definitely an advantage toward them. The whole process of an electric security plan provides security to utilities, not to consumers.

Blackwood said the process for electric security plans are “not fair” to consumers.

“It's very biased towards the utilities,” he said.

If the plan is approved, Blake said AEP will fix 247 circuits where customers have experienced five or more outages per year over the last three years; replace some of the 350 transformers, 475 breakers and 560 regulators the company identified in its distribution network that should be replaced within the next 10 years; replace about 5,500 miles of distribution lines; and build new lines and substations to support new development.

“This is a significant and necessary investment for our customers. We have invested in our electric system over the last decade and customers have seen the benefits of less frequent and shorter outages. But we need to accelerate our efforts to meet the changing ways customers are using electricity,” Blake stated in an email.

In person hearings will be held at 6 p.m. Wednesday at the Zanesville-Muskingum County Conference and Welcome Center in Zanesville, 6 p.m. Monday, May 1 at Washington State Community College in Marietta; 12:30 p.m. May 22 at the PUCO Offices in Columbus and 5 p.m. May 23 at the Ohio History Connection in Columbus.

Blackwood encourages people to speak out at upcoming hearings on the case, which will include an extra virtual hearing the PUCO scheduled after the OCC requested the regulators add two virtual hearings to allow for more participation. A virtual hearing wasn’t originally included in the original lineup of hearings. AEP had argued a virtual hearing was not necessary and asked that hearings not alter the schedule for the case, which is expected to wrap up in October.

The virtual hearing is scheduled for 11 a.m. May 9. People who want to provide testimony have to register online before 12 p.m. on May 8 and enter “PUCO” if prompted for a password, or call the PUCO at 1-800-686-7826. Speakers have to provide their full name, home address, telephone number and email address, and state that they wish to register for the public hearing in Case No. 23-23-EL-SSO.

People who want to watch without participating can click here to view it and will need to enter the password “PUCO,” or listen by calling 1-408-418-9388 and entering the access code 2337 294 0787.

The hearing will also be live streamed.

Renee Fox is a reporter for 89.7 NPR News.