COLUMBUS — The Ohio Consumers Council argued before the Ohio Supreme Court Monday that American Electric Power’s cost recovery for its proposed IGCC power plant in Meigs County is unlawful and should be overturned.

The plan for cost recovery was approved by the Public Utilities Commission of Ohio, and went into effect for AEP customers earlier this year. The first phase of cost recovery for the proposed plant in Lebanon Township is for front-end design and engineering work, and not for construction. The $24 million in cost recovery was paid by AEP customers for a 12-month period ending in July.

AEP is waiting for a decision on the OCC challenge and challenges from other interested parties before continuing plans to build the proposed plant. In June, AEP spokesman Jeff Rennie confirmed a report that the plant might not be operational until 2017.

AEP notified the PUCO it will not make any more filings for cost recovery on the Meigs project until the case now pending in the state’s high court is resolved.

Assistant Consumers’ Counsel Jeffrey Small argued the case for the OCC, and requested that the court instruct the PUCO to order nearly $24 million in refunds to AEP customers. The oral argument addressed the OCC’s appeal as well as similar appeals by the Industrial Energy Users-Ohio, the Ohio Energy Group and FirstEnergy Solutions.

“An unlawful decision by the PUCO caused consumers to pay higher electric rates for research on a power plant that has not yet been constructed or produced any amount of electricity,” said Janine Migden-Ostrander of the Consumers’ Counsel. “AEP has been unlawfully permitted to shift the risks of planning and constructing a new power plant on to consumers.”

In April 2006, the PUCO approved an AEP proposal to increase customers’ rates to recover an estimated $23.7 million for research and pre-construction costs related to the building of a clean-coal power plant.

Consumers were charged for these costs over 12 months ending July, 2007.

The research and pre-construction costs represent the first of three phases proposed by AEP’s distribution utilities, Columbus Southern Power and Ohio Power. The price of a similar Integrated Gasification Combined Cycle (IGCC) plant proposed by AEP in West Virginia is currently estimated at $2.2 billion.

In a news release, the OCC said it supports the environmentally-friendly technology that would be used by the plant and the economic benefits for the region, but opposes the manner in which AEP proposed paying for the plant, including a guarantee by consumers to pay for the plant whatever the eventual cost.

The OCC also argued that AEP’s proposal violated Ohio’s electric choice law because a local distribution utility cannot own a power plant. The IGCC plant proposed by AEP would be owned by its distribution utilities, Columbus Southern Power and Ohio Power.

In addition, the OCC said, the construction of the plant would unlawfully increase customers’ rates without a full examination of all the utility’s costs and a legally required ratemaking process.

The OCC is a state agency representing 4.5 million utility customer households, which also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals.