The plan, required under the electricity deregulation law, Senate Bill 221, will outline the future of AEP's Ohio operations over a 10-year period. The plan will include a schedule of incremental rate increases designed to address the rising cost of coal and other factors, AEP President and Chief Operating Officer Joe Hamrock said Wednesday.
Hamrock and other AEP officials met with Meigs County Commissioners and Economic Development Director Perry Varnadoe Wednesday to update them on the ESP and how its contents will affect the AEP consumer. Their visit was part of a trip to southeastern Ohio that also included meetings in Nelsonville and Marietta.
AEP will submit to the PUCO for approval a three-year rate plan which Hamrock called “the first chapter in a five to ten-year picture.” The ESP will also include proposals to address supply and demand, means of reducing demand for electricity, particularly during peak periods of usage, and how to reduce and more quickly respond to outages.
AEP relies on coal for 90 percent of its generating capacity, and the cost of coal has doubled in the past year. Fuel in general, including fuel for AEP's vehicle fleet, has increased 89 percent.
“We are seeing dramatic changes in this business,” Hamrock said. “This plan will begin to lay out the future for us and our consumers. However, it's going to be a different world in five to ten years, and right now, we can't say exactly what it will look like.”
“AEP is especially concerned about the impact rate increases will have on the customer, and in particular those customers who are in a low-income or at-risk population,” Hamrock said.
Hamrock said Ohio has more effectively anticipated the changes in the nation's energy practices through S.B. 221, and the legislation will allow AEP to phase in rate increases. He declined to outline the scope of those rate increases, but said they will be outlined in the PUCO filing next week.
Gov. Ted Strickland signed S.B. 221 into law on May 1 and it takes effect at the end of July. The bill requires Ohio's electric utilities to file ESP's that will establish essentially cost-based rates, but also permits them to file “market option plans” in which rates will move over a five-year transition to market-based rates.