August 3, 2012

Update:  Recall that the PUCO’s July 2 Order held that AEP-Ohio’s costs of generating capacity are not as high as what AEP-Ohio stated and are actually $188.88/MW-D. The PUCO determined that the state compensation mechanism should be cost-based and, thus, AEP-Ohio is entitled to recover its costs of capacity at $188.88/MW-D.  However, the PUCO also determined that AEP-Ohio is permitted to charge competitive suppliers only the PJM RPM price, and authorized AEP-Ohio to defer the difference between the $188.88/MW-D and the PJM RPM price plus carrying costs for future recovery.

On July 20, 2012, AEP-Ohio filed an application for rehearing, regarding the PUCO’s July 2, 2012 Opinion and Order.  The OMA, among others, filed a memorandum contra AEP-Ohio’s application for rehearing.  The OMA argued that the Commission’s decision to allow AEP-Ohio to recover the PJM RPM auction price is in no way confiscatory or an unconstitutional taking.  The OMA also argued that all shopping customers should be eligible for the PJM RPM price, not just a limited population as AEP-Ohio suggested.

Additionally, numerous parties filed applications for rehearing of the Commission’s decision, including the OMA.  The OMA argued that the Commission’s decision to permit AEP-Ohio to recover only the PJM RPM auction price was appropriate but the Commission’s decision to permit AEP-Ohio to defer for future recovery the delta between $188.88/MW-Day (the Commission-determined cost of AEP-Ohio’s capacity) and the PJM RPM auction price, was unreasonable and unlawful.

The Commission has 30 days to rule on the applications for rehearing.  However, the Commission also may grant rehearing for the purpose of giving itself indefinitely more time to reach a substantive conclusion.  We will provide updates as this case continues to develop.