July 27, 2012

Update:  On July 20, 2012, AEP-Ohio filed an application for rehearing, regarding the PUCO’s July 2, 2012 Opinion and Order.

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.

Accordingly, AEP-Ohio argued in its application for rehearing, among other tangential arguments, that: (1) the PUCO adopted energy credit should be reduced because it is based upon incorrect shopping levels; (2) the methodology used to calculate the energy credit failed to account for the impact of zonal prices, and uses inaccurate fuel costs and heat rates; (3) the methodology incorrectly incorporates traditional OSS margins and fails to properly reflect the impact of the AEP-Ohio System Interconnection Agreement; (4) the PUCO adopted energy credit creates a state compensation mechanism that is an unconstitutional taking of property without just compensation; (5) it is unlawful for the PUCO to authorize AEP-Ohio to collect only RPM pricing and require deferral of expenses without simultaneously providing for recovery of the shortfall; and, (6) it is unlawful and unreasonable for the PUCO to extend RPM pricing to customers that switched at a capacity price of $255/MW-D.
The OMAEG will address AEP-Ohio’s arguments by filing a memorandum contra.  Additionally, the OMAEG will file its own, separate application for rehearing on the PUCO’s decision.