The PUCO put the kibosh on a carefully negotiated rate plan for American Electric Power it approved just two months ago. The regulators noted price spikes that have followed and some suspicious filings AEP had recently made with federal regulators.
More power from FirstEnergy Corp. could soon be flowing south to customers served by Columbus-based AEP Ohio. Ohio utility regulators did something no one expected Thursday: They tossed out a rate increase that had been in place for the last two months.
Rates for customers of AEP Ohio, a subsidiary of American Electric Power, will now be reset to what they were paying in December -- the lowest in the state.
The Public Utilities Commission of Ohio unanimously agreed that its December approval of a new and very complicated rate package the utility negotiated with the PUCO staff and about 21 of 31 business, industrial, consumer and institutional groups was a mistake.
The commission's reversal, unprecedented in recent memory, followed weeks of protests and formal appeals, including more than 1,000 phone calls from irate consumers. It gives the company 30 days to either amend its original application or file a new one.
Some customers said their monthly bills had shot up by 30 percent under the new rates. Schools also had appealed the rate increases as budget busters.
PUCO Chairman Todd Snitchler said the ruling "effectively hits the reset button . . . allows us to start over from the beginning, ensure that we have a complete picture of any proposal, and balance the interests of all customers and the utility.
"The evidence in the record inadvertently failed to present a full and accurate record of the actual bill impacts to be felt by customers," Snitchler said.
In its new order, the commission explained itself this way: "Since we issued the opinion and order, numerous customers have filed, in the case record of this proceeding, actual bills containing total bill rate increases disproportionately higher than the 30 percent predicted by AEP Ohio."
The decision caught AEP Ohio by surprise.
"We are concerned by the commission's reaction to what we believe were solvable issues on rehearing," said Nicholas K. Akins, AEP president and chief executive officer, in a written statement. "We are currently evaluating our options and the potential financial and operational impacts on AEP Ohio."
The rate plan was to be the company's transition to deregulation of its power plants, which it would put under ownership of an unregulated company - the same as FirstEnergy did in 2005.
AEP recently asked the Federal Energy Regulatory Commission to move control of some of its Ohio power plants to other states, a move the PUCO feared would limit AEP Ohio's total capacity in the state, leading to even higher prices in the future.
The PUCO ruling delighted FirstEnergy Corp because it opened the door again for FirstEnergy's unregulated retail subsidiary to offer discounted long-term contracts to AEP Ohio customers.
The new rate plan had limited the number of customers FirstEnergy could grab until 2015, when AEP Ohio will be fully unregulated, meaning at that the PUCO will have little authority to set AEP's power prices.
The unregulated FirstEnergy Solutions had signed up 22 entire communities for discounted prices.
The PUCO order "is welcome relief for AEP Ohio customers who have seen sharply higher electric rates," Donald Schneider, president of FirstEnergy Solutions, said in a written statement. "With market prices for electricity at historic lows, we commend the commission for recognizing that the higher rates and shopping limitations contained in AEP Ohio's plan would have denied many customers the benefits of lower prices and innovative services available through the competitive market.
The Ohio Consumers' Counsel, which opposed the negotiated deal that the rate plan had become, also welcomed the commission's decision.
"The PUCO's rejection of AEP's settlement is a beginning step toward improving electricity rates for the public," Interim Consumers' Counsel Bruce Weston said. "The Consumers' Counsel will continue its advocacy so that the voices of Ohio's residential consumers are heard in this process for fair rates."