Ohio electric customers complain to FERC about AEP transmission charges

transmission line november elp 5.png

American Electric Power’s Ohio utility is unlawfully charging customers for transmission service in violation of the PJM Interconnection open access transmission tariff and hindering Ohio’s retail choice market, the Industrial Energy Users-Ohio said in a Nov. 6 complaint filed at FERC.

IEU-Ohio asked FERC to order the utility to refund amounts AEP-Ohio has collected since June 1, when it began collecting for PJM transmission services under a basic transmission cost recovery rider approved by the Public Utilities Commission of Ohio.

The rider is in violation of the PJM tariff and results in double-billing of transmission service for customers in Ohio’s competitive retail market who sign power supply contracts with retail suppliers at a fixed price that includes the cost of transmission service or who arrange for transmission service through PJM on their own, according to the complaint.

“We are reviewing the complaint and will be responding in the coming weeks,” an AEP spokesperson told TransmissionHub on Nov. 6.

FERC set a comment deadline of Nov. 25 in its notice of the complaint (Docket No. EL16-10).

PJM, which has responsibility for administering its tariff, “has not taken actions to prevent AEP-Ohio’s unlawful and unreasonable actions,” the industrial group told FERC.

Starting June 1, AEP-Ohio billed and collected from customers charges for certain PJM transmission services, including network integration transmission service, through the basic transmission cost recovery rider that was unavoidable by retail customers in Ohio, IEU-Ohio said. Prior to that date, an AEP-Ohio customer taking supply service from a retail supplier could contract with that supplier for transmission service or secure transmission service on its own from PJM and avoid the AEP-Ohio transmission charge.

The PUCO authorized the change in an order approving AEP-Ohio’s electric security plan, even adding generation deactivation charges to the list of charges that could be recovered through the transmission cost recovery rider, IEU-Ohio said.

The industrial users also asserted that AEP-Ohio has implemented the rider by using billing determinants that differ from the PJM tariff and result in higher transmission charges for large customers. While the PJM tariff specifies that transmission charges be assessed using a one coincident-peak billing determinant, AEP-Ohio since June 1 has based the charges on the higher of a customer’s monthly demand or a minimum billing demand.

As a result of the different billing determinant, IEU-Ohio members estimate that their collective transmission bills from AEP-Ohio will be at least $1.3m more annually than if they had been billed under the terms and conditions of the PJM tariff, according to the complaint.

“PJM has apparently accepted these new arrangements,” even though they result in the potential for double-billing of transmission service, violate the PJM tariff and FERC’s open-access requirements under Order 888, IEU-Ohio said.

AEP-Ohio has not sought or received FERC authorization to alter the rates, terms and conditions for the provision of transmission service through the transmission cost recovery rider, which has essentially barred retail customers from securing transmission services directly from PJM or indirectly through a retail supplier, IEU-Ohio said.

“AEP-Ohio’s failure to secure FERC authorization of such alterations is in violation of FERC’s exclusive jurisdiction over the rates, terms and conditions of unbundled transmission service, and undermines FERC’s continuing efforts to lower the barriers to market-based solutions to assure the reliability of the interstate electric transmission system,” the industrial group said.

The use of the basic transmission cost recovery rider by AEP-Ohio may cause transmission owners in other states with retail competition to seek state regulatory approval for alternative transmission service arrangements, IEU-Ohio warned. That could result in transmission owners seeking better state-approved tariffs to meet their revenue objectives, compared with a FERC-approved tariff, IEU-Ohio said.

The customer group said FERC should find that AEP-Ohio’s implementation of the basic transmission cost recovery rider is in violation of the PJM tariff and that AEP-Ohio’s charges for transmission service are unjust and unreasonable. FERC should also direct AEP-Ohio to refund amounts it has collected in violation of the PJM tariff since June 1, or some other refund effective date determined by FERC, IEU-Ohio said.

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