American Electric Power's AEP Ohio utility unit received an order from the Public Utilities Commission of Ohio supporting and modifying AEP Ohio's expanded power purchase agreement.
"Although the Public Utilities Commission of Ohio modified the settlement agreement, they did recognize the significant benefits of this plan for Ohio consumers. This plan will ensure more stable electricity prices in Ohio and promote the development of new, renewable generation to support the state's economy," said Nicholas K. Akins, AEP chairman, president and chief executive officer. "We worked with advocates for low-income customers, environmental organizations, industrial and commercial customers and competitive energy suppliers to develop an energy plan for Ohio that will support the state economy, preserve jobs, protect Ohio customers from electricity price volatility, and move Ohio to a greener energy future."
The agreement approved by the PUCO today was filed Dec. 14, 2015, and supported by 11 parties, including the PUCO staff, Sierra Club, Ohio Partners for Affordable Energy, Ohio Energy Group, Ohio Hospital Association, Mid-Atlantic Renewable Energy Coalition, as well as three competitive retail energy suppliers.
The plan includes AEP Ohio entering into an eight-year power purchase agreement (ending May 31, 2024) for the capacity, energy and ancillary service output of AEP's 2,671 MW ownership share of nine generating units and AEP Ohio's 423 MW contractual share of Ohio Valley Electric Corp. generation.
The nine generating units include Cardinal Unit 1 in Brilliant (Jefferson County); Conesville Units 4, 5 & 6 in Conesville (Coshocton County); Stuart Units 1-4 in Aberdeen (Brown County); and Zimmer Unit 1 in Moscow (Clermont County).
The company also will retire, refuel or repower to 100 percent natural gas Conesville Units 5 and 6 and Cardinal Unit 1 by the end of 2029 and 2030, respectively.
Subject to PUCO approval and cost recovery, AEP Ohio will develop at least 900 MW of wind and solar generation in Ohio over the next five years; continue its strong support of energy efficiency programs; and move forward with grid modernization efforts, including the installation of smart meters. Additionally, AEP Ohio will provide up to $100 million in customer credits during the term of the agreement.
In aggregate, the plan is expected to provide a net benefit to AEP Ohio customers over the next eight years.
AEP is reaffirming its 2016 earnings guidance range of $3.60 to $3.80 per share, as the AEP Ohio PPA is just one factor among a number of factors that are considered when determining earnings guidance.
AEP Ohio delivers electricity to nearly 1.5 million customers of AEP's unit Ohio Power Co. in Ohio. AEP Ohio is based in Gahanna, Ohio, and is a unit of American Electric Power.