AEP to merge units, open generation to competition

AEP Ohio, a unit of American Electric Power (NYSE: AEP) agreed to separate its Ohio generation assets and complete the move to a competitive power generation market by mid-2015. AEP Ohio will also provide a percentage of its generation capacity to competitive retail suppliers at a discounted price for a three-year period. The agreement was reached with a majority of parties involved in several cases pending before the Public Utilities Commission of Ohio, including the company’s Electric Security Plan proposal.

The settlement was signed by more than 20 organizations and allows AEP to merge its two operating companies, Columbus Southern Power and Ohio Power into one company.

As part of the agreement, AEP Ohio will promote shale gas development by entering into long-term shale gas contracts for natural gas-fired units in the state.

AEP Ohio will also provide a percentage of its generation capacity to competitive retail suppliers at a discounted price for a three-year period. During 2012, approximately 20 percent will be made available to serve all customers. In 2013, approximately 30 percent will be available. From 2014 through May 2015, approximately 40 percent will be made available. The company’s standard service offer price beginning in June 2015 will be determined through auctions involving multiple generation service providers.

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