AEP rate increases denied by Ohio regulators

The Public Utilities Commission of Ohio (PUCO) on Feb. 23 denied American Electric Power’s (AEP, NYSE: AEP) electric security plan (ESP) that would have increased electricity rates.

“Upon consideration of arguments raised by parties who did not sign the settlement agreement and upon becoming aware of the actual impacts of the agreement, the Commission found that approving the agreement does not benefit ratepayers and is not in the public interest,” PUCO said in a statement.

The Commission has ordered AEP to return its rates, as mandated by Ohio law, to levels similar to those in place in December 2011. These rates will remain in place until a new rate plan is adopted.

FirstEnergy Solutions said the decision made was the right one.

"With market prices for electricitu at historic lows, we commend the Commission for recognizing that the higher rates and shopping limitation contained in AEP Ohio's plan would have denied many customers the benefits of lower prices and innovative services available through the competitive market," said Donald R. Schneider, president of FirstEnergy Solutions. "Going forward, the best-case scenario for customers is for AEP Ohio to move toward a model that fully embraces competition."

AEP and its AEP Ohio operating unit expressed disappointment with the order provided by the PUCO.

"We are concerned by the Commission's reaction to what we believe were solvable issues on rehearing," said Nicholas Akins, AEP president and chief executive officer. "We are currently evaluating our options and the potential financial and operational impacts on AEP Ohio."

The company has 30 days to proceed with its initial application as filed, or modify or withdraw the application overall.

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