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AEP Could Raise Ohio Small Biz Rates 30 Percent

December 5, 2011
The Intelligencer / Wheeling News-Register

COLUMBUS, Ohio (AP) - A newspaper's analysis indicates that a proposed agreement between American Electric Power and Ohio's utility regulators could raise electricity rates for small businesses by 30 percent while at the same time reducing rates for many large manufacturers.

The Public Utilities Commission of Ohio is expected to vote on the proposal later this month.

While the utility company's publicity has said the rate increase would be small for central Ohio, an analysis indicates that companies that use a large amount of electricity for a short period and low usage the rest of the time would see the largest rate increases.

Hundreds of small manufacturers, retailers and even churches fall into that category, but they make up a small percentage of overall customers. The analysis was performed by the Columbus Dispatch with the assistance of outside experts, including Commercial Rate Services of Dublin, a business that helps companies evaluate their energy costs.

Robert Fortney, the PUCO staff member who managed the case, said the small-business rate increase "doesn't hardly seem fair," in an Aug. 24 e-mail obtained in response to a public-records request.

Joe Hamrock, president and chief operating officer of American Electric Power Ohio, said those customers that will see the largest increases are not typical. Most customers will see rate cuts or smaller increases, he said.

Most of the small-business customers that will see higher rates fall into a usage category that makes up about 15 percent of AEP's electricity sales to businesses.

The proposed agreement is part of a larger plan that will give AEP $151 million in additional base-rate income next year, which it says it needs in order to cover its own rising costs and begin a three-year transition to a deregulated market.

In a statement, PUCO spokesman Matt Butler said the agency "is concerned with the interests of all customer classes and feels that the (AEP plan) as a whole is in the best public interest and benefits ratepayers and the state of Ohio."

When told about the rate increases for small businesses, Gov. John Kasich said his office isn't involved in the negotiations of the utilities commission.

The rate cuts for large manufacturers are necessary for those companies to be able to compete on a national and international scale, said Michael Kurtz, the lead attorney for the Ohio Energy Group, a coalition of large manufacturers that was part of the agreement negotiations.

He said the plan is a good deal for Ohio because it would institute a multi-year transition to prices set by market forces, which he said will lead to fairer prices for everyone.

 
 

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