If you’re one of the 595,000 AEP customers in Ohio who recently suffered through extreme heat without the convenience of refrigeration or air conditioning, I’m going to guess this headline might piss you off:
AEP Ohio Wants To Pass Costs Of Outage Repairs To Customers
An AEP Ohio spokeswoman said that the company planned to ask the Ohio Public Utilities Commission to pass costs to customers.
AEP Ohio estimates its spent millions to restore power to hundreds of thousands of Ohioans after storms hit June 29 and July 1.
“We pass on what the commission allows us to pass on,” said AEP Ohio spokeswoman Terri Flora. “(It’s) not a guarantee, and it’s not automatic.”
WTF, right? That’s what we thought.
But it’s true.
Ohio law grants utility customers no right to a credit for electrical outages, but Ohio’s electric utilities do have a right under Ohio law to pass along the costs associated with storm damage to customers to ensure their profit margin is protected. That right is manifested by an approval from the Public Utilities Commission of Ohio (PUCO) to impose a tariff on customer bills.
And while the folks who lost power should be the most pissed-off, if approved by PUCO, all AEP customers will be on the hook for the additional charges.
AEP’s request to the PUCO will not be the first by an electric utility seeking to recover storm damage costs from consumers. In September 2008, Hurricane Ike left hundreds of thousands of Ohioans in the dark. The next December, Duke Energy asked the PUCO to allow it to pass on nearly $31 million in storm-related costs to its customers.
Fortunately, utility customers in Ohio have an advocate in the Ohio Consumers’ Counsel (OCC). OCC weighed in on the Duke request, arguing that cost recovery should be closer to $5 million. OCC filed numerous briefs with the Commission, outlining multiple objections to Duke’s claims of storm damage costs, requiring countless staff hours requesting and reviewing company documents. The PUCO eventually granted Duke $14.1 million, less than half of what the company requested. This case illustrates the importance of the Ohio Consumers’ Counsel to advocate on behalf of consumers before the Public Utilities Commission.
Which is why it’s so infuriating to recall that, in his two-year budget, Governor Kasich slashed the OCC’s budget, cutting its funding in half. Kasich claimed OCC’s function was “redundant” with the PUCO, a claim the editors of the Plain Dealer said “reflects a fundamental lack of knowledge about utility regulation in Ohio that Kasich’s team had better correct, forthwith.”
It wasn’t even a cost-cutting move, as the OCC is funded entirely through assessments on the utilities themselves, and not from taxpayer funds.
The move came at the request of Ohio’s regulated utilities (after a meeting with one of Kasich’s best friends, lobbying for his natural gas clients) who wanted to get the consumer watchdog off their backs and ensure Kasich’s PUCO would rubber stamp their requests for rate increases with a minimum of hassle.
As a result of the cuts, OCC’s ability to do the type of legal work exhibited in the 2009 Duke Energy case, where they were able to get the company’s rate recovery tariff cut in half, has been severely hampered by a reduction in staff attorneys. The agency estimates that it will be able to participate in half as many cases as it did before the cuts.
Keep in mind, Governor Kasich also appoints members to the PUCO and its Chairman is a member of the Governor’s cabinet, so he exerts considerable influence on the Commission’s decision-making process.
For these two reasons, Kasich will be on the hook to justify whatever costs the Commission allows utilities to pass on to consumers. All Ohio electricity customers should pay close attention.
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