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AEP v First Energy

Monday, May 21, 2012 at 5:37 AM

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Ohio's electricity system was deregulated several years ago, and now customers are able to shop around for the best rates on electric and buy their power from a group of retail providers. But as Statehouse Bureau Chief Karen Kasler reports, this competitive market has sparked a lot of confusion for some customers.

Ohioans can now buy their electricity from not just the utility in their territory, but also from unregulated retail subsidiaries of other utilities.  There has been competition in other parts of the state for a while, but for customers in American Electric Power’s territory in central and southern Ohio, this is fairly new. And as if the new process of choosing an electricity provider weren’t confusing enough - a pair of TV and online ads from two big players in Ohio look remarkably similar. Both take place in a gym, where schoolkids are assembled to play dodgeball.  The ad by AEP features a group of adults bursting into the gym to take on the kids, who cower in fear.

("These companies tilt the field in their favor, and that could cost thousands of Ohio jobs. We need to protect Ohio’s economy and the energy that keeps it running.")

That’s one of several ads that AEP has been running under the organization Fair Energy Ohio. The retail arm of northeast Ohio utility FirstEnergy, called FirstEnergy Solutions, answered with an ad showing two men facing off with their dodgeballs - then the one in the AEP T-shirt runs behind the kids, who look confused.

(Whistle - “But AEP wants to restrict competition and hide behind ridiculous claims about fair energy and jobs to force electric prices up and guarantee its revenues.")

Neither ad really explains the issue - which is about a charge AEP levies on suppliers such as FirstEnergy Solutions when they sell to customers in AEP’s.  AEP wants to increase this capacity charge by about 15 dollars per customer if the supplier passes along the full cost. Terri Flora with AEP says the utility wants more time for what she calls this “transition to competition”, which she says AEP supports, and that suppliers can absorb the higher cost and still make a profit.

“These suppliers are coming in and wanting to use our generation at well below our cost to actually run the facilities, and we’re basically saying, ‘give us a transition period - we’re giving you a discounted price.’ And what they’re saying is ‘no - we just want to use your generation at really low cost.”

But FirstEnergy Solutions says that increase is too high. President Donny Schneider says AEP previously agreed to a pricing structure that’s being used in other parts of the state, but now wants the PUCO to regulate that capacity charge instead of letting the market set it.
“Now all of a sudden, that price isn’t good enough for them, and they want to go to a cost-based rate instead of a market-based rate. And they want to stay at a cost-based rate until the market price goes back up, essentially. Is that fair?”

For consumers who don’t know about the power struggle between the utilities, these ads may not make much sense. Sandy Buchanan follows energy issues for the non-profit watchdog group Ohio Citizen Action. She says the ad war is unusual, but to her, it’s not unexpected.
“This is all an upshot of Ohio having deregulated electricity, but it’s all about who can make the most money and who can get the most customers.”

The Public Utilities Commission will soon make a decision on AEP’s capacity charges, likely before AEP’s interim capacity charge rates expire at the end of this month. 


Economy, Regional Economy/Business - Analysis and Trends, Technology, Statehouse News Bureau

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