AEP Ohio administrative assistant addresses typical billing impact

The Highland County Commissioners' Office has released this correspondence (below) from Laurie Shaffer, administrative assistant, community affairs, for AEP Ohio, regarding the Public Utilities Commission of Ohio (PUCO) ruling on AEP Ohio's Electric Security Plan (ESP).

According to Shaffer,

Rates and tariffs were approved by the PUCO on August 22, 2012 and they will become effective with the first billing cycle of September 2012.

Under the approved tariffs a "typical" residential customer who uses 1,000 kwh in a billing period would see a 6.3 percent increase or $7.85/month in the CSP Rate Zone, or a 6.1percent or $6.94/month increase in the OPCo Rate Zone.

For a commercial GS2 customer that uses 10,000 kWh per month with 30 kilowatt demand the increase in the CSP Rate Zone is $13.08/month or 1 percent, or in the OPCo Rate Zone the increase is $49.87/month or 4.8 percent.

Please be aware that the typical percentage increases provided in the filing are calculated using the total bill by customer class. The total bill assumes the customer is receiving its generation, transmission and distribution charges from AEP Ohio.

Percentage increases may be different for customers who shop for generation supply. Precise total bill impacts can be difficult to calculate because generation supply agreements vary by supplier and because of differences in individual customer usage characteristics.

Please note that more than half of the percentage increase under the modified ESP can be attributed to the Retail Stability Rider (RSR) approved by the Commission. This non-bypassable rider is generation related.

It is designed to replace a portion of the lost revenue AEP Ohio will experience by providing competitive retail suppliers an 89 percent discount off the state-approved cost to use our generation facilities and to provide customers the benefit of a frozen generation rate through May 31, 2015.

Other increases under the modified ESP are related to distribution investments made since the early 1990s and continued vegetation management efforts, and this accounts for just over 2 percent of the percentage increases.

Although the Commission referenced a maximum bill increase of 12 percent for any individual customer, AEP Ohio is seeking clarification from the Commission on the rule's interpretation.

AEP Ohio has undertaken best efforts to confirm that no customer has received a 12 percent increase in their total bill as a result of the initial modified ESP rate increases effective with the first billing cycle of September 2012.

Customers also will see a Phase-In Recovery Rider (PIRR) listed on their bills in September. This rider is also non-bypassable and was approved by the Commission in an earlier proceeding not related to the modified ESP.

The PIRR allows AEP Ohio to recover Generation associated costs, particularly those surround purchased fuel used to generate electricity that was incurred during 2009-2011 and deferred for later recovery.

AEP Ohio was not able to recover its total cost of fuel to provide generation service to customers during the previous three-year ESP (2009-2011) period due to caps on bill increases as ordered by the Commission.

To minimize bill impacts at that time, the Commission directed AEP Ohio to defer the recovery of these fuel costs over a seven-year period beginning in 2012. It should be noted that customers located in the Ohio Power rate zone are experiencing a higher increase for this deferred fuel since much of the costs are related to fuel used to provide generation services to customers of the former Ohio Power Company.

As part of the PIRR, a "typical" residential customer in the CSP Rate Zone will see their total bill increase by $0.07/month or 0.1 percent, in the OPCo Rate Zone their total bill will increase by $4.22/month or 3.7 percent.

Total percentage increases for a "typical" residential customer, including the PIRR in the CSP Rate Zone will be total bill increase of $7.92/month or 6.3 percent, in the OPCo Rate Zone their total bill will increase by $11.16/month or 9.8 percent.

The majority of the percentage increase is attributed to generation-related charges including the RSR and PIRR. The RSR will remain in effect through the term of the modified ESP and the PIRR will remain in effect for seven years.

After the initial increase, AEP Ohio expects rates to remain relatively flat over the next two years. As always, changes in the amount of energy a customer uses, whether driven by load growth, weather or energy efficiency efforts, will change the amount of a customer's bill.

However, the rates for energy should remain relatively stable.

Our Customer Services Group is available to help you evaluate the unique impacts that these new rates will have on your electric bill.

Sincerely,
Laurie Shaffer
Administrative Assistant, Community Affairs
AEP Ohio
301 Cleveland Ave. S.W.
Canton, Ohio 44701-4400