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West Virginia bailout emboldens FirstEnergy and AEP in Ohio

October 01, 2015
Cathy Kunkel
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Key Findings

By FirstEnergy’s own estimates its PPA would cost Ohio ratepayers $464 million from June 2016 through December 2018.

FirstEnergy and AEP are proposing to do to consumers in Ohio what has been done to consumers in West Virginia, where a proposed 12.5 percent increase is the result of a reregulation scheme that was allowed there.

Executive Summary

In two current cases before the Public Utilities Commission of Ohio, Columbus-based American Electric Power and Cleveland-based FirstEnergy Corp. are seeking approval of a re-regulation scheme that would ensure ratepayer subsidies for several of their aging Ohio power plants.

The strategy has worked to good effect elsewhere, specifically in West Virginia, where FirstEnergy two years ago got the Public Service Commission of West Virginia to sign off on an arrangement that has shifted the cost risks of a plant it owns and operates from shareholders to ratepayers. As a result of that deal, ratepayers in West Virginia are currently facing a 12.5 percent increase in electricity rates.

This briefing note explains the similarities between what happened in West Virginia in 2013 and what is occurring now in Ohio, where ratepayers are at similar risk. The Ohio proposals stand to affect about 20 percent of all electric generation capacity in the state.

The Ohio proposals are part of a broader electricity industry strategy of shifting risks from owners of uncompetitive power plants onto ratepayers, who in turn would bear the risk of low wholesale energy market prices.

Please view full report PDF for references and sources.

Press release: IEEFA Report: FirstEnergy And AEP Model Proposals For Ohio Bailout After West Virginia Strategy

Cathy Kunkel

Cathy Kunkel is the Energy Program Manager at CAMBIO PR, a non-profit organization based in Puerto Rico that designs, promotes and implements sustainable policies and practices. 

Cathy also served as an IEEFA Energy Finance Analyst for 7 years, researching Appalachian natural gas pipelines and drilling; electric utility mergers, rates and resource planning; energy efficiency; and Puerto Rico’s electrical system. She has degrees in physics from Princeton and Cambridge.

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