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AEP official explains rates

April 9, 2013
By ROBERT A. DEFRANK - Times Leader Staff Writer , Times Leader

ST. CLAIRSVILLE - In response to numerous requests from the public, the county commissioners sent word to the Public Utilities Commission of Ohio (PUCO) asking if American Electric Power might lower its rates since the company had enjoyed a prosperous year financially.

During Wednesday's meeting Paul Prater, American Electric Power community affairs manager, spoke to commissioners and guests regarding the reasons for changes in rates.

He said the primary reason for the increase in rates was deregulation. In the 1990s, the state government attempted to end disparity of rates in different parts of the state, noticing areas in the north of Ohio had extremely high rates and the south's rates were very low. In 1999 Senate Bill 3 initiated deregulation. By 2003 changes were minimal, but House Bill 221 in 2008 further advanced deregulation. As a result, the high prices have gone down and the low prices have increased.

Other factors include the increased price of coal. Prater said full deregulation is expected by May 2015. The government provided a glide pat to avoid rate shock and PUCO had AEP defer costs to the amount of $600 million, since they did not wish a rate increase during a recession.

"Those costs have to be paid for, so we have started to recover those costs," he said, adding that this process should continue into 2017.

He added that rate payers have the option to purchase the generation portion of their electricity from other suppliers to affect a rate decrease. Contact information for providers can be found at the Public Utilities Web site under "electric." Customers are free to contact providers and compare rates.

He stated that AEP was a holding company, not a public utility, which holds utilities, barge lines and other operations. AEP Ohio boasts 1.5 million customers.

Prater noted that AEP's impact in Belmont County is close to $8 million yearly. This includes $2.5 million in taxes, with $80,000 in local taxes. Employees who live in the county generate $3.4 million in wages. They purchase about $1 million in goods and services. Philanthropic efforts in the county in 2011 were close to $62,000.

"We're a big player here," he said. "We pay a lot of money into Belmont County."

He added that AEP had no major facilities in the county.

Prater added that after 2015 AEP would likely shut down some coal fire generation including Units 1 through 4 on the Muskingum River facility and other plants. He added that First Energy is facing similar circumstances. The effects this will have on rates has not been determined. AEP has purchased some gas fire plants in the state on the possibility that those operations could be less costly than coal.

Afterward, Prater answered questions from guests.

Robert L. Scarfpin objected to the numerous riders that appear on the bills, which suggests the company is requiring customers to pay unrelated expenses.

"It's your bill, not ours," he said, adding that the majority population is senior citizens with set means and a wide range of expenses.

Prater said riders allow officials to determine the exact expenses. He pointed out some aspects including the percentage of income plan to assist those unable to pay their bills. He said this problem has increased with the economic downturn.

Scarfpin objected to the company recovering those costs along with costs of oil and material from customers who pay their bills dutifully.

Ed Bell agreed, noting the repeated blows of these extensive costs to his budget. He also leveled criticism at PUCO for permitting this.

"We shouldn't have to pay for their mistakes," he said.

DeFrank may be reached at defrankrobert@yahoo.com

Prater added that electric usage has been down due to the recession, but has been increasing. He pointed out a need for different types of generation including coal and gas.

John White added that other expenses included repairs to storm damage.

"You can't continue the war on workers forever," he said.

Prater said the storm was particularly bad and repairs fell under cost of doing businesses.

The guests criticized AEP's business practices. Scarfpin stated that there were numerous layoffs last year through the elimination of jobs, with a 30-percent in pay for increase for CEOs.

Commissioner Matt Coffland noted that businesses ranging from hospitals to insurance have similar cost recovery methods. He also pointed to deregulation as a primary cause.

"This has been a problem since deregulation of the 2,000s," he said, adding that this is primary a state and not local issue.

Prater added that the costs can be lowered through methods such as insulating one's house and switching generation providers.

DeFrank can be reached at rdefrank@timesleaderonline.com

 
 

 

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