Dive Brief:
- AEP Ohio President Pablo Vegas told Columbus Business First that his company is willing to negotiate on the length of coal subsidies it has requested in order to keep the plants running.
- Staff at the Public Utilities Commission of Ohio last week recommended a similar agreement proposed by FirstEnergy be rejected, but the AEP chief said he is not worried.
- Hearings on FirstEnergy's proposal are ongoing and those on AEP's plan are slated to begin in early October.
Dive Insight:
With PUCO staff recommending the commission reject a power purchase agreement proposed by FirstEnergy, many observers think it's likely AEP will face a similar finding once its case begins. But AEP President Vegas noted that regulatory commissioners do not have follow the recommendations of the PUC staff, which is independent from the regulators themselves. He also indicated his company is willing to tweak its proposals in order to move them ahead.
“I think big policy issues belong with the commission and not with the staff,” Vegas told Columbus Business First.
Among the changes PUCO staff recommended in the FirstEnergy case was to shorten the length of the power purchase agreements. FirstEnergy had proposed a 15-year agreement, but staff said three years would be more appropriate. Vegas said he is open to altering AEP's proposal — which would guarantee income for the life of the plants — but also said staff's proposal was too short.
“It’s not enough certainty to make investments," he said. “I think the time can be compromised on but not as much as that staff suggested.”
Hearings into AEP's proposal will begin next month. Opponents of the plan, including large commercial and industrial customers and environmental groups, call the proposals "bailouts" for aging coal plants, arguing that assets that can't compete in unregulated electricity markets should not get extra ratepayer support. The utilities say the plants in question are essential to ensure reliability and protect against an over-reliance on natural gas.
