Ohio regulators grant rehearing for AEP plant subsidy request

Dive Brief:

The Public Utilities Commission of Ohio (PUCO) has granted AEP Ohio a new hearing on its revised proposal to guarantee income for aging coal generation in Ohio.
AEP originally requested that regulators approve income guarantees for 3,100 MW of aging coal-fired generation in four plants that the utility said were uneconomic in PJM electricity markets. After the Federal Energy Regulatory Commission (FERC) intervened, the utility downsized its proposal to 440 MW and requested a rehearing.
The decision was expected, Columbus Business First reports, as PUCO regulators recently granted a rehearing for FirstEnergy, which pushed a similar subsidy proposal that was also shot down by FERC.

Dive Insight:

Early last month, the income guarantees for seven coal plants and one nuclear plant owned by AEP and FirstEnergy looked like a sure thing.

Both companies had struck settlements with environmental advocates earlier in the year, and regulators greenlighted the eight-year power purchase agreements to support the uneconomic plants at the end of March.

But in late April, FERC swooped in, issuing two orders that blocked the PPAs over concerns that the companies may be abusing the relationship with their generation affiliates and undermining market competition.

That prompted both companies to revise their proposals. FirstEnergy filed a proposal that would eliminate the PPAs from the income support plan and instead use customer surcharges to support its ailing plants, hypothetically avoiding a FERC review.

AEP took a different route, announcing it would attempt to sell the plants slated for PPAs, push for re-regulation of the Ohio utility market, and downsize the remaining income support proposal to a 440 MW portion of a plant it owns in conjuntion with the Ohio Valley Electric Corp. The plan also includes a commitment to build 900 MW of wind and solar in Ohio.

The decision to re-hear the AEP case came as PUCO swore in its new chair, Commissioner Asim Haque. He took the reins this week after former Chair Andre Porter left to take a post as general counsel at MISO.

“We are all stuck between the past and the future, but for our energy and utilities communities, that concept has been amplified during my time at the commission,” Haque said at his swearing in, according to Columbus Business First.