Energy consumer groups claim American Electric Power violated electric choice law

COLUMBUS, Ohio, June 27, 2002 — The Ohio Consumers’ Counsel (OCC), the residential utility advocate, joined with the Industrial Energy Users-Ohio (IEU – Ohio) and American Municipal Power – Ohio (AMP – Ohio) in a complaint filed recently at the Public Utilities Commission of Ohio (PUCO) against American Electric Power (AEP) for an alleged violation of the state’s electric choice law.

The OCC and its partners in the complaint said that by failing to honor commitments to promote the efficient and effective transmission of energy, AEP is inhibiting the development of a competitive electric market for Ohio’s consumers.

The parties are asking the PUCO to impose a $25,000 per day, per operating company penalty and order the suspension of the company’s collection of transition-related charges from customers until it honors its transmission commitments and complies with Ohio law.

The company committed to joining a fully functional Regional Transmission Organization (RTO) no later than December 15, 2001.

Even though AEP has considered joining three different RTOs over the past three years and has begun discussions with PJM, it has failed to meet its obligations, the complaint said, hindering efforts to improve reliability and provide consumers with effective access to other suppliers.

There are currently no supplier offers for residential consumers served by either of AEP’s operating companies, Columbus Southern Power or Ohio Power.

Less than one-half of one percent of the company’s residential customers have switched suppliers since electric choice began last January.

“Electric choice is being hampered by American Electric Power’s failure to promote the free flow of energy by joining a fully functional transmission organization,” said Robert S. Tongren, Consumers’ Counsel. “Ohio consumers should be protected and this company should be held accountable for its inaction and for violating its transition plan as well as Ohio’s electric choice law.”

The complaint filed recently alleges that AEP’s failure to meet its obligations is contributing to relatively higher wholesale electricity prices and the lack of competition in Ohio.

This is due in part to high transmission rates that are the result of the accumulation, or “pancaking,” of charges from every utility whose transmission lines are used to transport electricity across the Midwest as well as other technical and procedural hurdles hindering the free flow of electricity.

A fully functional RTO should also help to manage the risks of power supply problems and wildly fluctuating prices, according to the complaint. These problems were very visible in the Midwest in 1998 and 1999.

“Ohio customers are compensating AEP for stranded costs, which is something AEP demanded in exchange for the opening of a competitive market,” said Sam Randazzo, General Counsel for the Industrial Energy Users – Ohio. “AEP’s performance on its part of the bargain is something we must, unfortunately, seek through this complaint to protect customers’ interest both as a matter of law and equity.”

“As transmission-dependent utilities and long-time customers in the wholesale electric market, we can attest firsthand to the negative impacts a malfunctioning market can have on consumers,” explained Marc Gerken, AMP-Ohio president. “We’re concerned that if Ohio is carved up into a jigsaw puzzle of different RTOs, the costs and technical and procedural obstacles involved with moving power will be a barrier to an effective and functioning market.”

Ohio’s electric restructuring law went into effect on July 6, 1999 and opened the supply market to customer choice beginning on January 1, 2001. As required under the law and PUCO rules, AEP and Ohio’s other investor-owned electric utilities filed a transition plan by December 30, 1999. In 2000, agreements, or “stipulations” related to that plan were filed with and approved by the PUCO on behalf of AEP and all parties to the case, including the OCC, the IEU-Ohio and AMP-Ohio.

About the Ohio Consumers’ Counsel

The Ohio Consumers’ Counsel (OCC) is the legal representative and residential utility advocate serving as a resource for individuals who have questions and concerns or would like more information about the services provided by their publicly owned electric, natural gas, telephone and water companies. The state agency also educates consumers about utility issues and resolves complaints from individuals. To receive utility information brochures, schedule a presentation or file a utility complaint, residential consumers may contact 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC website at .

About the Industrial Energy Users – Ohio

The Industrial Energy Users-Ohio (IEU-Ohio) is an association of large Ohio industrial energy consumers that spend collectively over $3 billion per year to obtain electricity and natural gas and employ over 250,000 people in Ohio. IEU-Ohio’s members work together to address matters that affect the availability of utility services and the cost of such services.

About American Municipal Power – Ohio

American Municipal Power-Ohio (AMP-Ohio) is the Columbus-based nonprofit wholesale power supplier and services provider for 85 member municipal electric communities in Ohio, Pennsylvania and West Virginia.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at

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