Regulators Thwart Ohio Utility’s Price Hike for Proposed Solar Facilities

Published January 13, 2020

The Public Utilities Commission of Ohio (PUCO) denied a power company permission to charge customers for two solar-energy projects in southwest Ohio, one of which would be the largest renewable-energy facility in the state.

PUCO’s action prevents American Electric Power (AEP) from adding charges to its customer’s bills for power plants the regulatory agency concluded were unneeded.

Actual Cost Unknown

PUCO’s ruling doesn’t mean the projects—solar farms of 300-megawatt and 100-megawatt capacity in Highland County—won’t ultimately be constructed. It just means AEP Ohio will now have to find someone other than its ratepayers to pay for them.

The plan AEP Ohio proposed would have charged residential customers using 1,000 kilowatt hours of electricity an extra 28 cents per month to pay for the two solar projects. The new plants would be built and owned by two solar companies which would sell the power to AEP Ohio.

AEP Ohio claimed the new plants would save customers $200 million over the next 20 years. Opponents of the projects, however, dismissed AEP’s projection, noting two of the six proposed solar projects are eligible for subsidies under House Bill 6, enacted in July, and AEP did not count in its calculations any subsidies those plants may receive, so it is unclear how much savings, if any, the two proposed plants could generate.

Following the Law

In rejecting AEP’s proposed funding scheme, PUCO was just upholding the law regarding when utilities may justifiably raise ratepayers’ charges, said PUCO Chair Sam Randazzo, in a statement.

“Today’s decision is not about any particular generating technology; rather, it is about what must be demonstrated by an electric distribution utility before Ohio law might allow the PUCO to approve the proposed charge,” Randazzo said.

Calls for Deregulation, Competition

The AEP solar case is about a monopoly utility attempting to force its customers to subsidize construction of renewable energy plants, says J. P. Blackwood, a public and legislative affairs specialist with the Ohio Consumers’ Counsel.

“This case is important because the competitive market, not monopoly utilities like AEP or the government, should determine which power plants and fuel sources are used,” Blackwood said. “Power plant competition and deregulation can better deliver lower prices and higher innovation to consumers.”

Kenneth Artz ([email protected]) writes from Dallas, Texas.