Advancing Energy Affordability, Efficiency, and Equity: AEP Ohio’s Latest Plan

Karin Nordstrom, Clean Energy Attorney, September 18, 2023

In early September 2023, AEP Ohio filed an agreement with several parties, including the Ohio Environmental Council, to resolve its latest request to the Public UtilitIes Commission of Ohio (PUCO) for new ratepayer-funded programs. That request would have created a massive rate hike. This agreement is a good first step towards more utility accountability and improved grid stability. Instead of the proposed 13% increase over 6 years, AEP Ohio will raise rates 4.5% over the next 4 years. And, as part of the agreement, from June 2024 to May 2028, AEP Ohio will offer programs to help customers limit their energy usage, improve grid stability, and increase transparency on shutoffs due to nonpayment.

What was AEP’s Request?

AEP Ohio filed an application for something called an Electric Security Plan that would have raised customer rates 13% over 6 years, beginning in June 2024. An Electric Security Plan is different from a rate case that sets the standard cost for delivering you electricity. It is also different from the 28% increase in the cost of energy that hit AEP bills this past June mostly due to rising natural gas prices in the energy market. An Electric Security Plan creates specific programs, billed through extra charges called riders, to help support grid improvements and customer programs.

Why did OEC intervene?

The OEC intervened as a party in the case to fight for affordability, energy efficiency programs, and equity. The OEC wanted to decrease the burden AEP Ohio’s application would have on customer bills, increase the programs related to grid stability, and ensure that those customers hit hardest by the climate crisis and rising rates received some additional protection. We ultimately signed the agreement with AEP because we believe it takes an important step toward achieving these goals.

What’s in the agreement?

Here’s is an explanation of our top priorities when we entered the case, and how we think the agreement we signed takes a step toward meeting these goals:

OEC’s Priority	What’s in the Agreement
Affordability: Energy bills are rising fast and the OEC wanted to limit the bill impacts for Ohioans. The cost of the energy AEP Ohio provides to customers skyrocketed this summer. At the same time, AEP Ohio’s parent company reported large profits for 2022. AEP Ohio asked to raise bills for a customer using 1,000 kilowatt hours by 5.2% ($8.16) starting June 2024, with a total increase of 13% over 6 years.	Reduced the rate increase and the amount of time the riders will last. Now, AEP Ohio will increase rates 4.5% over 4 years. AEP Ohio will take $400,000 from the Energy Efficiency Rider in the approved Electric Security Plan and put it into the neighbor to neighbor bill payment assistance program.
Energy Efficiency Programs: The legacy of House Bill 6 has stifled energy efficiency programs that save Ohioans money. House Bill 6 eliminated mandatory utility-run energy efficiency programs. These programs helped reduce harmful emissions and save customers money. In 2021, a study found Ohio would miss out on 129,488 jobs and millions in savings without these programs.	AEP Ohio will create a demand response program which will offer discounts on smart thermostats and compensation for customers to turn down their thermostats when the grid is at risk of overloading. These programs can prevent outages like the June 2022 outage when demand was too high and AEP had to shut down the grid to keep it from overloading. AEP Ohio will offer special rates to electric vehicle (EV) owners to shift their electricity use to times when the grid is most able to accommodate this extra demand, like during the night. The Energy Efficiency Rider will provide energy efficiency programs for low-income households by collecting $10 million to help low-income households with home weatherization programs and appliance upgrades. The agreement also increases the definition of low-income to 300% of the federal poverty line.
Equity: Black and Brown communities in Ohio are bearing the brunt of climate change. For example, during the June 2022 outages some Black and Brown communities in Columbus were among the hardest hit. It is important that AEP Ohio be more transparent about energy access throughout its service territory.	In addition to bill payment assistance and energy efficiency upgrades, AEP Ohio has agreed to more transparent data sharing on the communities that receive the most utility shut offs due to non-payment. AEP Ohio will share this information with the PUCO to help better inform decisions on grid investment.