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PUCO rejects AEP coal plant subsidy, but leaves door open for future rate hikes

Environmental advocates applaud PUCO’s rejection of AEP-Ohio’s proposal to bail out dirty coal-fired power plants

Today, the Public Utilities Commission of Ohio (PUCO) rejected major aspects of American Electric Power’s (AEP) controversial rate plan, which would have given the utility a green light to charge customers millions of dollars to keep two dirty, expensive coal plants in operation.

“The PUCO’s decision to reject at this time AEP’s request to bail out old, dirty and inefficient coal-power plants is a victory for AEP’s customers and Ohio’s air quality,” said Trent Dougherty, Managing Director of Legal Affairs for the Ohio Environmental Council, “AEP’s anti-environment, anti-competitive, and anti-consumer plan would derailed our path towards a cleaner energy future for Ohio. The PUCO determined this plan would provide no benefit to consumers and we hope the Commission will turn down similar requests to support old, dirty and outdated power plants from FirstEnergy  and Duke Energy.”

“Today’s decision is great news! Not only because AEP’s first bailout request was denied, but because it appears that the PUCO and Governor Kasich heard the outcry of citizens about AEP’s bad plan. One down, two to go,” said Rachael Belz, Ohio Citizen Action Executive Director

Although Ohio only has a handful of companies, like AEP, that distribute power, it has many companies that generate it. This allows Ohioans to choose where they get their power from; creating competition that drives innovation and lowers electricity costs. If the PUCO had approved the subsidy for AEP’s unregulated affiliate, AEP customers would have been forced to pay for power they may not have wanted.

With consumers increasingly turning away from dirty energy, PUCO agreed with many coal bailout opponents that the plan would no provide benefits to consumers. However, the Commission did agree with AEP on a legal technicality, indicating there is nothing in Ohio law preventing the Commission from approving future Power Purchase Agreement (PPA) requests that address, among other things, how subsidizing old, dirty power plants can comply with future environmental regulations. Recently, the US EPA proposed the Clean Power Plan, the first limits on carbon dioxide emissions from power plants; plants that have been able to spew unlimited amounts of carbon dioxide into the atmosphere.

“Today’s decision does not necessarily seal the same fate for FirstEnergy and Duke customers,” stated Dougherty, referencing the fact that both FirstEnergy and Duke have similar proposals pending before the PUCO that would charge customers to support their unregulated affiliates’ coal and nuclear plants. These cases, however, have yet to complete their hearing schedule and therefore the PUCO isn’t slated to decide these cases for several months.

One of the power plants proposed to be supported through AEP’s subsidy – the Kyger Creek power plant – is one of the nation’s dirtiest coal-burning plants, ranked in the top 50 most polluting power plants in terms of air pollution. According to a 2011 Clean Air Task Force study, the Kyger Creek’s air pollution can be linked to 305 asthma attacks annually (including visits to the emergency room), as well as 19 deaths and 29 heart attacks every year. AEP’s rate plan would have allowed the utility to charge its customers for the power generated by this plant, as well as one other – the Clifty Creek plant in Madison, Indiana.

“Ohioans can breath easier knowing PUCO has chosen clean air and customer choice in Ohio.” said Dougherty. “We’re cautiously optimistic that the PUCO will see this decision as a precedent, and maintain in future decisions that utilities force Ohioans to pay for power plants that pollute Ohio’s air with soot, carbon and mercury pollution.”