Update: On December 17, 2014, the Commission held an oral argument for the purpose of enabling it to clarify the legal and policy implications related to the AEP’s proposed Power Purchase Agreement Rider (Rider PPA). AEP was initially provided ten minutes to present its arguments in support of the proposed Power Purchase Agreement Rider, and during that time, argued that the rider promotes three main concepts: (1) rate stability, (2) the preservation and advancement of competition, and (3) economic development. In addition to these concepts, AEP argued for the first time that the Commission would have the ability to conduct prudency reviews associated with costs of Rider PPA. AEP also argued that Commission authority to approve a mechanism such as Rider PPA is not preempted by the Federal Energy Regulatory Commission’s (FERC) regulation of wholesale markets. Following AEP’s initial presentation, FirstEnergy Solutions (FES) presented a short argument in which it reiterated AEP’s views that the Commission is not preempted from approving riders such as AEP’s Rider PPA because of FERC’s authority over wholesale electric markets.

Following FES’s presentation, intervenors opposing Rider PPA, including Ohio Manufacturers’ Association Energy Group (OMA Energy Group), the Ohio Consumers’ Counsel (OCC), Industrial Energy Users-Ohio (IEU-Ohio), The Kroger Company (Kroger), Ohio Partners for Affordable Energy/Appalachian Peace and Justice Network, the Retail Energy Supply Association (RESA), Exelon/Constellation New Energy, and the Environmental Law and Policy Center/Ohio Environmental Council. The opponents of Rider PPA advanced the following arguments, among others: Ohio and federal law do not permit the Commission to authorize Rider PPA; the Commission does not have any statutory authority to regulate wholesale markets; approval of Rider PPA is preempted by the Federal Power Act; the Ohio ESP statute does not authorize Rider PPA; Ohio law prohibits the collection of additional transition revenues, which is effectively what the costs of Rider PPA would be; Rider PPA is an unlawful subsidy; it unfairly and unreasonably increases the cost of electricity to ratepayers; it eliminates important customer choices; it frustrates the goals of the competitive market; it will not provide customers with reliability or stability; and it reasonably shifts the risks associated with the OVEC generation units to customers, subjecting them to unknown costs.

Immediately following Rider PPA opponents’ arguments, OEG presented its argument regarding Rider PPA to the Commission, in which it indicated that it would support Rider PPA if the rider was modified such that AEP would retain a ten to twenty percent interest in the costs of the OVEC generating units, rather than shifting all costs to consumers. By retaining such an interest, OEG argued, AEP would have an incentive to keep costs down. Additionally, when asked by the Commission, OEG argued that it supports a modification that would permit large industrial customers to opt out of the costs of Rider PPA.

Following each of the above-mentioned arguments, AEP was provided with a rebuttal opportunity, in which AEP reiterated those points it previously asserted, and requested that the Commission approve Rider PPA.