July 13, 2012

Update:  On July 11, 2012, the PUCO issued an order granting separate applications for rehearing filed by the OMAEG, FirstEnergy Solutions, and IEU-Ohio, regarding the PUCO’s May 30 Entry extending the interim capacity rates for AEP-Ohio.  The OMAEG argued in its application for rehearing that: (1) the PUCO’s decision to increase and extend AEP-Ohio’s interim capacity pricing relief is not supported by record evidence; and, (2) the PUCO’s May 30 Entry undermines customer expectations and substantially harms Ohio manufacturers and other customers.  In FES’ application for rehearing, it argued that the PUCO’s May 30 Entry: (1) failed to follow PJM policies regarding the RPM; (2) continues an improper interim state compensation mechanism which grants cost recovery for stranded investments; (3) imposes capacity pricing above RPM prices on tier-one customers who have always been entitled to RPM-priced capacity; and, (4) is not based on probative or credible evidence that AEP-Ohio will suffer immediate or irreparable financial harm under RPM market-based capacity prices.  Finally, IEU-Ohio argued that: (1) the PUCO failed to comply with the law by not returning customers to the rates under AEP-Ohio’s prior ESP; (2) the PUCO is without jurisdiction to approve the pricing scheme; (3) AEP-Ohio failed to meet its applicable burden of proof; (4) the pricing scheme is discriminatory and allows AEP-Ohio to collect transition revenue in violation of the law; and, (5) the pricing scheme is not supported by the evidence.

Based upon the above, the PUCO provided that sufficient reason was set forth by each party, thereby warranting further consideration of the matters specified.  We will continue to follow this case and provide updates.