Smack! Regulators slap down AEP rate increase as rivals call for competition

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By Jesse Berst

Ohio regulators just slapped American Electric Power by revoking an earlier December approval. It also reversed its earlier approval for the utility to spin off its Ohio power plants. "The complexity of the issues required us to take a step back," commission chairman Todd Snitchler said. He added that he thinks the issue could be resolved in a relatively short period of time.

Not so fast. Opponents and rivals see the reversal as an opportunity. "Today's rehearing order is welcome relief for AEP Ohio customers who have seen sharply higher electric rates," said Donald R. Schneider, President of FirstEnergy Solutions. "Going forward, the best-case scenario for customers is for AEP Ohio to move toward a model that fully embraces competition."

FirstEnergy Solutions is one of the nation's largest providers of competitive electric generation supply. It claims it can provide lower-cost electricity to AEP Ohio customers – but first it has to get the commission to open the territory to retail competition.

But it isn't just business rivals who are applying the pressure. The commission's unprecedented reversal followed weeks of protests and formal appeals, including more than 1,000 phone calls from irate consumers, according to The Plain Dealer newspaper.

Are we entering an era where vertically integrated utilities will once again face pressure to open their territories to competition? Please use the Comment form to weigh in. And join us at my Electronomics blog for articles such as "When the future attacks: How regulatory constraints could block utilities from their full potential."

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Jesse Berst is the founder and chief analyst of Smart Grid News.com. He consults to smart grid companies seeking market entry advice and M&A advisory. A frequent keynoter at industry events in the US and abroad, he also serves on the Advisory Council of Pacific Northwest National Laboratory's Energy & Environment directorate.

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