COLUMBUS, Ohio (WCMH) — Thursday marks the beginning of a nearly 30% markup on bills for a major portion of American Electric Power’s customers in Ohio.
The electric utility company warned previously that customers would be seeing a 28% rate increase after the latest competitive auction for electricity generation on March 7. As a dollar amount, that comes out to a $198 monthly bill compared to $155 for a customer using 1,000 kilowatt-hours of electricity, according to AEP Ohio’s estimates.
“Unfortunately, this change is out of our control and was determined by recent auctions to secure the energy supply needed to serve our customers,” AEP Ohio President Mark Reitter wrote in March.
Because the state’s energy market is unregulated, utility providers like AEP take bids from companies that generate power fed on the grid to a customer’s home. The Public Utilities Commission of Ohio oversees this auction process and creates a Standard Service Offer (SSO), which sets the per-kilowatt-hour price of generating electricity before it is supplied to AEP Ohio and then to users. PUCO spokesman Matt Schilling said multiple external factors came into play when setting that new rate.
“The inflationary pressure that the entire economy is facing, and upward pressure on the price of natural gas due to the war in Ukraine, meant that the auction prices that cleared to provide energy came in at a significantly higher price,” Schilling said.
The price increase will affect any AEP Ohio customer who is using the SSO. Some company emails seen Wednesday also alerted customers to whether or not they would be affected. For people who are affected, a company spokesperson explained when they would see the effects of the rate increase.
“It is simply a matter of when customers will have their meter readings in June and will be billed based on the rates effective that day,” the spokesperson wrote. “If the meter reading is done on May 31, 2023, the customer will not see an impact to the supply portion of their bill. If the meter reading is on June 1, 2023, the customer will see the updated supply rate if they are on the SSO.”
Customers won’t be retroactively charged the heightened rate for electricity usage in May. Rather, the new rate will be applied for any day of usage after June 1 within a customer’s cycle.
The 28% increase now in effect may not be the last of AEP Ohio’s rate hikes, either. The utility provider filed paperwork with PUCO for Electric Security Plan V in January, with hopes of spending $2 billion on upgrades and improvements to the company’s equipment and services.
An AEP Ohio case manager estimated a 1,000-kWh customer would see an initial 5.2%, or $8.16 increase in their bill, as a result of the company’s spending in ESP V. However, that estimate — included in AEP’s January application for the plan — did not factor in the separate 28% rate increase that just went into effect.
Reitter did hint at the additional rate increase from ESP V in Wednesday’s emails to customers but clarified that it wouldn’t stack on top of the 28% hike anytime soon.
“Our proposal is currently under review with the PUCO and will go through a very thorough and transparent process,” Reitter wrote. “If approved, any impact to customers’ bills wouldn’t take effect until the summer of 2024.”
An AEP spokesperson declined to give an updated estimate on a potential rate increase accompanying ESP V. They did mention that another round of auctions for PUCO to set the SSO rate will happen in November 2023 and March 2024, and could alter customer charges again.
AEP customers now dealing with higher bills still have options, however, as they can choose who generates their electricity rather than accept the SSO price. PUCO has created a website, Energy Choice Ohio, to review offers from electric generation suppliers. AEP Ohio also offers assistance like payment extensions and different monthly payment plans for customers struggling with higher bills.