Electricity rate change to swell bills
Local utility bills for small consumers may soon see a significant upfront increase due to changes in American Electric Power Ohio’s proposed service plan.
“If this goes through, as early as this summer customers could see a huge increase on their bills,” said Rachael Belz, executive director of Ohio Citizen Action.
AEP Ohio has proposed altering mandatory customer charges from $8.40 per month to $13.40 per month this year and to $18.40 per month in 2018.
Four types of charges make up an electric bill including a customer charge, a fixed fee established to pay for the costs associated with electric equipment and maintenance; a distribution service charge, a kilowatt-hour based volumetric charge for delivering electricity to a home, including use of local wires and other equipment to move electricity; a generation service charge, a kilowatt-hour based volumetric charge for the production of electricity; and a transmission service charge, a kilowatt-hour based volumetric charge for moving high-voltage electricity from power plants to the electric company.
Electric distribution in the valley, regardless of provider, comes from AEP Ohio, meaning even those not billed directly by AEP will still have the changes on their bills.
But the increased customer charge wouldn’t change overall profits for the company, according to Matt Schilling, spokesman for the Public Utilities Commission of Ohio.
“AEP Ohio’s proposal is shifting from a volumetric charge to more of a fixed charge,” said Schilling. “But that’s only if it gets approved by the commission. We are holding both public hearings and taking public comments in the mail and online to hear from private customers how this will affect them. That will all be a part of the official testimony considered in the evidentiary hearing by the commission in June with a ruling expected later this summer.”
Justification for the change from bills based predominately on usage to fixed charges is to further infrastructure, according to AEP Ohio president Julie Sloat.
“AEP Ohio is focusing on making investments that enhance the reliability and quality of service that we provide to our customers. This proposal will allow us to continue programs that have improved the reliability of our service in recent years and introduce new, smarter energy technologies on our system that help the system operate more efficiently and effectively,” said Sloat in a release. “It also gives us a way to invest in renewable generation that will bring clean energy, jobs and support economic development in Ohio.”
According to the U.S. Energy Department’s Energy Information Administration, of Ohio’s 4,892,916 customers in 2015, the average monthly consumption was 877 kilowatt hours per customer. With an average state price per kilowatt hour at $12.80 the average monthly bill equaled $112.25.
At current AEP Ohio rates, the monthly consumption of 800 kilowatt hours in a month currently costs $115.95. If the proposed plan is approved by PUCO, that bill would increase by 2.43 percent immediately but then over time drop, assuming the same usage, by 3.57 percent in 2019 to $114.56 per month.
“PUCO approves how much in total utilities are allowed to make in profits in a given year,” explained Schilling. “We can’t ignore the fact that AEP is lowering volumetric charges at the same time as trying to increase fixed charges.”
But for smaller households, like couples in retirement or small families with little usage, the proposal could show significant increases to their bills.
“The lower usages will see an increase because of the rate design change,” confirmed Schilling.
Average usage for a one-bedroom apartment, 500 kilowatt hours per month currently seeing a bill of $77.31 per month, would see an immediate 6.07 percent increase to their bill if this proposal is approved–a trend that would continue in 2018 for another 6.07 percent increase and then again in 2019 with an additional 3.75 percent increase changing a monthly average bill from $82 to $83.67.
The additional fixed customer charges would be offset by lower usage rates per kilowatt hour over the coming years, according to the proposal. If approved and implemented, that energy charge would begin at $0.01342 per kilowatt hour and lower to $0.00857 per kilowatt hour in 2018.
“But for those in retirement or on fixed incomes, that extra cost could still hit hard,” said Belz. “They’re the people who can afford to pay this the least and the households that would benefit would only be the big users in mansions.”
Belz and Schilling encourage local electric consumers to attend a public hearing Thursday concerning the proposed plan. The hearing will take place at 6 p.m. in the Washington State Community College Graham Auditorium.
“We are taking sworn testimony from AEP customers that will be added to the official case docket to be considered at the evidentiary hearing,” said Schilling. “All filed comments and testimony will be reviewed before a decision is made on these proposed changes.”
In an email, Scott Blake, communications consultant for AEP, said the public input process is an important part of the PUCO proceedings.
“We value hearing from our customers and our team does attend these public hearings,” he said. “A fixed-charge better represents the costs for delivering power. The proposal includes an offsetting decrease in the distribution energy charge making this revenue neutral for AEP Ohio.”
For more information or to post a public comment visit puco.ohio.gov/be-informed/consumer-topics/aep-ohio-s-electric-security-plan-iii-extension.
Electric bill changes
¯ AEP Ohio has proposed altering customer charges to all local electricity users.
¯ Public comments can be made:
¯ Online or by mail at 180 East Broad St., Columbus, Ohio 43215.
¯ Correspondences should include the case number 16-1852-EL-SSO.
¯ Local residents may also attend Thursday’s public hearing put on by the commission:
¯ Thursday at 6 p.m. at Washington State Community College, Graham Auditorium in Marietta.
Sources: Public Utilities Commission of Ohio, Ohio Consumers’ Counsel, AEP Ohio and Ohio Citizen Action.