Office of the Ohio Consumers' Counsel

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Consumers' Counsel receives victory at Supreme Court in effort to protect American Electric Power customers

COLUMBUS, Ohio - July 5, 2006 - Corrected version - Based on a challenge by the Office of the Ohio Consumers' Counsel (OCC), the Ohio Supreme Court today struck down the Public Utilities Commission of Ohio's (PUCO) decision that approved a rate plan for American Electric Power (AEP) in January 2005. The OCC challenged the PUCO's failure to follow Ohio's electric choice law which requires that the price of energy be set by a competitive market. The Supreme Court left the door open to future challenges on the other grounds for appeal raised by the OCC, including arguments related to rate increases.

"The OCC and residential consumers have received a victory from the Supreme Court. A rate plan that did not follow Ohio's electric choice law must now go back to the PUCO and be corrected," said Janine Migden-Ostrander, Consumers' Counsel. "We urge the PUCO to review all aspects of the rate plan, including a series of rate increases imposed on residents through 2008." The OCC believes that the rate plan review should be performed quickly to ensure that any benefits to consumers are received as soon as possible.

In its appeal, the OCC raised the concern of whether rate increases that began in January should be imposed on residential consumers. The AEP rate plan, which lasts through 2008, includes annual automatic generation rate increases of 7 percent for Ohio Power customers and 3 percent for customers of Columbus Southern Power. The plan also allows AEP to request new or additional increases based on costs related to items such as environmental and security expenses. Generation rates, which pay for the production of electricity at a power plant, make up approximately 66 percent of a resident's total monthly bill.

Based solely on the automatic increases, the OCC estimates that between 2006 and 2008, the typical residential customer served by Ohio Power will be paying an increase of $73. Those served by Columbus Southern Power will be seeing an increase of $43. If additional increases are requested by AEP and approved by the PUCO, the rate impact could be much greater under the plan.

Today's Supreme Court decision on the AEP rate plan follows a decision in May involving the OCC's challenge to a PUCO decision involving the FirstEnergy rate plan. In the FirstEnergy decision, the court agreed with the OCC that the plan failed to offer customers a price determined through a competitive bid. The court sent the rate plan decision back to the PUCO, where it is pending.

About the Office of the Ohio Consumers' Counsel

The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. The state agency also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals. To receive utility information, brochures, schedule a presentation or file a utility complaint, residential consumers may call 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC website at www.pickocc.org.