AES Ohio CEO testifies to utility’s ‘very fragile’ financial condition

Dayton-area electric utility AES Ohio has been in a “very fragile” financial condition and its planned “smart grid” investments are an important part of the company’s future, the utility’s chief executive testified Tuesday in a hearing before state regulators.

Kristina Lund, AES Ohio CEO and president since October 2020, was the first witness of the day as the Public Utilities Commission of Ohio (PUCO) weighs an AES Ohio application to raise its electric distribution rates. The hearing is set to continue through Feb. 4.

“As it has been well documented in many cases in front of the PUCO, DP&L/AES Ohio has had a very fragile financial condition for a long time,” Lund testified on cross-examination by an attorney for the Ohio Manufacturers Association Energy Group. “We worked very hard for a long time to get our company on the right track financially, and our smart grid investments are a component of that.”

Dayton Power & Light rebranded to AES Ohio in early 2021.

DP&L’s plan to build “smart grid” technology in the Dayton area would entail spending up to $267 million in capital investments in the project’s first phase, the company has said.

Such a grid would help the utility respond to power outages faster and connect to customers more precisely, leaders have also said.

The attorney for the manufacturers group moved to strike Lund’s testimony on the company’s financial condition.

“I simply was asking if AES will make the smart grid investments, which are related to distribution ... regardless of whether the application in this case” is approved, said the attorney, Kim Bojko.

Jeff Sharkey, a Dayton attorney for AES Ohio, objected more than once to Bojko’s line of questioning, arguing that revelation of “privileged issues” regarding AES Ohio’s plans was a possibility. Sharkey asked that Lund answer without disclosing privileged information.

Bojko responded that she did not ask Lund to reveal anything beyond a “yes,” a “no” or a “I don’t know.”

A PUCO hearing examiner allowed the testimony.

The smart grid investments are not immediately part of this rate case. The PUCO approved those plans in June 2021.

Sharkey, on redirect questioning, asked if the smart grid investments depend on the outcome of the distribution case that is before the PUCO.

“Those investments depend on the overall condition of the utility and this rate case is very important to the financial condition of the utility,” Lund told Sharkey.

If the company does not have enough cash, there could be “risks to reliability” in delivery of power, the CEO warned.

The rate increase originally sought by AES Ohio/DP&L would have amounted to a 14.3% increase in customer bills.

But PUCO staff has recommended reducing the annual revenue requested by the utility by nearly half — from $120.7 million to a range between $61.1 million and $66.6 million.

If the commission passes what PUCO staff has recommended, a customer using 750 kilowatt-hours a month would see a 5.47% increase in their bill.

However, PUCO members are free to vote as they see fit, regardless of their staff recommendation.

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