AES Ohio requests $100M in ‘deferred expenses’

Ohio Consumers’ Counsel seeks to intervene in new AES Ohio ‘electric security plan.’

An AES Ohio operating plan filed last month with Ohio regulators seeks about $100 million from electric consumers in “deferred expenses,” some dating back to 2014, according to the Office of the Ohio Consumers’ Counsel (OCC).

The OCC moved Monday to become an intervenor in the utility’s application for state approval of the plan, called an “electric security plan” or “ESP.”

AES Ohio filed for state approval of the plan late last month. If approved, it would initially impose new costs of less than $1 on a residential customer using 750 kilowatt hours (kWh) a month — before rising to $4 a month in new costs over three years.

The average Ohio resident uses about 892 kWh a month, according to the U.S. Energy Information Administration.

The OCC objects to the practice of deferred expenses, whereby utilities are permitted to accumulate costs in a “deferral account” when a law or rule prevents the utilities from collecting the costs from consumers. Later, the utility asks PUCO to permit the transfer of the deferrals (with interest) into charges to consumers.

“Generally, utilities win and consumers lose with deferrals,” the OCC said in a statement.

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A spokeswoman for AES Ohio acknowledged that the company wants to recover authorized deferred expenses — slightly less than $100 million, over three years.

AES Ohio says its ESP plan will “enhance and upgrade its network and improve service reliability, provide greater safeguards for price stability and continue investments in local economic development.”

While the ESP process was originally allowed to ensure that electricity prices would not increase too much as utilities shifted to a deregulated market, opponents argue now that the process lets power companies raise costs through new charges added to customers’ bills.

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Public Utilities Commission of Ohio (PUCO) staff held a technical hearing on the company’s ESP application Tuesday. Sharon Schroder, regulatory affairs director for AES Ohio, said the plan’s goal is to ease “price spikes,” making charges predictable in an era of market volatility.

AES Ohio standard service customers faced higher electric rates this year after a wholesale energy auction this spring, an auction that happened not long after Russia’s invasion of Ukraine and at a time of general inflation, when energy was quickly becoming more expensive.

At one point this year, AES Ohio’s generation rate, or its “price to compare” with other companies, was the highest in Ohio at 10.91 cents per kilowatt-hour of usage for residential customers, doubling the previous rate.

“We had an unfortunate date,” Schroder said, referring to this year’s auction.

Reliable funding brought on by the ESP will allow new investments and reliable service, Schroder said. AES Ohio transmission units are older than many of its peers, she said.

Mark Vest, senior director of Ohio transmission and distribution for AES U.S. Services, said in testimony filed with the PUCO last month that 45% of AES Ohio’s substations are more than 30 years old, while 24% are over 50 years old. Over 45% of AES Ohio’s distribution poles are more than 40 years old, 35% are over 50 years old, Vest also said.

The process for considering a newly filed ESP involves consideration by PUCO staff members, who make a recommendation to commission members. There will be formal evidentiary hearings before the commission votes on the plan, a PUCO spokesman said.

AES Ohio provides electric transmission and distribution service to more than 527,000 customers across its 6,000 square mile service territory.

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