State regulator staff recommends AES Ohio rate freeze

AES held a ribbon cutting on it's newly renovated, Smart Operations Center,  Monday October 25, 2021. AES spent $20 million to renovate the old Dayton Power & Light building and move AES into the future. JIM NOELKER/STAFF

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AES held a ribbon cutting on it's newly renovated, Smart Operations Center, Monday October 25, 2021. AES spent $20 million to renovate the old Dayton Power & Light building and move AES into the future. JIM NOELKER/STAFF

Staff for state regulators recommend against Dayton utility rate increase

Staff for the Public Utilities Commission of Ohio has recommended that the commission freeze Dayton electric utility AES Ohio’s rates.

AES Ohio — the re-branded Dayton Power & Light — last year applied to Ohio regulators for a $120 million distribution rate increase. PUCO staff last summer initially recommended instead a rate increase of about half that, about $65 million.

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

But last Friday, in a new filing, PUCO staff members argued against any rate increase, saying: “AES Ohio is committed to a freeze of its base rates for the duration of its operation pursuant to its first Electric Security Plan (ESP I),” or plan for operations.

“It would be unfair to determine only some of the terms and conditions of ESP I are applicable, while others are not,” staff added.

Asked about the difference between the recommendations, a spokesman for the PUCO said Tuesday the August recommendation was based on an “analytical investigation of what AES Ohio’s costs are” while the brief filed Friday is based on relevant legal issues.

Staff’s new argument is similar to one made last year by the Office of the Ohio Consumers’ Counsel (OCC).

In response to the OCC last year, PUCO commission members found that AES Ohio’s bid to raise rates “should be adjudicated, rather than dismissed.”

In last week’s filing, PUCO staffers appeared to agree with the OCC’s stance.

“Staff’s position on this issue is that the distribution rate freeze was a term and condition of (the electric security plan),” the 53-page filing said. “Since AES Ohio filed its application to increase distribution rates for this proceeding while operating under the terms of and conditions of (the electric security plan) the commission should not implement new distribution rates until such time that AES Ohio is no longer operating under” the plan.

“Over the years, AES Ohio has taken the necessary steps to keep rates reasonable through efficient distribution operations to meet the growing needs of our customers,” AES Ohio said in a statement Tuesday. “Today, we maintain the lowest residential rates of the investor-owned electric utilities in Ohio.”

The utility needs to perform activities such as “proactive maintenance” and “enhanced tree trimming” to reduce the likelihood and length of outages, the company said. “A freeze of these rates will limit our ability to do this work and limit the use of contractor crews which will result in longer outages and slow storm restoration efforts.”

Testifying before the PUCO in January, Kristina Lund, AES Ohio CEO and president, said her company has had “a very fragile financial condition for a long time.”

“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,” Lund testified then.

Briefs and reply briefs are the last step in the rate case before a commission decision, the PUCO spokesman said.

In its own brief last week, the OCC again argued against a rate increase.

Dayton-area consumers should not be charged a penny more for their electric service. That’s because DP&L agreed, in a 2009 settlement, to freeze electric rates while it is charging consumers ($79 million annually) for so-called ‘stability,’” the OCC said.

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

Last August, PUCO staff recommended reducing the annual revenue requested by the utility by about half — from $120.7 million to a range between $61.1 million and $66.6 million.

If the commission passes what PUCO staff first recommended last summer, a customer using 750 kilowatt-hours a month would see a 5.5% increase in their bill.

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

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