Another bill increase is coming for AEP Ohio customers. How did prices get here?
COLUMBUS, Ohio (WCMH) — AEP Ohio will be taking a bigger cut from its customers’ wallets in the future, but there could also be relief on the way, according to the state’s utility regulator.
From 2022 to 2024, the electricity provider has moved to raise prices at least three times, with two already in effect with approval from the Public Utilities Commission of Ohio. A fourth price increase is on the way, as PUCO approved a $154 million transmission charge bill, also known as a rider, for AEP. The Ohio Consumers’ Counsel, which commonly contests the power company’s price increases, filed paperwork asking for federal intervention.
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The group said if unchecked, this would look like another $10 hitting residential bills starting in April. It would come simultaneously as AEP Ohio reduced transmission charges for businesses, or let them opt out of paying for the charge under the new rider.
“Ohio utilities’ transmission spending that receives no regulatory review for need or prudence continues to be a problem for Ohio utility consumers that foot the bill,” OCC Director Maureen Willis wrote.
Most customers using 1,000 kilowatt-hours of electricity in Columbus are already paying monthly bills of around $200, which have been unseen in the past decade. Historical data on how much Columbus residents have paid for electricity shows the steep price hikes from AEP are a recent phenomenon, rather than a steady trend following inflation. The chart below reviews nearly 10 years’ worth of billing history from PUCO, and breaks down annual changes in itemized charges on AEP Ohio bills. It also shows how much a customer using 1,000 kilowatt-hours of electricity paid in a month as the years progressed.
PUCO Public Affairs Director Matt Schilling explained the different itemized charges on a bill, which were affected over the decade by different factors.
“Generation prices are set by market forces, transmission rates are overseen and set by the federal government at the Federal Energy Regulatory Commission, the PUCO oversees and sets rates for distribution service,” Schilling said.
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The oldest data available from the utilities commission was from January 2015. NBC4 reviewed data on July bills for the years afterward, because federal and state alterations to electricity bills have historically gone into effect by June of each year.
In 2017, AEP Ohio proposed a 120% increase in fixed fees for customers, which would look like $10 more. PUCO confirmed to NBC4 that the 2017 fixed fee increase was approved and later went into effect. And a 2022 increase of 2 cents in price per kilowatt-hour bumped the average 1,000 kWh customer’s bill up around $20 as well.
In the most significant increase, AEP Ohio instituted a 28% rate increase in 2023, sending Columbus electricity bills around $200 for 1,000 kilowatt-hours if they were using the provider’s standard service offer. Company president Mark Reitter previously wrote the change was “out of our control,” while AEP Media Relations Director Scott Blake told NBC4 that the company was feeling the effects as well.
“Many of our costs are also being driven up by inflation,” Blake said. “The most significant increases in recent years have come from changes in the generation rate for customers who do not choose an energy supplier. AEP Ohio passes on those costs with no markup to customers. They are set through an auction process.”
Schilling, in previous comments to NBC4, noted external factors.
“The inflationary pressure that the entire economy is facing, and upward pressure on the price of natural gas due to the war in Ukraine, meant that the auction prices that cleared to provide energy came in at a significantly higher price,” Schilling said.
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Later in 2024, however, Schilling said bills for the same customer could look more in the ballpark of $189.50. Both the utilities commission and AEP Ohio are anticipating energy costs could fall by around $30 after wholesale prices drop.
Another relief for customers could come in lower than previously anticipated price increases. AEP Ohio drafted a proposal called Electric Security Plan V which would seek millions in funding for infrastructure and equipment upgrades after a lengthy 2022 summer outage. An analyst for the company previously predicted it would bring another $8.16 monthly charge for customers, but Schilling pointed to more recent filings in December 2023 that put that increase closer to $1.50.
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