Proposals by three Ohio utilities to raise electricity rates, led by American Electric Power's 45 percent increase over three years, are excessive and poorly timed, some consumer advocates said.
The rate increases, which are subject to state approval, are needed to cover soaring coal prices and the cost of modernizing systems to keep them reliable, the utilities said in making the announcements Thursday.
The plan by Columbus-based AEP would affect electricity rates for its nearly 1.5 million customers in Ohio. Duke Energy Ohio, based in Cincinnati, wants to raise rates 6.2 percent in 2009 and an unspecified amount in 2010 and 2011. Akron-based FirstEnergy wants to raise rates 5.3 percent in next year, followed by a 4 percent increase in 2010 and a 6 percent increase in 2011.
Ohio Consumers' Counsel Janine Migden-Ostrander, whose state agency represents residential customers in rate cases, said AEP's plan would be one of the largest rate increases in the 31-year history of her office.
"I don't see how in this economy customers are expected to absorb these price increases," she said, noting the high price of gasoline, natural gas and other necessities.
AEP, one of the nation's largest power generators, delivering electricity to more than 5 million customers in 11 states, says even with its proposed rate increases, customers of its Columbus Southern Power and Ohio Power operations will pay rates among the lowest in the state.
An average Columbus Southern customer currently pays about $100 a month for electricity; an Ohio Power customer about $82.50.
The rate increases filed by AEP, Duke Energy and FirstEnergy are the first under Ohio's new utility regulation law, which was signed by Gov. Ted Strickland on May 1 after a nine-month battle with lawmakers and utility lobbyists.
The bill, which tries to move the utilities back under state regulation, became law Thursday, and the utilities wasted no time seeking rate increases, even though the Public Utilities Commission of Ohio, which regulates the utilities, has not finished writing the administrative code it must use to evaluate the rate proposals.
Strickland said he has not yet dug into AEP's request to determine its validity, but said it doesn't appear to meet the stable and predictable standard for rate increases that he had envisioned.
"It does not seem like an appropriate or an acceptable course of action. I'm sure the (PUCO) will look at it very carefully," he said.
AEP has said it plans to exceed requirements under the new energy law for purchasing and supplying renewable power in Ohio and to contribute $75 million of shareholder money to help struggling Ohio customers pay their bills.
"In these troubling economic times for Ohio families, we recognize that any electric-rate increase will draw frustration, anger and criticism," Michael Morris, AEP's chairman, president and chief executive, said in a statement.
Duke Energy Ohio has 687,000 electric customers and provides natural gas service to approximately 424,000 customers in southwest Ohio.
FirstEnergy operates utilities across northern Ohio.