American Electric Power of Ohio says it wants to decrease customers' electric bills, but consumer advocates say the company is doing this by using $82 million the utility owed back to customers.
AEP said in a Wednesday press release the proposed decrease would drop bills by a little more than $1 a month for average customers driven by a reduction to distribution rates by $58.7 million. Only last month, AEP pushed for a $4 monthly increase to average monthly bills, drawing a flood of opposition at Public Utilities Commission of Ohio public hearings.
AEP said in the release the average AEP Ohio residential customer using 1,000 kilowatt-hours per month would see their electric distribution bill drop by $1.22 per month.
“AEP Ohio cares about our customers and their communities — we live in these communities, too — and we know affordability is the No. 1 issue our customers are dealing with right now,” AEP Ohio's President and Chief Operating Officer Marc Reitter said in the statement.
That stark reversal, it turns out, isn't the result of lowering costs, but is being fueled by tax credits from a rebate owed to customers two years ago known as the Accumulated Deferred Income Taxes, or ADIT. AEP's press release didn't mention this method. AEP outlines the strategy in the fine print of the settlement on the PUCO's website that the company will be using $82 million the utility owed back to customers from the tax credit.
Under the agreement, AEP clarifies it is still aiming for a revenue increase that will go before the utility regulator for approval this year. Once the tax credit lapses in 18 months, customers may still see their bills increase.
The Ohio Consumer's Counsel, Ohio Environmental Council and the progressive grassroots group Columbus Stand Up are opposing the agreement on these grounds. The groups also opposed the proposed $4 increase to bills AEP put forward last year.
The Ohio Consumer's Counsel office pointed out in its statement that consumer tax credits, like the ADIT AEP wants to be used to offset costs by AEP, fall off in 18 months.
"Despite being marketed as a rate decrease, the proposed AEP settlement would actually increase consumers’ total bills by up to 23 percent once all riders are included and accounting gimmicks are put aside. The settlement only gets to a 'rate decrease' if riders are ignored and consumer tax credits... are repackaged," the statement said.
Maureen Willis, the head of the Ohio Consumer's Counsel, said in the statement AEP's claim that consumers' charges will decrease is wrong.
"Using tax credits to mask higher charges and locking in elevated profits during an affordability crisis is misleading and unfair to consumers," Willis said.
Just last year amid bill increases, AEP posted online about its record profits. Yet, the company still came before the PUCO at the end of the year asking for a rate increase.
AEP responded to these groups in a statement to WOSU Friday. The utility said it disagrees with the claim that this is not a real rate decrease.
"Under the proposed settlement, customers would see lower distribution charges on their bills compared to what they would otherwise pay, which is why AEP Ohio characterizes this as a rate decrease. The agreement reflects a negotiated outcome reviewed by regulators and multiple parties, not a unilateral company decision," the statement said.
Columbus Stand Up co-founder Morgan Harper, a former U.S. Senate candidate, helped organize community opposition to the rate increase. She criticized AEP for manipulating its numbers.
"It's another example of AEP Ohio trying to apply Wall Street Math, which is taking a credit that was due for something else and applying it to this rate increase," Harper said.
Harper said the PUCO should reject this agreement and "stop the madness."
"We know right from wrong in Ohio. This is AEP trying to manipulate the public into thinking they are actually lowering prices and it's just not true," Harper said.
AEP explained in its statement Friday it filed an update to its “tax savings credit rider” in 2022 and in 2024 to refund rate payers the tax credit balance. It said these applications were not yet approved by the PUCO, and therefore, AEP Ohio is applying these credits as part of the current settlement package in this proceeding.
"Incorporating the credit into rates allows customers to benefit immediately through lower monthly bills while maintaining rate stability and avoiding sharp swings," the statement said. "Without the ADIT credit it would be a 68-cent increase to the average AEP Ohio customer using 1,000 kWH a month, instead they will be seeing the $1.22 credit for the first 18 months of this base case."
AEP explained it is upgrading aging utility infrastructure in its Ohio service area.
A large part of customer's electric utility bills are being driven by the costs of data centers and the strain the large buildings put on this aging infrastructure. AEP did agree to put a tariff on the data center's energy use last year, but the power required to operate these buildings still strains that aging infrastructure.
The Ohio Environmental Council said in a statement the settlement also doesn't contribute to an affordable, clean, and reliable energy system. It said state regulators cannot let AEP Ohio use "utility math" to portray costs incorrectly to customers.
AEP said it expects the PUCO to consider approval of this increase in the first quarter of 2026.
