The Ohio Supreme Court has rejected the claim that customers overpaid to AEP Ohio so the energy company could continue to operate two coal power plants.
The court reached a unanimous decision that upheld a previous Public Utilities Commission of Ohio’s (PUCO) decision on rider rates for two 1950s-era coal power plants: the Kyger Creek Power Plant in Gallia County in southeast Ohio and the Clifty Creek Power Plant in Jefferson County in southern Indiana.
The plants are partially owned by AEP Ohio as part of the Ohio Valley Electric Corporation (OVEC). When the two plants lost money in 2018 and 2019, AEP Ohio charged consumers $74.5 million in riders to reimburse its portion of operating costs.
The Ohio Supreme Court’s decision cited PUCO authorizations from 2015 and 2016 that allowed the riders to be added to energy bills.
The Office of the Ohio Consumers’ Counsel (OCC) challenged the charges. Its primary argument was against the operation strategy the plants use, which is called “must-run.” As the name implies, the plants continue to run constantly instead of shutting down when the cost of generating electricity becomes more than the price of electricity. PUCO approved the “must-run” strategy.
The OCC also claimed ratepayers should not cover operators' losses.
Annual audits in 2018 and 2019 found OVEC’s operation of the plants cost customers more than the cost of energy on the wholesale market, but did not find AEP Ohio’s actions imprudent.
The OCC expressed disappointment at the court’s decision.
“Today’s decision leaves Ohio consumers paying for tens of millions of dollars in costs from outdated, uneconomic coal plants,” OCC Director Maureen Willis said in a statement. “While policymakers have acted to stop these charges going forward through Ohio House Bill 15, the Court’s ruling denies consumers relief from past overcharges-even when cheaper energy options were available.”
Willis also stated the decision allowed utilities to shift financial risk onto consumers.