Another Ohio Utility Seeks a Bailout When It Should be Upgrading the Grid

coal smoke morguefileFirstEnergy isn’t the only utility trying to stick Ohioans with the cost of its poor business decisions.

AEP Ohio has also presented a similar proposal to bail out several old, uneconomic coal plants, asking the Public Utilities Commission of Ohio (PUCO) to guarantee the purchase of power produced by its coal plants. The utility tried the same tactic earlier this year and failed, but is now back with an updated proposal. Last week, Environmental Defense Fund (EDF) filed testimony opposing the deal and recommended that AEP Ohio should invest in grid upgrades if the PUCO decides to approve AEP Ohio’s proposal.

Ohio has a competitive retail electric market, meaning customers can buy electricity from many different sellers. But utilities still have a monopoly when it comes to service territories. So if you live in AEP Ohio’s territory, the company will deliver your electricity – even if you purchase it from a different provider. Since AEP Ohio’s bailout proposal applies to its entire service area, essentially the utility wants to force all of those customers to pay for its coal plants, including those who don’t buy their electricity from AEP Ohio.

Not only would the deal unfairly burden Ohioans with these costs, it would disrupt the competitive retail market. Why tamper with something that is working well? Competition has driven down the price of electricity for Ohio customers, and will continue to do so – if big utilities don’t get in the way.

AEP Ohio claims it might have to shut down these plants due to new environmental regulations, but this is how the market ought to work. If these old, dirty coal plants can no longer compete in the clean energy economy, the power demand will be met by newer, cleaner, cheaper sources like natural gas and renewable energy.

Moreover, there are other ways for AEP Ohio to lower operating costs and simultaneously reduce carbon emissions, like making its delivery system more efficient. For that reason, EDF also recommends that AEP Ohio invest in newer technology, such as Volt/VAR Optimization and Conservation Voltage Reduction. Many appliances work just as effectively, yet consume less energy, when the flow of electricity to them is reduced. Put another way, higher voltages generally make individuals and businesses needlessly use more energy, driving up electricity bills and air pollution. Therefore, if voltage was “right-sized” through Volt/VAR technology and Conservation Voltage Reduction, people would not get more electricity than needed. These resources are cost-effective and have the potential to reduce energy consumption by three percent, as evidenced by AEP's own gridSMART pilot program.

Instead of trying to prop up coal, which is already losing ground throughout the country, AEP Ohio should invest in the future and modernize the grid.

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