AEP agreement axes 2011 rate increase

AEP agreement axes 2011 rate increase

There are 80 comments on the DispatchPolitics story from Dec 1, 2010, titled AEP agreement axes 2011 rate increase. In it, DispatchPolitics reports that:

Without a rate freeze, AEP could raise rates up to 6 percent next year, which translates to $78 annually for each household.

Join the discussion below, or Read more at DispatchPolitics.

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Jakey

Columbus, OH

#63 Dec 2, 2010
Sterling Silver wrote:
<quoted text>
You are living in an alternative universe, "Flakey". We went to a competitive market. Several companies came in, looked at the rates AEP was charging, and promptly left the state, never to return, because AEP's rates were already in the basement. And northern Ohio is NOT paying cheaper rates, ask the customers up there, they would love to have the rates AEP charges. Quit yer lying.
Wow. Pretty clever name calling there Sterling. You went to a competitive market except for the fact that you guys (AEP) had non bypassable charges which prevented anyone from providing a competitive price. The fact of the matter is that in northern Ohio, they went to an generation price set by a market option without your non bypassable charges. And guess what happened now for two years in a row.....power prices are significantly lower that the standard price in AEP's service territory.

I'm not ragging on AEP. They wanted access to an unfettered market. PUCO and Strickland felt that a regulated "stable" rate was best for central and southern ohio. Nice move TED.

Be careful when you want to call people lyars when they are informed.
Jakey

Columbus, OH

#64 Dec 2, 2010
Larry wrote:
One question. Why aren't oil companies regulated the same way as electric utilities in the state of Ohio? They too are energy companies providing a 'product' just as essential as electricity. Yet, as far as I know, they are not regulated. Their profits are not limited to some prescribed amount. They can make as much profit as possible.
AEP employs many people in the state of Ohio. Recently AEP went through a reduction in force in which a large number of employees either voluntarily left or were involuntarily severed from the company. How does limiting the company's ability to be profitable and retain employees square with the state's goals of promoting economic and job growth?
If excessive profits are the issue, what about oil companies or for that matter any company that provides a 'basic' service or product such as electricity, gasoline, etc.? Are there special interest politics at play here?
Electric Utilities have been regulated because of the fact that you dont want five sets of wires along your street. And those wires are delivering a commodity which travels at the speed of light from the point of production to the point of consumption.

Oil can be produced, refined, stored, and shipped based on the demand for the product.

Citizen

Highland, OH

#65 Dec 2, 2010
The OH Life wrote:
<quoted text>
The company didn't make a 21% return from the people in central Ohio, they actually made around 13%, which is in line with all other utilities. The dispatch had an artlice about this a few months back saying the excessive profit came from selling extra electricity to other utilities. I don't see how a company can be penalized for selling extra of what it produces to make more profit... especially if that extra profit comes from outside it's territory.
If the company did bring in 21% from its central Ohio territory, the company would have given that back and if not, the PUCO would force AEP to... but since the company made extra profit outside of Central Ohio, it had to be litigated or arbitrated. In this case an agreement was settled.
I'm a little disappointed in the dispatch, I feel the reporters/writers intentionally left info out to paint a wrong picture. AEP didn't make excessive profit from Central Ohio, where was that fact in this article?
Good to know.
Phil Proctor

Columbus, OH

#66 Dec 2, 2010
Blue Dusky wrote:
<quoted text>
I sold my AEP stock in 2001 for $41. It has not year recovered to where it was 10 years ago. Excess profits my behind. lol. Nobody is getting rich.
I am. They're paying 42 cents per quarter dividends. If you hold $36/share a stock like that for 10 years, you'll earn at least 50% on it even if the price stays the same. If you re-invested, you'd have even more. Try to get that return in a savings account. They've paid a dividend every quarter since 1910.

Since: Aug 10

United States

#67 Dec 2, 2010
Phil Proctor wrote:
<quoted text>
I am. They're paying 42 cents per quarter dividends. If you hold $36/share a stock like that for 10 years, you'll earn at least 50% on it even if the price stays the same. If you re-invested, you'd have even more. Try to get that return in a savings account. They've paid a dividend every quarter since 1910.
Good point and good strategy for growing your money. I'm a financial advisor and I always point out that most money is made from dividens not growth so I'm totally with you on that.

I'm just saying AEP isn't a growth stock like Google or Apple which have huge profits and 200%-300% growth in stock prices avery few years. It's not having excessive profits over a prolonged period or the stock price would go up instead of remaining flat. A lot of widows and orphans traditional hold utility stocks.
Robert

United States

#68 Dec 3, 2010
Blue Dusky wrote:
<quoted text>
AEP was deregulated and just raised rates after Strickland said they need regulated because there wasn't enough competition. Duh?
AEP operates in Texas too. They can't relocate their power plants but can decide which state to build new ones so it works both ways doesn't it?
I would like to see the proof that AEP is not regulated in Ohio, because it is. Granted they are a big boy and their lobbyists have scored some high profile projects, like the "smart" meters to keep tabs on people's power usage. They get a lot of price flexibility, but power is still regulated in Ohio. If it weren't, people's power would be shut off in the winter for non-payment, and do not say the power companies would never shut off power in the winter, because they would if they could.
The OH Life

Columbus, OH

#69 Dec 3, 2010
Robert wrote:
<quoted text>
I would like to see the proof that AEP is not regulated in Ohio, because it is. Granted they are a big boy and their lobbyists have scored some high profile projects, like the "smart" meters to keep tabs on people's power usage. They get a lot of price flexibility, but power is still regulated in Ohio. If it weren't, people's power would be shut off in the winter for non-payment, and do not say the power companies would never shut off power in the winter, because they would if they could.
AEP is a regulated utility, but the guy is right, parts of AEP's generating units are not regulated in Ohio.
Bob

Washington Court House, OH

#70 Dec 4, 2010
The OH Life wrote:
<quoted text>
Actually, AEP doesn't have the privilege of being a monopoly. You can choose another power company. Where did you get the idea that AEP has been given the "great privilege" of being the sole provider in Ohio? Heard of Duke (Cinergy), Dayton Power, First Energy, IGS Energy, American Municipal... the list goes on. To say AEP is a monopoly is incorrect, and to say the state has given them the prvilege of being the sole provider is also incorrect.
The company isn't rolling in the profit or "making a killing" either, not from its territory customers. It made this "excessive profit" from outside its territory. The power was bought by non-traditional customers. The company found a way to help offset plunging profits in a recession, good for them. So any "excessive" or "killing of a profit" is coming from outside of Central and Southern Ohio.
Sure anyone who wants to compete is "allowed". Here is the problem with that however. AEP has been the big player for so long that they already have the infrastructure, the grids, the customer base, etc. Anyone wanting to compete against them must overcome this established giant.
Competition is effectively squashed because of AEP's size.
How many people do you know that get electric from another source? One or two at the most???? Why is that?
AEP has an effective monopoly, everyone knows that, even if it isn't "officially" true.
How many people do you know that know how to change their electric provider? Probably the same as the first question. How does someone in Columbus go about changing their provider? It's not like going to the store and picking out an item that's for sure.
Larry

Hayesville, OH

#71 Dec 4, 2010
Jakey wrote:
<quoted text>
Electric Utilities have been regulated because of the fact that you dont want five sets of wires along your street. And those wires are delivering a commodity which travels at the speed of light from the point of production to the point of consumption.
Oil can be produced, refined, stored, and shipped based on the demand for the product.
This is the reason retail competition was enacted in the electric utility industry.Under retail competition, consumers can purchase their electrical energy from any provider they choose.The owner of the wires that transmit this electrical energy does not matter - one set of wires, multiple providers.So far the state of Ohio allows individual consumer participation and cummunities to vote to aggregate the loads of individual consumers (unless they opt out) in order to seek a competitive energy supplier. A good example of this was originally reported in the Dispatch in November in which the city of Reynoldsburg was considering buying power for it's residents from FirstEnergy Solutions at a five percent discount.

The state undermined aggregation and retail competition, when in 2006, it put in place Rate Stabilization Plans effective from 2006 to 2008 to provide a more gradual transition to market-based rates.These Rate Stabilization Plans had the effect of driving many energy suppliers out of the state because they could not compete with the regulated utilities - AEP, FirstEnergy, etc.So thank the state of Ohio for the lack of consumer choice.

So, you would have a choice, had the state of Ohio not stepped in, of who you purchase your electrical energy from just as you have a choice of who you purchase your gasoline or heating oil from.As far as I am concerned, gasoline, heating oil, etc. are just as essential as electrical energy.Therefore, the same arguments that were used in the early 1900's to enact regulation on electric utilities could presumably be used to enact regulation on oil companies.Why has this not happened?Oh yes, the monopoly argument utilized as a reason to regulate electric utilities in my opinion applies just as much to oil companies.
Larry

Hayesville, OH

#72 Dec 4, 2010
Bob wrote:
<quoted text>
Well consider this.
AEP has been given the privilage of basically having a monopoly in Ohio.
I personally had no raises in 2008, 2009 and my job was terminated in 2010. Big deal. Straw man in terms of defending your company. The companies giving raises during this recession are few and far between. Times are tough.
Here is where you seem to have a huge disconnect however. Since AEP has a monopoly, they in turn come under a different level of scrutiny. AEP not only has to do what other companies are forced to do in tough economic times(freeze pay, make cuts, etc.) but their profits are also going to come under review because of thier monopoly status. If AEP had given extravagant raises and big bonuses to their executives, do you think that would have played out any better in the poll of public opinion? Of course not.
Bottom line is that since AEP has been given the great privilage of essentially being the sole provider in Ohio, the consumers in Ohio need protection. PUCO is supposed to be that protection, sadly however, they seem to have ulterior motives.
(And for what it's worth, this decision was regarding profits in 2009. If you want a laugh look at the posted profits for 2010 and you will immediately know why AEP was so willing to give up rate hikes for 2011. They are making a killing without them!!)
This is the reason retail competition was enacted in the electric utility industry.Under retail competition, consumers can purchase their electrical energy from any provider they choose.The owner of the wires that transmit this electrical energy does not matter - one set of wires, multiple providers.So far the state of Ohio allows individual consumer participation and cummunities to vote to aggregate the loads of individual consumers (unless they opt out) in order to seek a competitive energy supplier. A good example of this was originally reported in the Dispatch in November in which the city of Reynoldsburg was considering buying power for it's residents from FirstEnergy Solutions at a five percent discount.

The state undermined aggregation and retail competition, when in 2006, it put in place Rate Stabilization Plans effective from 2006 to 2008 to provide a more gradual transition to market-based rates.These Rate Stabilization Plans had the effect of driving many energy suppliers out of the state because they could not compete with the regulated utilities - AEP, FirstEnergy, etc.So thank the state of Ohio for the lack of consumer choice.

So, you would have a choice, had the state of Ohio not stepped in, of who you purchase your electrical energy from just as you have a choice of who you purchase your gasoline or heating oil from.As far as I am concerned, gasoline, heating oil, etc. are just as essential as electrical energy.Therefore, the same arguments that were used in the early 1900's to enact regulation on electric utilities could presumably be used to enact regulation on oil companies.Why has this not happened?Oh yes, the monopoly argument utilized as a reason to regulate electric utilities in my opinion applies just as much to oil companies.
Nitpicker

Columbus, OH

#73 Dec 4, 2010
Larry wrote:
<quoted text>
This is the reason retail competition was enacted in the electric utility industry.Under retail competition, consumers can purchase their electrical energy from any provider they choose.The owner of the wires that transmit this electrical energy does not matter - one set of wires, multiple providers.So far the state of Ohio allows individual consumer participation and cummunities to vote to aggregate the loads of individual consumers (unless they opt out) in order to seek a competitive energy supplier. A good example of this was originally reported in the Dispatch in November in which the city of Reynoldsburg was considering buying power for it's residents from FirstEnergy Solutions at a five percent discount.
The state undermined aggregation and retail competition, when in 2006, it put in place Rate Stabilization Plans effective from 2006 to 2008 to provide a more gradual transition to market-based rates.These Rate Stabilization Plans had the effect of driving many energy suppliers out of the state because they could not compete with the regulated utilities - AEP, FirstEnergy, etc.So thank the state of Ohio for the lack of consumer choice.
So, you would have a choice, had the state of Ohio not stepped in, of who you purchase your electrical energy from just as you have a choice of who you purchase your gasoline or heating oil from.As far as I am concerned, gasoline, heating oil, etc. are just as essential as electrical energy.Therefore, the same arguments that were used in the early 1900's to enact regulation on electric utilities could presumably be used to enact regulation on oil companies.Why has this not happened?Oh yes, the monopoly argument utilized as a reason to regulate electric utilities in my opinion applies just as much to oil companies.
Oil companies were deregulated in 1998. See Republic Act No. 8479
Larry

Hayesville, OH

#74 Dec 4, 2010
Nitpicker wrote:
<quoted text>
Oil companies were deregulated in 1998. See Republic Act No. 8479
EXACTLY! So why can oil companies be deregulated and not electric utilities?
Sterling Silver

Columbus, OH

#75 Dec 4, 2010
Larry wrote:
<quoted text>
EXACTLY! So why can oil companies be deregulated and not electric utilities?
They ARE deregulated in most states, including Ohio. For the umteenth time, other companies looked at AEP's territory, and promptly left, because they could not offer rates anywhere near as low as AEP's. What part of this is so hard to understand?

Since: Aug 10

United States

#76 Dec 4, 2010
Bob wrote:
<quoted text>
Sure anyone who wants to compete is "allowed". Here is the problem with that however. AEP has been the big player for so long that they already have the infrastructure, the grids, the customer base, etc. Anyone wanting to compete against them must overcome this established giant.
Competition is effectively squashed because of AEP's size.
How many people do you know that get electric from another source? One or two at the most???? Why is that?
AEP has an effective monopoly, everyone knows that, even if it isn't "officially" true.
How many people do you know that know how to change their electric provider? Probably the same as the first question. How does someone in Columbus go about changing their provider? It's not like going to the store and picking out an item that's for sure.
AEP is one of the largest and a Fortune 100 company. However there are thousands of utilities in USA. Not much of a monopoloy. There are only a few car companies and nobody accused them of being a monopoly only too big to fail. 2009 out of 3,273,utilites 61 percent are government run.

http://www.eia.doe.gov/electricity/page/prim2...
The more than 3,273 traditional electric utilities in the United States are responsible for ensuring an adequate and reliable source of electricity to all consumers in their service territories at a reasonable cost. Electric utilities include investor-owned, publicly-owned, cooperatives, and Federal utilities.
The OH Life

Columbus, OH

#77 Dec 6, 2010
Bob wrote:
<quoted text>
Sure anyone who wants to compete is "allowed". Here is the problem with that however. AEP has been the big player for so long that they already have the infrastructure, the grids, the customer base, etc. Anyone wanting to compete against them must overcome this established giant.
Competition is effectively squashed because of AEP's size.
How many people do you know that get electric from another source? One or two at the most???? Why is that?
AEP has an effective monopoly, everyone knows that, even if it isn't "officially" true.
How many people do you know that know how to change their electric provider? Probably the same as the first question. How does someone in Columbus go about changing their provider? It's not like going to the store and picking out an item that's for sure.
Haven't you been reading the newspaper? AEP is purchasing renewable sources from other companies so that its customers have a choice to purchase electricity from those sources, and then the customer gets billed for the rate of producing the energy. This is the same with electricity purchased from another company. AEP isn't the only company to own the power lines. They pay each other to use them. Just because you're a big player in the power industry doesn't mean no one can compete with you. Sharing the power lines actually helps the small guy, they don't need to build the extra lines just for their electricity... now those costs would be outrageous and make it impossible for new players and small players to compete.
Also, a lot of people don't have different electricity providers because AEP is pretty much the lowest. We enjoy some of the lowest electricity costs in the state, let alone in the entire country. Even after the rate hikes, we're still pay among the lowest for power.
AnotherClosetMar xist

Columbus, OH

#78 Dec 6, 2010
Right On Gaia!!!!
The Earth Goddess considers all humans to be parasites!
There are just too many people on this planet.
Human Population causes the pollution!
Human Population control NOW!
Human Population control NOW!
Human Population control NOW!
Human Population control NOW!
Human Population control NOW!
Human Population control NOW!
of course, those who disagree will have to be the first to go.
(or did I misinterpret something?)
rls

Columbus, OH

#79 Dec 6, 2010
Did we forget the 15% increase per year for three years? This is year #1 wait till next year and see how much they make. Thanks alot PUCO..
Sterling Silver

Columbus, OH

#80 Dec 6, 2010
rls wrote:
Did we forget the 15% increase per year for three years? This is year #1 wait till next year and see how much they make. Thanks alot PUCO..
Those rates were what AEP asked for, not what they got, which was about half of that. You need to get ALL the facts, not just the inflammatory ones.
Jakey

Columbus, OH

#81 Dec 7, 2010
Sterling Silver wrote:
<quoted text>
They ARE deregulated in most states, including Ohio. For the umteenth time, other companies looked at AEP's territory, and promptly left, because they could not offer rates anywhere near as low as AEP's. What part of this is so hard to understand?
The other companies could not compete at a retail level because of AEP's non bypassable charges which all customers had to pay. Not exactly an unfettered marketplace. Deregulation has occurred and has been successful at the wholesale levels but AEP's "captive rates" have kept the retail market from truly developing. In AEP's defense, they wanted to put their retail customers into auctions to set prices but Strickland and the PUCO insisted a "stable, regulated" rate would be more beneficial to customers. THey were not very bright because rates are very low and show no signs of going up. Now AEP is quite enamored with their comparatively high rates and want further protections from the open market.

Since: Aug 10

United States

#82 Dec 7, 2010
Jakey wrote:
<quoted text>
The other companies could not compete at a retail level because of AEP's non bypassable charges which all customers had to pay. Not exactly an unfettered marketplace. Deregulation has occurred and has been successful at the wholesale levels but AEP's "captive rates" have kept the retail market from truly developing. In AEP's defense, they wanted to put their retail customers into auctions to set prices but Strickland and the PUCO insisted a "stable, regulated" rate would be more beneficial to customers. THey were not very bright because rates are very low and show no signs of going up. Now AEP is quite enamored with their comparatively high rates and want further protections from the open market.
In hindsight I'm amazed at how dumb some of the actions taken look and how good he does at making himself look victimized. He still has a lot of support yet he screw-ed Ohio badly. It will take many years to unscrew it.

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