AEP Rate Plan Hits Small Business

IN THE NEWS: EXCERPTED FROM THE COLUMBUS DISPATCH, DECEMBER 5 2011

PUCO ready to vote on proposal that would hike some rates 30%


From The Columbus Dispatch, December 5 2011— Some small businesses’ electricity rates will rise more than 30 percent in January—without warning—if the Public Utilities Commission of Ohio approves a proposal by American Electric Power.

The plan is the result of private negotiations that included no group that exclusively represents small businesses. Rates were increased for a subset of small businesses at the same time that they were reduced for many large manufacturers, according to records from the case.

Businesses might not see the increase coming, because AEP’s publicity has emphasized that rate increases will be small for central Ohio. The statements are based on the average rate change for households. The shift in business rates can be found only in the fine print of testimony related to the case.

The largest rate increases will be felt by companies that have a low “load factor,” which means that they have high electricity usage for short periods and low usage the rest of the time. This describes hundreds of small manufacturers, retailers and even churches, but is a small share of customers as a whole.

Most of the affected small-business customers are part of the “General Service 2” rate class, which accounts for about 15 percent of AEP’s electricity sales to businesses, in terms of kilowatt-hours.

Business rates are just one part of a larger plan that will give AEP an additional $151 million worth of base-rate income next year, which the utility says it needs to cover rising costs and begin a three-year transition to a deregulated market.

One of central Ohio’s largest churches, Grove City Church of the Nazarene, is looking at a 19 percent increase next year, which is $38,000.

“It’s going to be hard for us,” said Bob Bailey, a retired nuclear engineer who manages energy issues for the church. “Our income is voluntary. People tithe or donate, and all organizations like ours will tell you that giving is down because the economy is tough.”

by Dan Gearino, The ColumbusDispatch

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