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<title>October 2000: Public Utilities Commission of Ohio Approves Transition Plans Filed by Major Utilities</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<td width="67%" valign="top"><img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" WIDTH="375" HEIGHT="75"><p><b><u><br>
October 2000</u><br>
<font face="Arial" size="5" color="#000000">Public
Utilities Commission of Ohio Approves Transition Plans Filed by Major
Utilities<br>
</font>
</b><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
2000/</em>11)</font></p><center>
<p ALIGN="JUSTIFY"><font face="Arial" size="3">On September 28, 2000, the Public
Utilities Commission of Ohio approved a transition plan filed by American
Electric Power ("AEP"). The PUC’s approval is the latest of several
transition plan approvals, including those for Cincinnati Gas & Electric
("CG&E"), FirstEnergy and Daytona Power & Light Company
("DP&L"). These transition plans arise out of Ohio’s
deregulation process. Ohio’s deregulation legislation was signed into law July
6, 1999, with most provisions becoming effective on October 5, 1999. The
legislation requires each electric utility to file a transition plan with the
PUC. The transition plan details the utility’s provision for competitive
retail electric service in Ohio. Competition is scheduled to begin January 1,
2001.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial" size="3">AEP’s transition plan includes
a settlement among its Ohio companies, Ohio Power and Columbus Southern Power,
and the PUC and the Ohio Consumers’ Counsel. Multiple parties, including Enron
Energy Services, Ohio Rural Electric Cooperatives, Inc., American Municipal
Power-Ohio, Exelon Energy and National Energy Marketers Assn., participated as
intervenors. According to a PUC news release, Alan Schriber, PUC Chairman
commented that very complex issues were inherent in AEP’s transition plan and
the settlement agreement presented to the PUC was overwhelmingly supported by
the intervenors in the case.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial" size="3">Under the stipulation, AEP agreed
to freeze rates until the end of the market development period, or 2005, which
ever comes first, and to provide a 5% rate reduction off the full generation
component of Ohio Power’s and Columbus Southern Power’s unbundled rates
available to residential customers who do not choose a new supplier for electric
generation services. AEP also agreed to freeze distribution rates through
December 31, 2007 for Ohio Power Company and December 31, 2008 for Columbus
Southern Power.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial" size="3">The settlement agreement with AEP
also reduces the amount of transmission costs which were requested by its
companies, as well as the time in which those costs can be recovered. The
transmission costs will be reduced from the $947 million requested by AEP, to
$616 million. The companies had proposed that the costs would be recovered
through 2010. Under the settlement, transmission costs will be recovered only
through 2007 for Ohio Power, and 2008 for Columbus Southern Power. Additionally,
the first 20% of Ohio Power’s customers who switch after 2005 will not be
required to pay transition costs.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial" size="3">The AEP transition plan created
"shopping credits" to facilitate the development of the retail
marketplace and, therefore, competition. As an example of a "shopping
credit," under the agreement the first 25% of Columbus Southern Power’s
residential retail customers who choose a new generation supplier before
December 31, 2005 will not have to pay the generation component of current
rates, and will receive 0.25 cents per kilowatt-hour. Any unused portion of the
"shopping credit" will be used by AEP to reduce transition charges.
The "shopping credits" for customers of Ohio Power will not be
available until 2006 and 2007. AEP also agreed to absorb $40 million in consumer
education, customer choice implementation and transition plan filing costs.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial" size="3">There was some disagreement
between the parties as to the certification and registration requirements for
suppliers which focused on whether AEP’s proposed process created additional
certification requirements. The PUC directed investor owned electric utilities
to participate in a task force for the development of uniform business practices
and electronic data interchange ("EDI"), standards. The disagreement
was resolved by a task force resolution adopting the following requirements:
successful completion of supplier credit requirements to provide sufficient
financial coverage in case of default, an executed Trading Partner Agreement and
Certified Supplier Service Agreement, payment of registration fees and a showing
that the supplier is capable of providing service within EDI standards.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial" size="3">According to a corporate news
release issued by AEP on September 28, 2000, AEP Ohio president Floyd Nickerson
commented that the company disagrees with the PUC’s treatment of gross tax
receipts and will be asking for a rehearing on that issue.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial" size="3">The stipulation approved by the
PUC involving CG&E and multiple intervenors on August 31, 2000, is similar
to the AEP settlement. CG&E’s plan also requires that it extend the market
development period (the time period in which adjustments for full competition
become final), until December 31, 2005. During that period CG&E must waive
the supplier switching fee for the first 20% of customers who switch electric
suppliers. Also during that period, all customers who select an alternate
electric supplier will receive a "shopping credit" of 5 cents per
kilowatt-hour. CG&E’s customers will not be subject to any requirement to
remain with a particular retailer for the first year of the market development
period. CG&E retail customers will receive distribution service under the
same terms and conditions regardless of the electric supplier. Significantly,
CG&E’s residential customers who do not choose an alternative supplier
will receive a 5% reduction in the generation portion of their bill.</font></p>
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<blockquote>
<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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