(Updates with comment from company in sixth paragraph.)
Feb. 23 (Bloomberg) -- The Public Utilities Commission of Ohio rejected an American Electric Power Co. rate settlement agreement after some customers complained bills were increasing by more than 30 percent.
American Electric’s Ohio subsidiary must return rates to December levels until a new plan is adopted, according to a commission statement today. The rate settlement, submitted with 21 other parties and initially approved by the commission in December, is part of a four-year transition to competitive power markets in Ohio.
“The evidence in the record inadvertently failed to present a full and accurate record of the actual bill impacts to be felt by customers,” Todd Snitchler, chairman of the Public Utilities Commission, said in the statement.
The commission said two weeks ago it would address the “significant impacts” rate changes were having on small businesses, school districts and local governments, after receiving complaints about “exorbitant bill increases.”
American Electric, which serves more than five million customers in 11 states, fell 4 percent to $38.24 at 2:28 p.m. in New York, the biggest drop in six months.
“We are concerned by the commission’s reaction to what we believe were solvable issues on rehearing,” Chief Executive Officer Nick Akins said in an e-mailed statement. “We are currently evaluating our options and the potential financial and operational impacts on AEP Ohio.”
Some customers faced rate increases of as much as 30 percent under the settlement, as power prices are transitioned from state regulation to reflect the costs of electricity on wholesale markets, according to testimony to the commission.
“Since we issued the opinion and order, numerous customers have filed, in the case record of this proceeding, actual bills containing total bill rate increases disproportionately higher than the 30 percent predicted by AEP-Ohio,” the commission wrote in an order granting rehearing requests today.
The commission also said there’s “significant uncertainty” about American Electric’s plan to sell power plants from a regulated subsidiary to an affiliate.
Ohio’s move to competitive markets is “one of the fundamental changes that’s occurring for our company,” Akins said in a Feb. 21 interview on Bloomberg Radio. “That’s going to be a radical change for Ohio.”
--With assistance from Jim Polson in New York. Editors: Tina Davis, Jessica Resnick-Ault
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