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Columbus
Dispatch...
New AEP
rates stun small businesses
01/27/12
The PUCO
has fielded about 25 complaints about rates from small businesses this
week.
Some
small-business owners are furious about a sudden rise in electricity
costs, the
result of a new American Electric Power rate plan that took effect this
month.
With
immediate increases of up to 40 percent, business owners said they are
faced
with cutting workers, reducing investment and making other changes as
they
struggle to deal with an increased expense that many of them did not
see
coming.
“Honestly,
am I going to put my next machine here or in my plant in Tennessee?”
asked
Patrick Castro Jr., vice president of Electro General Plastics in Grove
City,
whose electricity costs have risen 35 percent.
“Tennessee
is looking a little bit more business-friendly.”
AEP says
the new rates reflect the cost to provide service, and that what might
seem
like a big increase is because the previous rates were unusually low
for
certain types of customers.
The
Dispatch reported last month that the AEP plan would lead to large rate
increases for small businesses, much larger than the average rates
disclosed by
the utility. The story cited internal emails from a Public Utilities
Commission
of Ohio staff member who raised concerns that the rates were unfair and
would
be harmful to many businesses.
At Plastic
Packaging Technologies on the Northwest Side, executives are
reconsidering
plans to expand. The company is based in Kansas City, Kan., and could
shift its
resources elsewhere.
“This is
very dangerous and very damaging,” said David Potter, the vice
president and
general manager. “We’re in a very competitive market, and to slap us
with a
$28,000 (annual) increase is just outrageous and could definitely
dampen
expansion plans.”
The PUCO
has fielded about 25 complaints about rates from small businesses this
week,
said commission spokesman Matt Butler.
“We
certainly do understand the impact this has had on certain
small-business
customers,” he said
Jeff
Rennie, an AEP spokesman, said the new rates are the result of a
compromise
between AEP, the PUCO and many other companies and groups. The plan
calls for
AEP to change gradually to prices set by market forces.
“In the
past, those rates might have been subsidized by other rate classes, but
now
those rates will reflect the cost to provide service to that customer,”
he
said.
The PUCO
and several other groups crafted the rates in a way that provides a
discount
for large manufacturers, one that essentially is paid for by rate
increases for
others, including small businesses. Supporters of the plan say it helps
the
economy by reducing costs for the largest employers.
The largest
rate increases are hitting businesses in the “General Service 2” rate
class,
which represents about 15 percent of AEP’s customer base in Ohio.
Within that
rate group, the average increase is less than 10 percent in AEP’s
Columbus
Southern Power service territory and less than 20 percent in AEP’s Ohio
Power
territory, according to the PUCO.
The end
result: Electricity costs are rising for many small businesses but
falling for
many large ones.
Debbie
Taranto, owner of Taranto’s Pizzeria in Lewis Center, said this
approach is
unfair. She said she might have to raise prices or lay off workers.
“While the
small-business owner is struggling to hold their head above the
quicksand of
the national recession that torpedoed us, our fine state has allowed
this
increase, thus showing how ‘ pro-business’ they are and working to help
the middle
class,” she said in an email.
But some
customers are seeing even-larger increases. They are:
• Companies
that buy their electricity-generation service from a company other than
AEP.
The new rate plan increases AEP’s distribution charges, the part of the
electricity bill that everybody pays, and decreases the generation
charge for
small businesses that get this service from AEP. This leads to a
disproportionately large increase for many of the customers that have
chosen an
alternative provider...
Read the rest of this articles,
and others at the Columbus Dispatch
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