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Supplier Supports Utility’s Long Overdue Divesture of AEP’s OVEC Assets While Another Utility Notes New Law Does Not Require Divestiture Of Power Plant While Other Comments Seek $23,916,000 Credit For Advance Debt Reserves Collected By OVEC
As reported previously, on November 6, 2025, AEP Ohio filed an amended application seeking approval of the full legal corporate separation of AEP Ohio of its Ohio Valley Electric Corporation (OVEC) interests to its affiliate, AEP Genco. The utility argues that this complete divestiture would bring the utility into compliance with the recently passed HB 15, which “defines an electric distribution utility as not owning or operating any generating assets.” The new law also repealed the statute that allowed AEP Ohio to recover net costs related to OVEC.
In response to AEP’s request parties filed comments including the following:
IGS Comments – “Now, with the recent passage of House Bill 15 (“HB15”) and the continued underperformance of its OVEC generation assets, it appears that AEP has finally arrived at a similar conclusion regarding the transfer rights authorized under the ICPA—albeit more than ten years too late. Indeed, AEP Ohio now seeks to rely on the authority granted to it pursuant to Section 9.182, and in doing so, proposes a two-step transaction to take advantage of its parent corporation’s investment-grade credit rating to transfer its OVEC entitlements to an affiliate, AEP Genco, without the consent of the other Sponsoring Companies.
“This proposal could have, and should have, been offered by AEP more than a decade ago. Nevertheless, IGS submits these comments to urge the Commission to adopt AEP’s proposal so that the utility may divest its OVEC assets by December 31, 2025, and relieve shopping customers of the non-bypassable burden they’ve shouldered for far too long.”
Joint Comments of OCC & OMAEG – “The Office of the Ohio Consumers’ Counsel (“OCC”), on behalf of AEP Ohio residential utility consumers, and the Ohio Manufacturers’ Association Energy Group (“OMAEG”), on behalf of Ohio manufacturers (collectively, “Consumer Parties”), file these joint comments for consumer protection. While the Consumer Parties ultimately support the utility’s transfer request, they ask that the PUCO carefully consider the application and take the following actions to protect AEP Ohio’s consumers: (1) order AEP Ohio to credit consumers $23,916,000 for AEP Ohio’s share of the $120 million in advance debt reserves collected by OVEC; (2) order AEP Ohio to comply with the PUCO’s prior order requiring AEP to pay a $15 million rate credit; and (3) prohibit AEP Ohio from collecting deferred coal subsidy costs from consumers.”
AES Ohio Comments – “AES Ohio takes no position as to whether the Commission should grant the relief requested by AEP Ohio. However, in deciding whether to grant the Application, the Commission need not decide whether AEP Ohio is legally required to divest its equity interest in OVEC or its contractual rights and obligations under the ICPA. Whether AEP Ohio can enter the proposed transaction is a separate and independent question from whether it must, by law, do so.
“If the Commission reaches that legal issue, however, then it should reject any argument that the state’s electric distribution utilities must transfer their interests, rights and obligations relating to OVEC under HB 15. In support of its Application, AEP Ohio notes (p. 2) that the recently-enacted bill amended R.C. 4928.01(A)(6) to define “electric distribution utility” as “an electric utility that supplies at least retail electric distribution service and does not own or operate an electric generating facility.” (New language in italics.) AEP Ohio states that the proposed transaction seeks to “act consistently with that statutory update” (p. 6), and that without the transaction it “may not be acting consistently with its status as an ‘electric distribution utility’ and be unable to offer a standard service offer at all” (p. 8).
“Despite that motivation, the new “own or operate” language in R.C. 4928.01(A)(6) does not prohibit the state’s electric distribution utilities from maintaining their historically unique interests in OVEC. The purpose of R.C. Chapter 4928 is to establish Ohio’s deregulated framework for competitive retail electric service, including retail electric generation.1 While R.C. 4928.01(A)(6) underscores that framework, the utilities’ involvement in OVEC does not undermine it, particularly given their limited role in providing default generation service through competitively sourced standard service offers under R.C. 4928.141.”
“To be clear, AES Ohio does not raise these arguments out of a desire to maintain its equity interest in OVEC or its contractual rights and obligations under the ICPA. Instead, AES Ohio urges the Commission not to construe R.C. 4928.02(A)(6) to require electric distribution utilities to divest those interests, rights, and obligations, or else risk their status as electric distribution utilities. The Commission has long recognized practical barriers in achieving divestment of OVEC interests,4 and the Commission should not presume that the state’s other electric distribution utilities are similarly situated to AEP Ohio. It should also be mindful of the potential ramifications on utilities and their customers before ordering transactions that may not be reasonably achievable in the short term.”
“For these reasons, AES Ohio urges the Commission – in deciding whether to grant AEP Ohio’s Application – not to hold that the state’s electric distribution utilities are required by HB 15 to divest their equity interests in OVEC or their contractual rights and obligations under the ICPA.”
25-1039-EL-ATR
(Ohio Power Company and American Electric Power Company, Inc.- Application Seeking Approval To transfer its Ohio Valley Electric Corporation (OVEC) Interests To An Affiliate, AEP Genco.)
