The changes are part of a revision to a 2007 settlement between AEP, the U.S. Environmental Protection Agency and several environmental groups.

It was the largest settlement of its kind in U.S. history, and the EPA said the new regulations would save the nation $32 billion in health care costs. AEP petitioned to have the settlement reopened to so it could make less-expensive pollution controls to an Indiana plant.

In exchange, AEP will stop burning coal at a plant in southeast Ohio along the Muskingum River, and two plants in Kentucky and Indiana.

AEP also agreed to produce at least 200 megawatts of power using wind or solar technology by 2015.

An official from the Columbus-based utility says they’re disappointed in Wednesday’s ruling by the Public Utilities Commission of Ohio. Regulators said the utility hadn’t demonstrated how the Turning Point project benefited ratepayers or why it was necessary to meet its renewable energy requirements.

The solar farm planned near the wildlife conservancy called The Wilds was expected to create hundreds of jobs and produce enough electricity to power 25,000 homes.

It was unclear if AEP would request another hearing before state utility regulators.

The state’s high court on Thursday rejected an argument by Columbus-based American Electric Power that the utility should not have been assessed a penalty for taking excessive profits in 2009.

The court, in a 6-1 decision, rejected AEP’s argument that the penalty was based on a law too vague to be enforceable. The court also disagreed with business groups and consumer advocates who argued that the utility should have faced a larger penalty than the $42 million it paid.

The 2008 law gave utilities wide latitude to raise rates but also gave the Public Utilities Commission of Ohio the discretion to decide what constitutes excessive profit.

“I anticipate we’re going to see things like the phone companies did when they de-regulated.So your cellphone gave you free minutes at night or free week-ends, those kinds of things. Says Snitchler

Public Utilities Commission of Ohio, Chair, Todd Snitchler, is on the front lines of change in Ohio’s move toward competitive electricity markets. As more companies decide they can buy energy wholesale and sell it profitably to retail customers, the public utilities commission decides who can compete.

“We have to certify and approve those competitive suppliers and then we’re also charged with monitoring their market conduct. So if a competitive supplier is not following the rules, is treating customers unfairly, it’s our obligation to, in effect, discipline the market.” Says Snitchler.

But, discipline is different than regulation. In the past, under PUCO regulations and rules, a utility such as American Electric Power, produced and distributed electricity from its power plants in the region to its 1-point-5 million customers. Now, the Public Utilities Commission auctions electric generation from AEP and other suppliers to retail energy companies. Those companies then can sell the electric at prices consumers will pay. So far, ten companies have persuaded about 18 percent of AEP’s customers to switch suppliers.

Direct Energy is a 26 year old international company considering entry into the AEP service region. Executive Cory Byzewski predicts the list of electric suppliers available to consumers will keep growing.

“Between now and 2014 you’re probably not going to see 40 or 50 but I would be surprised if you don’t see at least 20 as many people will be taking bets.”

Byzewski says by 2014 he expects changes that will boost competition among retail energy companies. More households and small businesses will have so-called smart meters that constantly monitor electric use and then transmit that information back to the utility.

“As more information starts to come out of households in terms of how they use energy the more we’ll be able to tailor offers to each and every consumer out there.” Byzewski says

In other states, Direct Energy already has a plan that gives some consumers free electric for a designated day each week. But such offers often include a higher price for electric at other times. The consumer will have to shop for the best offer.

Public Citizen is a consumer advocacy group that lobbies congress. Researcher Tyson Slocum has looked at electric deregulation in about two dozen states. He says deregulation is no boon to consumers.

“The bottom line is the experience of consumers in a deregulated market is one of price volatility, of higher prices, and poorer service and reliability.” Says Slocum.

American Electric Power says 18 percent of its customers have switched suppliers since deregulation began in its service region. And, PUCO chair Snitchler anticipates more competitors in coming months. He says consumers can stay informed and keep track of current electric offers on the PUCO website.

“We want to take away that uncertainty and provide folks with information and education and let folks make the choice that is best for them.” Says Snitchler.

There’s going to be a rate cap on customers’ bills such that no customer should experience more than a 12 percent increase due to today’s ruling.

PUCO Chairman Todd Snitchler says the order “…more evenly distributes the rate impacts among customers.”

At dollar stores and bus stops, it’s easy to start a conversation about electric rates. Carl King lives in the Northland area. He carries his latest electric bill statement in his wallet.

“Look what I’m paying for a studio. I’ve got a studio apartment; I got a refrigerator, a television” Says King.

King’s May bill shows a charge of $67.  He says that’s too high and now he worries his bill will go up after seeing competing TV ads about electric service.

The appearance of the ads shows Central Ohio is changing from a heavily regulated electricity market to a more competitive one. PUCO spokesman Matt Butler says it’s all because of a state law passed more than a decade ago.

“The PUCO is working to set the state up for competition in each of the electric service territories as was envisioned by the state legislature beginning back in 1999.”   Butler says.

Up until now, American Electric Power was the dominant private company providing electricity in Central Ohio.  AEP produces electricity and transmits it through the power grid and then sells it to businesses and homes. But because  AEP has not faced competition, it has been heavily regulated, its rates set by the Public Utilities Commission of Ohio.

Now, thanks to the new law, AEP must sell some of its electricity to other power companies – retail electric companies like First Energy, IGS, and Duke. AEP is also setting up its own retail company.  AEP must sell its electricity to these firms through a yearly wholesale auction.

The retail companies would buy electricity from AEP.. and then sell it to you..
Nothing in your house would change,  no new wires, no new meter. The only thing that would change is the bill, and perhaps, the rate.

The PUCO’s Matt Butler says Northern Ohio has gone to competitive pricing and seen rate reductions.

“Now, there’s no guarantee going forward that prices will always always decrease with the auction and certainly we’ll see fluctuations. But we do believe, the commission believes that the long term benefits and efficiencies gained through competition will lead to lower prices. “ Matt Butler, PUCO

But, this change to a competitive market is not happening overnight..

During a transition period, retail electric companies moving into Central Ohio will have to buy energy from AEP generating plants.  AEP has asked the PUCO to increase the rate it charges retail electric companies.  AEP-Ohio president Pablo Vegas  maintains the higher rate guarantees the power will stay on even during  periods of peak demand.

“That capacity, we call that capacity and capacity is having that generating plant available for the customer. They’re going to have to buy that capacity from AEP for the next three years.”  Vegas says.

First Energy argues that capacity rate request is too high  -  more than ten times the competitive rates – and will hurt its effort to lower electric rates.

The PUCO Hearings are scheduled to wrap up on June 8th and a decision is expected in July.

The Public Utilities Commission of Ohio on Thursday rejected a rate structuring formula instituted this year by Columbus-based American Electric Power. The PUCO ordered AEP to return its rates to levels similar to those in place in December.

These rates will remain in place until a new rate plan is adopted.

The PUCO chairman says the decision allows regulators to start over and ensure they have a complete picture of any rate proposal to balance the interests of customers and the utility.

The Public Utilities Commission has done what Governor Ted Strickland asked it to do- restore a special electricity price discount for those customers of FirstEnergy.

Statehouse correspondent Bill Cohen reports that while the PUCO ruling answers one question, it raises another.

But now, the special panel that nominates candidates for the PUCO has taken action that paves the way for the governor to re-appoint those same 4 people as utility regulators. Statehouse correspondent Bill Cohen reports.