Group Demands $54.4 Million AEP-PSO Refund

Oklahoma Industrial Energy Consumers file a motion with the Oklahoma Corporation Commission asking regulators to enforce the requirement that AEP-PSO refund to its Oklahoma customers $54.4 million in connection with the November ruling by the Federal Energy Regulatory Commission that parent company American Electric Power Corp. violated a federal tariff in its method of calculating trading margins between June 2000 and March 2006.
The tariff relates to the allocation of trading margins among AEP’s nine utilities nationwide. The FERC ruling required AEP’s East System, which includes five utilities, to transfer $251 million to be divided among AEP’s West System utilities, including PSO. The money has been transferred and divided among the western utilities, however, PSO has not complied with its tariff and refunded 75 percent of its share to Oklahoma customers.
“AEP has been avoiding its obligation to properly account and remit proceeds to its Oklahoma ratepayers for over five years despite the repeated efforts of OIEC and others, including the Oklahoma Attorney General’s office, to require compliance. The time has finally come for AEP and its affiliate companies, such as PSO, to act responsibly and refund what is properly owed to its Oklahoma customers, including those businesses belonging to OIEC,” said Tom Schroedter,executive director of OIEC, an association of companies with facilities in Oklahoma that advocates for fair energy prices.
On Nov. 26, FERC issued its order finding that AEP violated the System Integration Agreement in its method of calculating trading margins. The FERC directed AEP to recalculate and reallocate the trading margins in compliance with AEP’s System Integration Agreement and to issue appropriate refunds within 30 days of the date of issuance of this order. AEP filed a motion to reconsider the order, which is pending, but that filing does not affect implementation of the order.

The FERC ruling determined that AEP violated its FERC approved tariff relating to the allocation of trading margins to its East System, thereby shortchanging PSO and other utilities operating in AEP’s West System. As a result, FERC ordered AEP to issue refunds, with interest, to PSO and other utilities in its West System. Although AEP has made a $72.5 million refund to PSO, the state utility has failed to credit its Oklahoma customers with 75 percent of the refund amount (about $54.4 million) as required by PSO’s fuel adjustment clause tariff.



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