The Public Utilities Commission of Ohio (PUCO) approved an electric security plan (ESP) for AEP Ohio—a unit of American Electric Power—on Feb. 25, but declined to adopt the company’s proposed power purchase agreement (PPA) as it relates to the Ohio Valley Electric Corp. (OVEC).

The PPA rider was a point of contention with several groups and many individuals. As proposed, AEP Ohio’s OVEC contractual entitlement—including energy, capacity, and ancillaries from the Kyger Creek and Clifty Creek generating stations—would have been sold into the PJM Interconnection market. After deducting all associated costs from the revenues, the proceeds, whether a credit or a debit, would have accrued to Ohio ratepayers.

The PUCO held five local public hearings, allowing customers to express their opinions and said it received numerous letters from customers, most of which conveyed opposition to the proposed PPA rider. Although the PUCO found the proposal to be permitted under Ohio law, after weighing the evidence, the commission decided that the proposal would not benefit ratepayers.

“Today’s decision adopts a comprehensive plan that will promote a competitive environment for AEP Ohio’s customers and support future electric reliability in Ohio,” stated PUCO Chairman Thomas W. Johnson in a press release.

During the term of the ESP, AEP Ohio will conduct six auctions to provide 100% of its standard service offer. The process will ultimately determine rates for customers from June 1, 2015, through May 31, 2018.

The decision was being watched closely by at least a few other utilities. FirstEnergy Corp. and Duke Energy Ohio both have ESPs before the PUCO with similar proposals in them. However, Duke Energy is in the process of trying to exit the merchant generation business. The company announced last August that it would sell its non-regulated Midwest Commercial Generation Business and Duke Energy Retail Sales—the company’s competitive retail business in Ohio—to Dynegy Inc. In fact, AEP is even exploring options to unload its merchant generation fleet.

“We are disappointed that the Commission delayed any decision to include AEP Ohio’s ownership of the OVEC power plant. We will work with the PUCO to address their outstanding issues with our proposal,” Pablo Vegas, AEP Ohio president and chief operating officer, said in a press release.

Environmental groups applauded the PUCO decision. John Finnigan, lead attorney with the Environmental Defense Fund, said the decision assures that the market will remain competitive.

“These old coal plants cost more to operate than the value of power they generate,” Finnigan said.

Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)