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Utilities warn SB2's repeal of ESPs and retroactive refund authority could chill investment
Summary
AEP Ohio, AES Ohio and Duke Energy told the Senate Energy Committee that eliminating electric security plans and allowing retroactive refunds would create legal and financial uncertainty and could reduce utilities' ability to invest in reliability.
Multiple large utilities testified in opposition to provisions in Substitute Senate Bill 2 that would eliminate electric security plans (ESPs) and allow retroactive refunds of approved charges. Witnesses described ESP riders as a routine, auditable mechanism that funds timely grid investments between base rate cases.
Mark Ryder, president and COO of AEP Ohio, told the committee that riders "require the utility to justify every dollar of our investment plan" and argued that removing ESP tools without an adequate replacement "would place significant limitations on the ability of utilities to adequately invest in the grid to improve system reliability." He also highlighted the company's plan to invest roughly $5 billion over five years contingent on stable regulatory mechanisms.
Sharon Schroeder of AES Ohio and Amy Spiller of Duke Energy Ohio said the retroactive-refund provisions in the bill would undermine nearly a century of precedent and introduce uncertainty that could lead to higher borrowing costs and increased customer rates. Schroeder urged clarifying language to ensure PUCO orders still must set "just and reasonable rates," and Spiller recommended a modernized multi-year rate-plan option with annual true-ups as an alternative, saying such plans have worked in other states.
Committee members pressed witnesses on details: whether riders are audited, how frequently base rate cases are filed, and what the difference is in practice between annual true-ups and full rate cases. Utilities said riders and ESP filings undergo regular audits by PUCO staff and that regulatory lag is a real financial consideration when investments are not timely recovered.
No formal action was taken on amendments at the hearing; the committee adopted the substitute as the working document and left open the option to refine language based on stakeholder feedback.
