A new rate plan for American Electric Power could force Ohio University to abandon its current electrical service agreement with First Energy.
Last month, the Public Utilities Commission of Ohio rejected a rate plan proposal from AEP that would have hiked costs for customers. The commission ordered AEP to return its rates to December’s levels and keep them there until a new rate plan is approved, according to a commission news release.
The university bid out its electrical service to First Energy in September, and the new service went into effect in January, said Mike Gebeke, OU’s executive director of Facilities Management, in an email. First Energy generates some of its power through natural gas, whereas AEP relies heavily on coal, which is more expensive.
“Currently, the cost of natural gas is low,” Gebeke said. “The companies that have natural-gas electrical-generation resources … can now make electricity cheaper than traditional generation. AEP is still relying on a large percentage of coal power plants, and that cost to generate is becoming very expensive.”
OU still gets its electricity through AEP power lines, but First Energy generates the power. The university is now waiting for the commission to approve a new AEP rate plan to determine whether the university will be able to continue its contract with First Energy, Gebeke said.
“With the retraction of (AEP’s rate plan) by the Public Utilities Commission of Ohio, (OU) will be able to utilize the competitively bid electrical service from First Energy that will save a significant amount of money each month until the Public Utilities Commission of Ohio rules on a new rate,” Gebeke said.
The contract with First Energy saves OU about $60,000 per month. The university now pays for both the distribution and the generation of its electrical power.
Residential Housing and Culinary Services recommended 3.5 percent and 1.5 percent fee increases for next year, respectively, in part to cover rising utility costs as well as other expenses such as health care, building renovations and labor.
Lower utility rates would likely not affect the departments’ decisions to suggest fee increases for students.
“There are a number of variables that are taken into account when crafting a recommendation for a board rate increase,” said Gwyn Scott, associate vice president for auxiliaries, in a statement. “We have a proactive approach to estimating these expenses to the best of our ability. As such, this circumstance would not affect our recommendation.”
Executive Director of Residential Housing Christine Sheets also said the department would uphold its fee-increase recommendation to OU’s Budget Planning Council.
“(This) would not affect Residential Housing’s recommendation for a room rate increase,” Sheets said in a statement. “We have already taken into account the possibility of rate fluctuations and other factors beyond our control … as a part of our initial expense calculations.”
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