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AEP Agrees to Reduce Rates Due to Tax Cuts

PUCO adopts agreement to implement reduced AEP Ohio rates as result of TCJA

AEP Ohio reduces rates by $607 million

COLUMBUS, OHIO (Oct. 3, 2018) – The Public Utilities Commission of Ohio (PUCO) today adopted a settlement agreement to reflect the Tax Cuts and Jobs Act (TCJA) of 2017 into AEP Ohio’s rates. With today’s approval, AEP Ohio’s rates will reflect approximately $607 million in rate reductions.

“The Commission is pleased to approve an agreement that credits AEP Ohio’s customers with the utility’s reduced tax obligation,” stated PUCO Asim Z. Haque. “AEP Ohio’s rates now credit customers with hundreds of millions of dollars to accurately reflect the utility’s reduced tax obligation to the federal government.”

Specifically, AEP Ohio will return to customers normalized accumulated deferred income tax (ADIT) balance of approximately $278 million over a federally prescribed time period of approximately 25 years.

AEP Ohio will credit customers non-normalized excess deferred income tax (EDIT), estimated by the utility to be approximately $177.6 million, over approximately a six year period.

Additionally, AEP Ohio will also make annualized credits of $20.4 million until new base distribution rates become effective as a result of the rate case expected to be filed in June 2020.

The Commission has previously approved $66 million in rate reductions of various AEP Ohio riders.

AEP Ohio estimates the average residential customer using 1,000 kWh a month will see a $3.65 reduction in their monthly bill.


On Sept. 26, 2018, AEP Ohio, PUCO staff, and seven other parties filed a settlement agreement outlining how AEP Ohio will reconcile its rates to reflect changes in the federal tax code.

On April 25, 2018, the Commission denied legal arguments jointly filed by Ohio’s electric distribution utilities challenging the PUCO’s January order directing utilities to set aside money in excess of the reduced corporate tax rate during the pendency of the Commission’s investigation.

On Jan. 10, 2018, the Commission ordered an investigation to study the impacts of the TCJA on PUCO-regulated utilities and how best to pass on the benefits to customers, and directed utilities to set aside money in excess of the reduced tax rate to later be returned to customers.

The TCJA was signed into law on Dec. 22, 2017, which among other things, reduced the federal corporate income tax rate from 35 to 21 percent, effective Jan. 1, 2018.

A copies of today’s decision is available on the PUCO website Click on the link to Docketing Information System and enter the case number in the search box.

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