American Electric Power, a Columbus-based parent of electric utilities in 11 states, is once again asking Ohio regulators for a bailout of two unprofitable coal-fired power plants of which it’s a major shareholder.
This time the company is asking the Public Utilities Commission of Ohio to grant an “accounting deferral” that would allow it to collect an additional $35 million from Buckeye State customers.
AEP has repeatedly and successfully asked the commission for permission to shift losses from the Ohio Valley Electric Corp. (OVEC) to the ratepayers since about 2015. But this is the first time the company has done so since lawmakers passed legislation earlier this year prohibiting cost-shifting of “any charge” related to the plant over to electric customers.
The money would reimburse AEP’s losses as the largest owner of the Ohio Valley Electric Corp. – a consortium that runs two Cold War era, coal-fired power plants. The facilities operate in Cheshire, Ohio and Madison, Indiana. They’re listed among the dirtiest coal plants in the nation in terms of carbon dioxide emissions, in a planet that has recently experienced its hottest days, months and years on record.
And Ohioans have paid a staggering $600 million in subsidies through their electric bills since 2017 to prop up the plants, according to an analysis of PUCO data from a consulting firm on behalf of the Ohio Manufacturers’ Association.
Already the staff of the PUCO – whose word isn’t binding but is trusted by the five gubernatorial appointed commissioners – have recommended rejecting AEP. The Ohio Consumers’ Counsel, the Ohio Environmental Council, and the Ohio Manufacturers’ Association have all followed suit.
So far, the only entities that support allowing the $35 million in charges are AEP, which owns 43% of OVEC; Duke Energy, a Cincinnati utility that owns 9% of OVEC; and AES Ohio, a Dayton utility that owns about 5%.
Stakeholders urge PUCO to reject the bailout
Since 2020, utilities in Ohio have charged individual customers up to $1.50 per month on their electric bills and commercial customers up to $1,500 to cover OVEC’s losses. However, the law allowed for an accounting deferral of costs that exceeded those caps after the term of the bailout window in 2030.
Earlier this year, lawmakers rebuffed a heavy lobbying effort from AEP and passed legislation in mid-May ending the bailout when the law takes effect.
Within two weeks of that law taking effect, AEP asked the PUCO to allow it to charge the $35 million. They argued that lawmakers have no legal right to take away revenue that was already promised to the company in prior law.
“Depriving the Company of the under-recovery balance would render HB15 unlawful, as applied, in violation of the Ohio Constitution’s prohibition on retroactive laws,” the company argued.
PUCO staff recommended rejection. State lawmakers were “plain and unambiguous” in wanting the OVEC bailouts to end, and state agencies must follow clear state law, they said. And constitutional claims are for courts, not state agencies, they said.
Spokespersons for the Republican House Speaker and Senate President didn’t respond to inquiries about AEP’s request.
Democrats opposed the measure. Ohio has covered OVEC’s losses long enough, said Sen. Kent Smith, a Euclid Democrat who for years pushed to end the bailout, in an interview. Hopefully the PUCO faithfully carries out the clear will of the general assembly, he said.
Rep. Sean Brennan, a House Democrat from Parma who pushed for the same, made similar comments.
“It’s not surprising,” he said. “I think we all figured they were gonna find some kind of jiu jitsu to stay whole when it comes to the subsidy.”
The Ohio Consumers’ Counsel, a state agency that represents residential customers in PUCO cases, added in legal filings that AEP doesn’t need the money. The parent company recently reported a “record” $1.2 billion in profit for the second quarter of 2025 compared to $340 million in the same quarter last year.
AEP spokesman Scott Blake said the company’s request boils down to timing.
“The effective date of the General Assembly’s adoption of HB15 was August 14, 2025, and AEP Ohio’s request seeks to recover its prudently-incurred OVEC costs through that same date,” he said.
From the Cold War to a 21st century bribery scandal
In the 1950s, about a dozen utilities banded together and built two coal plants that would become OVEC to power the federal government’s enrichment of uranium to build an atomic bomb.
That federal contract ended in 2002. Since then, those companies have been selling the power OVEC generates back to their customers. But in that time frame, a surge in domestic natural gas production, new environmental rules for older and dirtier coal plants, foreign competition, and strategic choices from OVEC have left the plants uneconomic, losing money on the power they sell.
At first, the PUCO allowed AEP, AES Ohio and Duke Energy to charge customers for the companies’ losses on the plants through about 2024.
State legislation passed in 2019 expanded this dramatically. Lawmakers codified the bailout in law, extended it until 2030, and broadened it so all ratepayers statewide pay no matter who their electric provider is.
Both state and federal prosecutors have filed charges in connection with the 2019 legislation, accusing executives of Akron’s FirstEnergy Corp. of bribing both an Ohio House Speaker and a PUCO chairman in two related schemes. The prosecutions focused on a $1.3 billion bailout of a nuclear plant within the legislation, not the OVEC provision.
However, lawmakers and lobbyists have described the OVEC provision as a bargaining chip to gain political support from Ohio utilities on the controversial bill. And AEP, a major political donor, has paid a $19 million penalty to the U.S. Securities and Exchange Commission for misleading investors after the FBI executed its first five arrests in the case.