AEP Shares Fall After Ohio Regulators Reverse Rate Increases

American Electric Power Co. Inc. (AEP) shares fell as much as 5% after Ohio regulators reversed a previous decision that allowed the company's Ohio utility to raise rates.

The Public Utilities Commission of Ohio reversed a December decision that had approved a settlement agreement that AEP Ohio had reached with customer and other groups that approved the utility's plans to raise rates and spin off its Ohio power plants. Instead, the commission ordered the utility to return its rates to December 2011 levels until a new rate plan is approved.

Shares of AEP were recently trading 4.8% lower at $37.92, paring earlier losses.

The commission's reversal was driven by concerns that the rate change has led to huge utility bill increases for small commercial customers and that the power-plant divestitures could "unfairly impact" Ohio customers, said Matt Butler, a spokesman for the commission.

"Our decision effectively hits the reset button on AEP's electric security plan, allows us to start over from the beginning, ensure that we have a complete picture of any proposal, and balance the interests of all customers and the utility," PUCO Chairman Todd Snitchler said in a statement.

AEP has 30 days to modify its rate-increase request before the commission reopens the case and sets a new schedule that would lead to a new decision.

AEP Chief Executive Nick Akins said earlier this month that the company's plans to separate its Ohio power plants from the utility was an important step for the company. AEP filed a request with federal regulators this month for approval of the separation plans.

An AEP Ohio spokesman declined to comment on Thursday's decision.

Telephone calls to AEP's corporate headquarters weren't immediately returned. A telephone call to Ohio's top consumer advocate, Ohio Consumers Counsel, wasn't immediately returned.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; [e-mail]