What fun it must have been to write those television ads airing lately for fairenergyohio.org, the front operation for American Electric Power.
No need to worry about the truth. Be as creative, or outrageous, as necessary. Just include a handful of key words — scheme, bailout, deals, unfair and, oh, yeah, cost or destroy “thousands of Ohio jobs.”
One of the darkest arts in political campaigns today is seeking to turn an opponent’s strength into a weakness. John Kerry, decorated war veteran? Unleash the Swift Boaters. AEP has something more galling in mind: morph its glaring weakness into an advantage.
Perhaps you have seen one, two or all three of the 30-second spots. The first features a young girl with a lemonade stand. An “infamous middle man” appears, suit, cuff links, expensive shoes, casting a shadow over her business. He grabs the full pitcher and sets up shop across the street.
The second opens with a squad of thugs, too nasty for the New Orleans Saints, entering a gym for a game of dodge ball. One echoes the LeBron James routine, casting talcum powder into the air. They then mow down a group of helpless grade schoolers, bodies scattered on the gym floor.
The third ad goes for a Dickensian mood, a blue-gray hue, the setting like an orphanage. Downtrodden children wait in line, trays in hand, to receive their meal, a scoop of the barely edible, served by chilling women.
Who elicits more sympathy than children? Thus, AEP paints its plight, and that of Ohioans, as the victims of FirstEnergy “and other suppliers.”
All of this stems from a mess AEP concocted. The utility, with the approval of the state Public Utilities Commission and other interested parties, unleashed a new rate plan at the start of the year. Soon, school districts, small businesses, even churches cried foul, their bills revealing increases as high as 40 percent.
The uproar pushed the PUCO to retreat, pulling the plug on the rate plan, AEP ordered to start again. The utility has returned with a new proposal. It spreads more evenly the price increases across its customer base, yet it aims for the same result, a cushion of cash and protection from other utilities moving into its territory as part of a three-year transition to a more fully competitive market.
A reasonable request?
Let’s look more closely at the claims in the television ads.
The third starts: “Stand in line and take what you’ve been served.” The ad turns reality on its head. This is just what AEP wants!
FirstEnergy and other power companies are eager to provide choice and compete — when electricity prices have reached their lowest range in a decade. AEP seeks a big “capacity charge,” the fee paid by a utility to serve customers outside its territory. It would work to block competitors. The charge would exceed the market rate by as much as five times.
Thus, AEP customers would be in line, taking what they’ve been served, unable to access lower prices.
The ads refer to FirstEnergy “pushing a scheme on a government agency” or “making deals with local governments” and receiving “a $7 billion bailout to make it happen.” Actually, AEP appears the schemer.
Follow the law, and the utility would have reverted to its previous rate plan. Yet an accommodating Public Utilities Commission approved a temporary capacity charge that closely resembles the one the utility has proposed.
AEP talks about the need to recover transition costs. The trouble is, the recovery of such costs no longer is permitted. More, in 2000, the utility agreed that it would not apply an exit fee for departing customers.
Now it wants a second bite? In addition to the hefty capacity charge, AEP has proposed a “rate stability rider,” a guaranteed flow of money to bolster its financial position.
That $7 billion bailout? FirstEnergy followed the timetable for covering transition costs, the move more about accounting than ready cash.
The deals with local governments? Communities have seized the opening to band together and use their leverage to gain lower prices.
FirstEnergy isn’t bashful about getting its way at the Statehouse. It has launched tame ads in response. It did take a different path than AEP, embracing deregulation, after the state’s initial foray in 1999 and then the 2008 update. Competitive auctions drive its pricing. Duke Energy has taken the plunge, a bidding process resulting in a 17 percent reduction in its prices.
Now FirstEnergy and others want to pursue more AEP customers. (By the way, AEP is competing in FirstEnergy’s territory, promising savings of 17 percent and 24 percent.) Hard to see how the prospect of lower prices threatens the state economy.
That helps explain another bit of deception. FirstEnergy has allies. The opponents to the AEP plan include an array of customers: residential, commercial, industrial, schools, hospitals and local governments.
And those claims about destroying thousands of Ohio jobs? AEP has warned that if it doesn’t get its way it may move its headquarters out of the state, or reduce its local investment, or shrink its work force.
Is that the truth?
Douglas is the Beacon Journal editorial page editor. He can be reached at 330-996-3514, or emailed at firstname.lastname@example.org.