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CAC frustrated in stranded cost, AEP-CSW merger cases The last issue of Citizens Power included legal briefs on challenges organized by CAC to the stranded cost provisions included in FERC Order 888 and to the proposed merger of American Electric Power (AEP) and Central South West Corporation (CSW). CAC, in cooperation with a broad coalition of Indiana and national groups, had argued that the Federal Energy Regulatory Commission (FERC) lacked statutory authority to order either wholesale or retail stranded cost recovery for electric power generation (primarily nuclear) rendered uneconomic by FERC’s open access transmission policy. But, on June 30, the U.S. Court of Appeals in Washington, D.C. ruled in favor of FERC and its expansive view of its own authority to order recovery of both wholesale and retail generation costs through surcharges on interstate transmission tariffs. CAC, in consultation with its allies, is considering the possibility of seeking review of the lower court decision by the U. S. Supreme Court. CAC, as part of a regional coalition of consumer and environmental groups, also had challenged the AEP-CSW merger (which creates the largest public utility holding company in the world) on the grounds that it would result in the merger company having unlawful market power, a condition that would be exacerbated by AEP’s ability to use its large amount of coal capacity grandfathered under the Clean Air Act to undercut prospective competitors with newer, cleaner plants. However, on March 15, the FERC conditionally approved the merger and the anti-competitive consolidation was closed on June 15. However, CAC continues to contest in the Indiana Court of Appeals the highly favorable ratemaking treatment which the IURC afforded AEP for claimed merger savings in advance of the merger closing. -M.Mullett
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