OPC's credit profile is supported by cash flow from solid electric operations, lower forecasted capital expenditures, and a relatively balanced regulatory environment. As a wholly owned subsidiary of American Electric Power Co. (AEP; Fitch Issuer Default Rating of 'BBB' with a Stable Outlook), OPC benefits from the participation in the AEP power pool and money pool. In April 2009, AEP issued $1.69 billion of common equity and used $1.44 billion to repay outstanding balances on its credit facilities, the remainder is expected to be used to pre-fund debt maturities. With the pay down of the credit facilities, OPC has significant borrowing capacity under the AEP money pool, with $292 million outstanding as of Sep. 15, 2009. Additionally, AEP has reduced its capital spending program for 2009 and 2010, with decreases of $700 million and $1.6 billion, respectively. The reductions in capital expenditures are spread across AEP's utility operating companies in generation, transmission and distribution.

Rating concerns facing OPC include exposure to carbon legislation and environmental compliance costs, as well as a sluggish economy in Ohio, which has experienced unemployment rates above the national average. Fitch notes that due to AEP's highly centralized electric and treasury operations, any deterioration in the credit quality of the parent could negatively impact the ratings of OPC.

Earlier this year, the Public Utility Commission of Ohio (PUCO) issued an order that modified and approved OPC's electric security plan (ESP), which will be in effect until 2011. The order authorized increases to revenues during the ESP period and capped the overall revenue increases through a phase-in of the fuel adjustment clause (FAC). The capped increases are 8% in 2009, 7% in 2010 and 8% in 2011. OPC implemented rates for the April 2009 billing cycle. In July 2009, the PUCO reviewed the work papers filed with the utility's tariffs and found that the rate caps were exceeded for commercial and industrial customers. The PUCO required OPC to reduce rates implemented in April by $27 million.

OPC, a wholly owned subsidiary of AEP, is a vertically integrated electric utility that is engaged in the generation, purchase, sale, transmission and distribution of electric power to approximately 742,000 retail customers in various regions in Ohio.

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