In fact, many customers should be entitled to a rate decrease. The utility needs to be held accountable for service quality problems over the last several years, and should charge fair and reasonable rates to its customers.
(Vocus) January 10, 2008
A proposed distribution rate increase for FirstEnergy’s residential customers is unreasonable, the Office of the Ohio Consumers’ Counsel (OCC) says in extensive testimony to be filed today at the Public Utilities Commission of Ohio (PUCO). According to the OCC’s experts, distribution rates should go down - not up - in two of FirstEnergy’s Ohio operating companies (Cleveland Electric Illuminating and Ohio Edison). The increase in rates should be reduced from those filed by the third company (Toledo Edison). Among other reasons, the OCC cited various costs that customers should not have to pay as well as FirstEnergy’s declining service reliability.
“Consumers in northern Ohio should only pay electric rates that are just and reasonable. Based on the work of accountants, economists and other experts working for the OCC, the rate increases proposed for FirstEnergy should be reduced considerably,” said Janine Migden-Ostrander, Consumers’ Counsel. “In fact, many customers should be entitled to a rate decrease. The utility needs to be held accountable for service quality problems over the last several years, and should charge fair and reasonable rates to its customers.”
FirstEnergy proposed a $340 million annual revenue increase in June 2007, while the PUCO staff recommended an increase of between $162 million and $181 million in December 2007.
The following summarizes the request of FirstEnergy as well as the recommendations of the PUCO staff and the OCC regarding the annual revenue increases or decreases to be paid by customers:
Cleveland Electric Illuminating -
FirstEnergy filing: $109 million increase
PUCO staff report: $54 to $61 million increase
OCC expert testimony: $2.4 million reduction
Ohio Edison -
FirstEnergy filing: $161 million increase
PUCO staff report: $57 to $66 million increase
OCC expert testimony: $2 million reduction
Toledo Edison -
FirstEnergy filing: $71 million increase
PUCO staff report: $51 to 54 million increase
OCC expert testimony: $24 million increase
The pending rate case will establish new distribution rates for 2009. Distribution rates generally recover a utility’s costs for local facilities and equipment such as poles and wires and account for 30 to 40 percent of a typical customer’s monthly electric bill.
The OCC also recommends that FirstEnergy consider new energy efficiency programs. These programs could be targeted to postpone the need to make capital improvements to distribution lines, transformers and substations due to increased customer demand and the resulting line congestion. Energy efficiency technologies could also reduce the stress on distribution equipment during peak periods, avoiding premature equipment failures and extending the useful life of distribution components.
About the Office of the Ohio Consumers’ Counsel
The Office of the Ohio Consumers’ Counsel (OCC), the residential utility consumer advocate, represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. The state agency also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals. To receive utility information, brochures, schedule a presentation or file a utility complaint, residential consumers may call 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC website at http://www.pickocc.org.