OCC: FirstEnergy Agreement Should be Rejected by PUCO

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FirstEnergy’s proposed electric security plan and the rate increases that are a part of it, would result in customers seeing monthly bills that would be higher than they otherwise would have seen under a market rate offer.

Columbus, Ohio (Vocus) April 17, 2010

The Public Utilities Commission of Ohio (PUCO) should reject an agreement among FirstEnergy, the PUCO staff and others to establish an electric security plan from June 2011-May 2014. The PUCO should instead issue a decision on the utility’s pending market rate offer case, the Office of the Ohio Consumers’ Counsel (OCC) said in testimony filed yesterday.

The OCC has concerns about many issues proposed under FirstEnergy’s electric security plan agreement. They include:

•     Replacement of the current delivery system improvement charge with a new delivery capital recovery charge. The current charge is set to expire in December 2011. The new proposal would allow FirstEnergy to collect up to $390 million through quarterly increases over approximately two-and-a-half years without any provision to audit the reasonableness or prudence of the expenses;
•     FirstEnergy incorrectly claiming a benefit of the utilities’ agreement not to charge customers for certain future transmission-related costs. The OCC’s testimony demonstrates that the alleged savings may be overstated. These costs are a result of FirstEnergy’s business decision to switch from one regional transmission organization to another. Customers should not be responsible for any of these costs; and
•     Economic development arrangements that would cost customers millions of dollars in additional charges. These deals should be reviewed in separate proceedings that allow for full disclosure of information and complete PUCO review, including provisions guaranteeing accountability for jobs creation.

In addition to its opposition to specific portions of the FirstEnergy agreement, the OCC is concerned about the shortened and exclusive process that led to the agreement filed March 23. FirstEnergy requested a PUCO decision by May 5.

Under either an electric security plan or a market rate offer, FirstEnergy’s generation rates would be determined through a wholesale competitive bidding process. However, approval of the electric security plan agreement would affect many other FirstEnergy rates, riders and tariffs, and settle numerous other issues including some that are pending in other cases before the PUCO.

The OCC believes determining generation rates through the market rate offer will be the overall lowest-cost option for residential consumers. “FirstEnergy’s proposed electric security plan and the rate increases that are a part of it, would result in customers seeing monthly bills that would be higher than they otherwise would have seen under a market rate offer,” Consumers’ Counsel Janine Migden-Ostrander said.

If the FirstEnergy agreement is rejected and a market rate used, customers on standard rates would see changes in their bills as indicated below. The chart is based on FirstEnergy’s application and uses an average of 750 kilowatt-hours (kWh) per month. These bill estimates assume no change in generation rates and do not reflect any change that could occur as a result of a future generation auction.

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 Web site at http://www.pickocc.org.

Contact:
Anthony Rodriguez
(614) 466-9547

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