Group Urges Rejection Of FirstEnergy Rate Plan

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 Consumers’ Counsel (OCC) said in testimony filed last week.

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.