FirstEnergy’s customers could be subjected to higher electricity rates than necessary if a new proposed rate plan is approved, the Office of the Ohio Consumers’ Counsel (OCC) said Monday.
In testimony filed with the Public Utilities Commission of Ohio (PUCO), the OCC is advocating on behalf of FirstEnergy’s 1.9 million residential consumers for the rejection of unnecessary charges. Among other things, the utility’s proposal would improperly exclude income that should be counted when testing for significantly excessive profits, and could harm customers by changing the auction process to set generation rates.
Analysis by the OCC shows FirstEnergy is asking for up to $405 million over two years for distribution costs but the plan fails to indicate what system or reliability improvements would be made. When the utility had a full review of its distribution costs in 2009 it could only justify a $137 million increase to existing distribution rates, or 40 percent of its original request. Additionally, FirstEnergy has an obligation to revise its reliability standards by 2014, and should be required to have this review completed before any more charges are collected from customers for its distribution operations, the OCC said.
The OCC also recommended the PUCO follow its precedent and not allow FirstEnergy to reduce its profits by excluding deferred interest income. Approving FirstEnergy’s request would weaken Ohio law which requires money be refunded to customers if a PUCO annual review determines that FirstEnergy profits were significantly excessive. A refund would be more unlikely an outcome if deferred interest income is excluded from profits for purposes of the PUCO annual review.
The major tenet of FirstEnergy’s request also should be rejected, the OCC said. FirstEnergy wants to hold an auction to secure generation rates for three years. But current marketplace uncertainty contributing in part to announced power plant closures could cause bidding companies to drive prices up, costing customers who don’t shop to pay more for their monthly electric bills. To help reduce the risk and the potential for higher prices, an auction setting generation prices for no more than two years should be used, the OCC said.
FirstEnergy filed its plan April 13 as a settlement with a number of organizations. The OCC and others did not sign the settlement. The proposal, if approved, would set FirstEnergy electric rates from June 2014 to May 2016.
Public hearings, where customers can testify about the effect the proposal would have on them, are set for June 4, 7, and 12 in Akron, Toledo and Cleveland, respectively.
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