Consumer Groups – PUCO Approval Will Mean Higher FirstEnergy Bills

A number of leading advocacy groups for utility consumers, including the Office of the Ohio Consumers’ Counsel (OCC), the Northwest Ohio Aggregation Coalition and the Northeast Ohio Public Energy Council, expressed concerns about a settlement approved yesterday by the Public Utilities Commission of Ohio (PUCO).

The settlement was filed April 13 by FirstEnergy and other parties. The agreement affects electric rates for FirstEnergy’s customers beginning June 1, 2014 through May 31, 2016.

As a result of the agreement, among other issues, FirstEnergy will:

• Establish generation rates for non-shopping customers through a series of three-year auctions (June 1, 2013 through May 31, 2016);
• Receive up to $405 million from customers as part of a distribution rider;
• Be allowed to collect lost distribution revenues from customers as a result of its energy efficiency programs; and
• Exclude deferred interest income from its earnings calculation that is part of the test under Ohio law to determine whether a utility’s annual earnings are significantly excessive.

“It is disappointing that so many of the proposals to protect consumers’ rates were rejected in the PUCO’s 4-1 decision,” Consumers’ Counsel Bruce J. Weston said. “Commissioner Roberto’s dissent from the majority decision showed some of the ways that customers could have had lower bills.”

Concerned that consumers would be subjected to higher rates due to market uncertainty caused by issues such as plant retirements, the OCC and other groups recommended that auction rates be determined for no more than a two-year period.  The groups also said that FirstEnergy’s request for increased distribution revenues was unfair because specific system or reliability improvements were not addressed and there was no assurance that customers would actually benefit.

The OCC also opposed the inclusion of lost distribution revenues from energy efficiency projects, saying that the agreement called for an open-ended collection period and did not limit the amount of money customers would be required to pay. Finally, the group argued against the exclusion of deferred interest income from FirstEnergy’s profit statement, saying that it weakens the statute providing refunds to customers when a utility’s earnings are considered significantly excessive.