Three days after the Public Utilities Commission of Ohio modified a rate plan filed by utility companies of FirstEnergy Corp., the companies announced they are withdrawing their application for the plan.
The Electric Security Plan (ESP), filed by Toledo Edison, Ohio Edison, and the Cleveland Electric Illuminating Co., was approved and modified by the PUCO Dec. 19.
Under the plan, total customer rates – covering generation, transmission, and distribution charges – would have increased by an average of 5.3 percent this year, 4 percent in 2010, and 6 percent in 2011, according to FirstEnergy.
Of the 2009 increase, about 3.2 percent pertains to the companies’ pending distribution rate case.
FirstEnergy had estimated the impact on a typical residential monthly bill in the Toledo Edison service area – based on 750 kilowatt-hours of usage - would have been a decrease of 16 cents this year followed by increases of $3.06 and $3.30 in 2010 and 2011 respectively.
After reviewing modifications made to the plan by the PUCO, FirstEnergy announced it “… no longer maintains a reasonable balance between providing customers with continued rate stability and a fair return on the companies’ investments to serve customers.”
The PUCO reduced the base generation rates in the FirstEnergy proposal and said it determined that market rates have declined significantly since FirstEnergy filed its ESP application.
Under state law, utilities are required to provide consumers with a standard service offer, consisting of either a Market Rate Offer (MRO) or electric security plan. In November, the PUCO rejected FirstEnergy’s MRO application, which would have based consumers’ bills on bids by potential suppliers.
Alan Schriber, chairman of the PUCO, said the FirstEnergy MRO proposal “didn’t demonstrate that its competitive selection process would result in an open, fair, and transparent process.”
When it announced it was withdrawing its ESP, FirstEnergy said it would implement a competitive bidding process for procuring electric generation for delivery from Jan. 5 through March 31, 2009. The process would be for customers who choose not to selective an alternative supplier.
Bids were due Dec. 31, 2008 and another bidding process will be conducted later to meet supply needs beyond March 31.
“The Request for Proposal is being conducted to ensure that customers have a reliable supply of electricity following the Public Utilities Commission of Ohio’s actions to deny the companies’ Market Rate Offer filing and significantly alter their Electric Security Plan…” the company said.
Combined, Toledo Edison, Ohio Edison, and Cleveland Electric Illuminating service about 2.1 million companies in Ohio.
Rate reduction requested
The Ohio Consumers’ Counsel asked the PUCO in a Dec. 23 filing to reduce electric rates for Ohio Edison and Toledo Edison customers beginning in 2009.
The filing was in response to FirstEnergy’s request to maintain current rates after its existing rate plan expired on Dec. 31.
The OCC and other consumer groups claim that under state law, the current regulatory transition charges must be removed from customers’ monthly bills once FirstEnergy has been paid in full.
According to the OCC, those charges for Toledo Edison and Ohio Edison expired at the end of 2008, while the charges for Cleveland Electric Illuminating expire at later date.
The transition charges cost the average Toledo Edison residential customer more than $75 over three months based on usage of 750 kilowatt-hours a month, the OCC estimates.
The charges were implemented to allow utilities to recover expenditures that hadn’t been recouped as Ohio attempted to move from a fully regulated to a competitive generation market. Under state law, the charges must expire once a utility has fully recovered the cost.