An evidentiary hearing is scheduled for later this month to consider testimony in a case centering on rates for FirstEnergy’s all-electric customers.
The Public Utilities Commission of Ohio said it set the hearing for Jan. 27 in Columbus to allow parties more time to prepare testimony.
After holding six public meetings to accept comment on all-electric rates, including one in October in Maumee, the PUCO is entering the final phase of a process that will decide the fate of a discount for those consumers. Currently, the discount is scheduled to remain in effect through May 31 of this year.
FirstEnergy implemented discounted rates in the 1970s for consumers in all-electric homes.
In 2006, the PUCO approved an agreement between the company and cities of Akron, Toledo, and Cleveland to establish electric generation rates through 2008 to shield consumers from potential “rate shock.” The so-called rate certainty plan was considered necessary because a competitive market in electricity generation hadn’t developed after the state adopted a format for de-regulating the industry.
According to the PUCO, FirstEnergy’s rate certainty plan eliminated the all-electric generation rates for new customers at the beginning of 2007. Customers who’d been receiving service under the discounted rates were “grandfathered” and kept the rates as long as they remained at the same residence. In 2009, the PUCO approved a distribution rate increase sought by FirstEnergy, resulting in customers who’d been receiving grandfathered rates being charged at the standard residential distribution rate but still receiving a discount of about 1.7 cents per kilowatt hour.
Later that year, as part of another FirstEnergy rate case, the grandfathered all-electric customers were moved to the standard residential generation rate but still received a 1.9-cent kilowatt hour generation discount.
In other words, the PUCO says, while there has been an effort to align all-electric rates with those paid by other customers, the all-electric discounts for the generation and distribution components of an electric bill were never completely removed.
The company has argued that the discounted rates result in customers paying less than the actual cost it pays for purchasing electricity for customers. Consequently, the difference is recovered from other FirstEnergy customers not receiving the discounts.
The PUCO contends the “artificially” low electric rates can work against the state’s efforts to promote energy conservation and a reduction in the discounts reflects Ohio’s move toward a more competitive generation environment.
After the 2009-10 winter billing cycle when consumers saw their bills rise steeply, the PUCO directed FirstEnergy to return rates for all-electric homes to those in effect on Dec. 31, 2008. The temporary discount applies to homeowners who previously received the rates as well as customers who moved into homes serviced at all-electric rates under previous owners.