A freeze on rates for FirstEnergy all-electric customers has been extended to March 31, 2013, the Public Utilities Commission of Ohio has announced.
After the two-year freeze, the utility will reduce a portion of the discounted rates annually through 2018.
The PUCO last week said its action gives FirstEnergy electric heating customers time to prepare for increased rates.
Between Oct. 31, 2011 and March 31, 2013, FirstEngery will adjust what is called the residential generation credit to maintain existing discount levels. During that time, electric customers using 3,500 kilowatt hours of power per month will owe a monthly bill of about $191 for Cleveland Electric Illuminating, $229 for Ohio Edison, and $275 for Toledo Edison.
The RGC discount is limited to residential electric heating customers and will be applied only during the winter heating season from Oct. 31 to March 31.
The PUCO held six public meetings to accept comment on all-electric rates and the discount, which had been scheduled to remain in effect through May 31, 2011.
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 grandfather 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. The PUCO claimed that 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 a bill were never completely removed.
The commission last week further determined that customers who testified at the hearings didn’t provide sufficient evidence of misleading marketing practices by FirstEnergy or that contracts between the utility and all-electric customers promised permanent discounts.