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Published: Friday, 4/9/2004

Will consumers pay higher electric bills?

A coalition that included the new Ohio Consumers' Counsel gathered in Toledo yesterday to blast a FirstEnergy Corp. proposal that would freeze electric rates for three years after the current rate plan expires at the end of next year.

The pending plan would hurt homeowners and renters by maintaining unnecessary charges and killing competition, said Janine Migden-Ostrander, who this week took office as the consumers' counsel. The coalition also contended the plan could allow the utility to increase rates.

FirstEnergy spokesman Ralph DiNicola said the plan would keep rates from spiking and meets the conditions requested by the Public Utilities Commission of Ohio. The commission staff has endorsed the plan.

The PUCO may act as early as next week and likely will rule on the proposal no later than April 30. Ms. Migden said she may file a lawsuit if the plan is approved.

The plan, which would set rates from Jan. 1, 2006 through Dec. 31, 2008, unchanged from the current level, the company said. But it also would continue to allow the utility to charge a fee similar to one now that helps pay off the firm's debts. It is charged to all customers in the FirstEnergy territory, even if they have selected an alternate power supplier.

FirstEnergy has been allowed to collect $8.6 billion in such fees during the current period, a transition from when all electric rates were regulated. Under the plan, it would be able to collect more than $2 billion in such fees.

The coalition opposed to the plan was especially critical of the debt fee, to be called a "rate stabilization charge." The fee would make it unlikely other power suppliers would try to compete locally, because their potential margin of profit would be so slim, Ms. Migden said.

That means the money northwest Ohioans save now through the two bulk-buying groups likely would disappear, she said. The groups, known as aggregation groups, buy elec

tricity for residents who sign up throughout metro Toledo, saving $20 to 30 a year.

"It will destroy competition and destroy efforts by [aggregation] groups," said Ms. Migden.

Two aggregation groups, the Northwest Ohio Aggregation Coalition and the Northeast Ohio Public Energy Council, are part of the coalition.

Further, the coalition maintained that the plan could permit the Akron power company, under certain conditions, to boost rates up to 50 percent, costing residential customers up to $26 per month and $936 over the three-year term.

The FirstEnergy spokesman said the plan stabilizes rates and keeps a reliable source of electricity for customers. Whether competition is destroyed or prospers "is not our issue," Mr. DiNicola said. "The goal is no increases in rates."

The PUCO staff, in its written recommendation to the commission, said the proposal would chart a course, protecting consumers, after the electric industry is deregulated fully at the end of 2005.

Customers in New Jersey had rates jump 15 percent at the end of a deregulation transition, Mr. DiNicola said.

Mark Frye, a private energy consultant who advises the northwest Ohio aggregation, said FirstEnergy's plan boils down to insurance against potential high rates.

"We all have to consider whether the insurance is worth the premium," he said.

- JON CHAVEZ



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