Electric rates will decrease by an annual average of 12.6 percent for Toledo Edison's 314,000 customers as a result of an electricity auction conducted yesterday by state utility regulators.
The wholesale auction, designed to set generation and transmission rates based on market prices, drew 12 bidders offering to supply power to customers of FirstEnergy Corp., the Akron utility which owns Toledo Edison, Ohio Edison, and Cleveland Electric Illuminating Co.
Nine bidders made offers - later deemed acceptable by the Public Utilities Commission of Ohio - to supply chunks of the power expected to be needed by FirstEnergy customers starting June 1 and running through May 31, 2011.
A FirstEnergy affiliate, power generating subsidiary, FirstEnergy Solutions, successfully bid to supply 51 percent of the power, its parent company is required to supply.
The PUCO said the bids were averaged out so the final auction price came to 6.15 cents per kilowatt hour - less than what FirstEnergy earlier proposed for its rate.
Under a new state law, a utility submits its proposed rate, the PUCO can modify it, and if the two do not agree, the rate can be set by open auction. State regulators earlier had lowered FirstEnergy's proposed rates to about 7 cents per kilowatt hour, but the utility rejected that, forcing yesterday's auction to be held.
Customers in Ohio Edison territory will see a 16 percent decrease, and those in Cleveland Electric territory, a 7.4 percent drop.
"We are more than pleased that ratepayers in northern Ohio, many of whom have been victimized by the economy, will benefit from the outcome of this energy auction," PUCO Chairman Alan R. Schriber said in a statement.
CRA International conducted the auction that was monitored by Boston Pacific Company Inc., a consultant retained by the PUCO.
The names of the winning bidders are to be disclosed within 21 days.
"The economic slowdown has resulted in lower electric generation sales and significant bidder participation in the auction," Anthony J. Alexander, FirstEnergy president and chief executive officer, said.
Ohio Consumers' Counsel Janine Migden-Ostrander, who had lobbied hard for an auction and argued that FirstEnergy rates were higher than market rates, said she was pleased by the auction results.
"This is a great outcome for consumers in northern Ohio, who have struggled with high rates for too long," she said.
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