Electric competition heats up in Ohio

Dueling ads by FirstEnergy, AEP battle for customers

5/22/2012

Competition in the electric industry has generated sparks between two of Ohio's largest investor-owned utilities.

American Electric Power, which is based in central Ohio but whose territory comes north into Allen and Seneca Counties, has been running a television commercial the last month that takes shots at a subsidiary of FirstEnergy Corp., likening it to mean corporate executives who steal from a little girl's lemonade stand.

In retaliation, FirstEnergy has called out Columbus-based AEP Ohio in television, radio, print, and online advertisements, suggesting AEP is trying to stifle competition and saddle its customers with higher rates. Both utilities have set up Web sites to press their cases and dispute the other's claims.

"They've been going at it recently on the airwaves … with each saying the other is being unfair," said Matt Schilling, a spokesman for the Public Utilities Commission of Ohio. "The competition has really ramped up between them."

Marty Berkowitz, a spokesman for the Office of the Ohio Consumers' Counsel, said the war of words is a good sign for Ohio consumers.

"To us, this is indicative that competition is increasing, and it's now going hot and heavy. We really don't have a dog in this fight. All we would hope is that they are truthful, but they certainly can be amusing," he said.

FirstEnergy supplies power to much of northwest Ohio through its Toledo Edison subsidiary.

The dispute stems from a recent AEP rate plan case that concluded last week before the PUCO.

In the case, AEP is looking for approval of a rate plan that will shift it into a deregulated marketplace, something it chose not to do back in 1999 when the state approved deregulation for electric utilities. FirstEnergy deregulated in 2000 and went through a five-year transition period to free market rates. But its rates were frozen until 2008 at the behest of the PUCO to prevent "sticker shock" for its customers.

In AEP's current case, which the PUCO is to decide this summer, FirstEnergy's residential and commercial energy supplier subsidiary, FirstEnergy Solutions, has been a vocal intervenor.

FirstEnergy Solutions, which is aggressively targeting customers in AEP's territory, has argued before the PUCO that AEP is hurting competition by charging alternate suppliers an exorbitant fee to use its transmission lines to supply power to customers in AEP territory.

In response, AEP launched the lemonade-stand commercial and a second commercial depicting FirstEnergy as grown-ups tossing dodge balls at wimpy kids. AEP also has argued publicly that FirstEnergy Solutions wants to use AEP's electric capacity at a below-market rate so it can sell cheap power to consumers and make a profit.

Underlying the battle is that each utility has begun seeking new customers and selling power in each other's territory for several months.

Diane Francis, a FirstEnergy Solutions spokesman, said that in a deregulated environment, the company finds some of what AEP is seeking in its plan to be anti-competitive.

"Our position is to have a level playing field in competition," Ms. Francis said. "That was the intent in [Ohio's deregulation law] when the state passed it."

FirstEnergy Solutions believes the lemonade ad distorts what is happening, and that the subsidiary is "trying to set the story straight" with its counter-ads in print and radio and its Web site, forelectricsavings.com.

Meanwhile, Shelly Clark, an AEP spokesman, said her employer believes the issue is about fairness. FirstEnergy got a five-year transition period to move to market-based rates and fees, while AEP is only asking the PUCO for a three-year period to adjust its fees and settle its finances to compete in an open market.

"We want the same amount of time to transition to market and retain our financial stability," Ms. Clark said. Currently, AEP is charging alternative suppliers $2.55 per megawatt to use its distribution lines. FirstEnergy Solutions is arguing the price should be $1.46 or lower, and that price would hurt AEP at this time, she added.

The utility felt its best recourse was to go to the public with the lemonade stand ad and single out FirstEnergy Solutions. "This is out of the box for us, definitely," Ms. Clark said. "But we're also doing a lot of outreach, letters to the editor, and other ads. We want to get our facts out there."

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.