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Published: Friday, 10/26/2007

Electric plan to lock in northern Ohio's higher rates

BY JIM PROVANCE
BLADE COLUMBUS BUREAU

COLUMBUS A new plan to set future electric rates in the state, keeping northern Ohio s high rates, was unveiled yesterday in the Ohio Senate.

The plan, supported by Democratic Gov. Ted Stickland and Ohio Senate Republicans, would lock in the rates customers are paying for the Davis-Besse nuclear power plant and other utility investments in power-generating stations that otherwise would expire next year.

A Senate committee proposed using current electricity rates as the new floor, or low point, for determining customers future bills as lawmakers seek to shove part of the deregulation genie back into the bottle.

That means utilities like Toledo Edison parent FirstEnergy Corp. could continue rates previously assessed for the cost of existing power plants but would have to justify future rate hikes to the Public Utilities Commission of Ohio.

The revised bill unveiled by the Republican-controlled Senate Energy and Public Utilities Commission also places a cost cap on Mr. Strickland s proposed mandate that utilities find at least 25 percent of their power from advanced sources by the year 2025. That menu includes such things as cleaner-coal and nuclear technology, as well as renewable sources like wind and solar power.

If utilities demonstrate that adding such power to their energy portfolios has increased customers bills more than 3 percent, the PUCO could waive further compliance with the mandate.

The plan to preserve current rates as the new floor for future negotiation could prove significant to customers in FirstEnergy s northern Ohio territory. Although prices are expected to rise throughout most of the state, northern Ohio was again cited yesterday by electricity marketers as the one area where customers could conceivably see lower bills if the utility had to compete in an open market that the state maintains hasn t fully developed.

Mr. Strickland s office helped to negotiate the compromise. I believe this bill makes sensible improvements to my original bill and retains our core goals of protecting jobs through ensuring stable and predictable electricity prices, bringing the jobs of the future by encouraging advanced energy production, and safeguarding our communities by encouraging investment in Ohio s electricity infrastructure, the Democratic governor said.

The committee and full Senate are expected to act on the bill next week, shifting debate to the House. Mr. Strickland has said he wants a bill on his desk by year s end, knowing that regulatory plans that largely have held electricity prices in check will begin to expire at the end of 2008.

The changes are designed to improve our economy by bringing the pricing certainty businesses need to plan and invest in Ohio, while protecting consumers from unjust and unreasonable rates, said Eric Burkland, president of the Ohio Manufacturers Association.

But the Ohio s Consumers Counsel, utilities, and environmental groups were at best wary.

We re still concerned about the rate impact this would have on residential consumers, said Ryan Lippe, spokesman for the consumers counsel.

FirstEnergy still wants the option of going to an open market instead of submitting to renewed regulation.

Our company and industry continue to have serious concerns about Senate Bill 221, but we remain committed to working through the process, spokesman Ellen Raines said.

The consumers counsel and marketers previously have blamed the surcharges utilities have charged customers to recoup their costs for eight years for discouraging the creation of a competitive electricity market.

Although this bill would use those rates as the baseline for future rate discussion, Sen. Tom Niehaus (R., New Richmond), a committee member, said it is possible prices could be adjusted downward.

If coal prices come down, that can certainly have an effect, he said. We went through two years of high coal prices. If we go into a recession and energy consumption drops, commodity prices would drop with it. That would have the effect of lowering prices.

Environmental groups objected to the weakening of the renewable-power mandate, noting that the amended bill provides no penalties if utilities do nothing to comply before the 2025 deadline.

If I am a renewable-energy business, or I m looking to manufacture component parts for renewables, and I see there is no enforcement or benchmarks for getting us there, I m probably going to look elsewhere, said Erin Bowser, president of Environment Ohio.

We need to be sending a stronger signal to these businesses to come to Ohio. We can t wait until 2025 to take a look at it.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.



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