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Published: Thursday, 1/15/2009

FirstEnergy gets OK for higher rates

BY JIM PROVANCE
BLADE COLUMBUS BUREAU CHIEF

COLUMBUS What state regulators giveth, state regulators taketh away.

Toledo Edison customers recently heard that the average customer might save about $15 a month on their electric bills. But those savings have been largely erased with yesterday s vote allowing Akron-based parent FirstEnergy to at least temporarily pass on higher fuel costs.

Public Utilities Commission of Ohio Chairman Alan Schriber said Toledo Edison customers new bills will probably be roughly the same as last month s.

The commission unanimously approved a three-month fuel rider on customers bills despite the fact that FirstEnergy no longer directly owns power plants but rather buys power on the wholesale market.

They have to get their fuel somewhere and that falls under the heading of purchased power, said Mr. Schriber. Traditionally, purchased power has been considered fuel.

FirstEnergy has been ordered to file new rates with the commission by today that reflect the higher fuel costs as well as the end of temporary charges that the company had been passing on to customers for such past costs as maintenance and operation of power plants.

As of Dec. 31, Toledo Edison s customers across all classes were paying an average base generation rate of 7.5 cents per kilowatt hour, of which 1.8 cents was due to the temporary charges. Elimination of the temporary charges leaves a base generation rate of 5.7 cents per kilowatt hour.

The Ohio Consumers Counsel had estimated that this would result in a net savings of about $15 a month for the typical residential customer using 750 kilowatts of power.

Following an auction, FirstEnergy agreed to purchase wholesale power to serve its customers through March 31 from its subsidiary, FirstEnergy Solutions, and three other suppliers. The agreements are expected to result in an average retail price of 6.98 cents per kilowatt hour across all three of its companies Toledo Edison, Ohio Edison, and Cleveland Electric Illuminating.

Under yesterday s order, FirstEnergy would be allowed to attach a fuel rider to bills that would collect the difference between the lower base price approved by the PUCO and the higher cost of the purchased power.

FirstEnergy spokesman Ellen Raines would not estimate yesterday how that would play out for Toledo Edison.

Ohio Consumers Counsel Janine Migden-Ostranger, the residential customer s voice before the PUCO, said the fuel rider should have been denied.

To put customers at risk for FirstEnergy s decision to hold an auction without regulatory oversight is unfair and unreasonable, she said. Approval of the rider means that customers lose and [company subsidiary] FirstEnergy Solutions, which took 75 percent of the power at auction, wins.

FirstEnergy had argued that ordering it to charge customers a lower rate than that paid to buy power would lead to losses of $2 million a day and represent an unconstitutional taking of utility property.

FirstEnergy must come back before the PUCO on Feb. 2 to justify the fuel increases that it implements under the temporary rider.

Citing staff overload, the PUCO yesterday again postponed a decision on FirstEnergy s distribution case that has been pending a year and a half. The utility threatened in December to exercise its right to implement the higher rates it originally proposed to deliver power to customers.

Mr. Schriber urged the company to wait until after it takes the issue up at next week s meeting, and Ms. Raines said yesterday that the utility will comply.

Distribution costs represent roughly a quarter of a customer s bill, so a decision on this piece of the puzzle is also critical to the final question of how much Toledo Edison customers will pay.

The moving parts are due to Ohio s decision last year to reverse course on its original plan to force monopoly utilities to compete for customers in an open electricity market as of Jan. 1.

The state retreated to stronger regulation of the utilities after other states that reached the open market experienced price spikes because insufficient competition developed.

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



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