Toledo Edison gets OK to increase electric bills

1/22/2009

COLUMBUS - Electric bills for Toledo Edison customers will go up after state regulators agreed yesterday to let the utility increase what it charges to deliver its power.

The Public Utility Commission of Ohio estimated that the increase in electric distribution charges could translate into a 7 percent jump in the total bill of the typical residential customer using 750 kilowatt hours a month.

Commission Chairman Alan Schriber said this is likely the end of price increases for Toledo Edison customers for now. The commission still has a major decision ahead on how much the utility will charge in the future for the generation of electricity.

"It's safe to say things are not going to go higher but could, based on the outcome of that, potentially go down," Mr. Schriber said.

Earlier this month, the PUCO voted to allow temporary charges customers had been paying for power plant maintenance and other costs to expire as scheduled on Dec. 31. But the anticipated savings for customers from that, estimated at an average of $15 a month by the Ohio Consumer's Counsel, was largely offset by last week's approval of higher fuel charges.

As of last week, Toledo Edison's parent, FirstEnergy, had estimated that the average monthly bill for a typical residential customer would see a barely noticeable decline from $92.25 to $91.81 as a result of those two decisions.

That was before yesterday's decision allowing Toledo Edison to pass on $38.5 million more a year to customers on the power distribution side of their bills. A 7 percent increase would translate into a monthly bill for that typical customer of just more than $98.

Distribution costs associated with power substations, utility poles, and transmission wires used to deliver power generally represent 30 to 40 percent of customers' total bills.

"This is the first increase in distribution rates for Toledo Edison since 1996," FirstEnergy spokesman Ellen Raines said. "Costs have gone up considerably since then. As a result, we will continue to look for ways to operate our business more efficiently and effectively as possible, particularly in light of today's economy."

Ohio Consumer's Counsel Janine Migden-Ostrander raised questions about some previously deferred costs that the utility had asked to recover but the PUCO has yet to address. She expressed concern some of these could come back in the future and be passed onto customers.

"We acknowledge that the utility's proposed rate increase has been trimmed down, but remain concerned about the hardship of higher rates on customers," she said. "We will likely ask the PUCO to reconsider its decision."

FirstEnergy had requested a total of $338 million in increased billings to deliver power to customers served by its three subsidiaries - Toledo Edison, Ohio Edison, and Cleveland Electric Illuminating. Toledo Edison's share of that request would have been $71 million.

The PUCO instead approved a total increase of $137 million, $38.5 million of which would be Toledo Edison's share. The consumer's counsel had proposed $29 million.

The PUCO has gradually dealt with pieces of the rate puzzle in the wake of the state's decision to back away from plans to push monopoly utilities into an open electricity market in which they would have had to compete with other suppliers for customers.

States that got to the open market first experienced rate shock because insufficient competition had developed. Gov. Ted Strickland and lawmakers instead retreated to safer regulatory waters.

In December, the PUCO approved new base rates for FirstEnergy's generation of electricity that would have largely resulted in a rate freeze in 2009 and increases in 2010 and 2011 that were smaller than the company requested. FirstEnergy exercised its right under Ohio's new electricity law to reject that decision and has instead pushed its proposal to instead seek bids or conduct auctions to buy power in the marketplace for its customers.

The PUCO previously had rejected such a plan but agreed yesterday to FirstEnergy's request for a rehearing. Meanwhile, base rates charged for the generation of electricity in 2008 remain locked in place for 2009.

Contact Jim Provance at:

jprovance@theblade.com

or 614-221-0496.