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Published: Thursday, 7/31/2008

FirstEnergy proposes rate increase

BY JIM PROVANCE
BLADE COLUMBUS BUREAU CHIEF

COLUMBUS The typical Toledo Edison customer could see a barely noticeable but immediate drop in his electric bill under a proposed rate plan filed Thursday with state regulators.

But the longer-term outlook over the next three years would be higher prices.

Considering our costs to produce and deliver electricity have increased dramatically since our last base rate cases were decided more than a dozen years ago, we ve designed a plan that provides for modest increases in electricity prices over the next three years, said Anthony J. Alexander, president of Toledo Edison s Akron-based parent, FirstEnergy.

A new law reasserted the state s regulatory authority over electric utilities, slamming the brakes on the state s march toward an open electricity market that had resulted in price spikes in some other states that got there first.

The law required utilities to instead file three-year regulatory plans with the Public Utilities Commission of Ohio. Those plans invariably included requests for rate hikes for the three major utilities whose current rate plans expire on Dec. 31.

Under FirstEnergy s proposal, the average rates for customers across all of its subsidiaries would climb 5.3 percent next year, 4 percent in 2010, and 6 percent in 2011.

But in the higher-cost Toledo Edison territory, the monthly bill for the typical residential customer using 750 kilowatt hours would drop by 16 cents in 2009. The bills would then climb, however, by $3.06 in 2010 and $3.30 in 2011.

The anticipated impact of the Electric Security Plans would be a one-two punch to customers wallets, as any rate increases would be on the heels of the higher distribution rates proposed by most of Ohio s major electric and natural gas utilities, said Ohio Consumers Counsel Janine Migden-Ostrander.

The new law places decisions on future rates in the hands of the PUCO, which will hold public hearings before issuing final decisions within 150 days.

While the law was designed to prevent price spikes, price increases were still generally expected in Ohio after a decade of relatively stable rates. Some electricity marketers and Ms. Migden-Ostrander, however, had suggested that if any area of the state stood a chance at seeing lower bills, it would be FirstEnergy s northern Ohio territory.

The utility s rates are now the highest in the state, partly because of surcharges that the utilities had been allowed to tack onto customers bills to recoup past investments in such things as nuclear power plants. Those surcharges will expire at the end of the year.

For those who were concerned about the very large increases seen in some states, we re hopeful this addresses those concerns, said FirstEnergy spokesman Ralph DiNicola. If the rates were approved for everyone as submitted, it would largely eliminate whatever (price) variance existed in the past (between utilities).

According to its proposal, FirstEnergy would offer to reduce the increase in base generation rates by 10 percent for those who choose to buy their power from the local utility during the three-year period instead of buying it elsewhere. That amount would be deferred and later spread out and collected over up to 10 years.

FirstEnergy waited until after the stock market closed Thursday before filing its plan with the PUCO. It was the last of the three major Ohio utilities whose current rate plans expire on Dec. 31 to do so.

The company noted that its Toledo Edison customers are currently paying about $1.70 more per kilowatt-hour of power than they did in 1996 when the utility had its last rate case. The average bill has increased more than that, however, because consumers power consumption has increased 21 percent since then.



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