Electric bill savings can't be reduced

12/7/2002

FirstEnergy Corp.'s bid to reduce the amount of money its customers can save if they switch to an alternative electric supplier has been rejected by the Public Utilities Commission of Ohio.

The commission this week turned down the utility's request on the grounds that doing so might lead people to switch back from alternative providers to the traditional supplier, which would negate the goal of deregulation. The affected incentive shows on homeowners' bills as a shopping credit.

``They were afraid a reduction could reverse the trend we're seeing in the FirstEnergy territories,” said Shana Gerber, a PUCO spokesman.

Spokesman Ralph DiNicola said the company would accept the decision.

On average, most homeowners and renters in FirstEnergy's service territory in northwest Ohio pay about 12 cents per kilowatt hour for electricity if they buy it from Toledo Edison, said Mark Frye, an electric industry consultant and president of Palmer Energy Co. in Toledo.

However, under Ohio's deregulation rules, a customer who switched suppliers is charged 7.4 cents by Toledo Edison for transmitting the power and usually something less than the difference, or 4.6 cents, by an alternative supplier, such as WPS Energy Services, Inc. That way, someone switching suppliers saves money by doing so. The 4.6 cents a kilowatt hour is called a shopping credit and shows up as a deduction, based on usage, on a homeowner's bill.

For example, several Lucas County and neighboring governments, including Sylvania, Northwood, Holland, and Maumee, formed a bulk-buying group to purchase power from WPS Energy of Green Bay, Wis., at a rate of 4.325 cents a kilowatt hour. Residents in those communities who switched from Toledo Edison to WPS are saving about $20 to $30 a year because of the shopping credit.

The city of Toledo contracted for a similar deal with FirstEnergy Solutions, a subsidiary of FirstEnergy, and its residents who have switched are getting similar savings.

FirstEnergy, of Akron, requested a lower shopping credit, at 4.2 cents a kilowatt hour. If state regulators had approved it, people in those bulk-buying areas who had switched would pay more than people who had stayed with Toledo Edison.

The PUCO said the utility had achieved its state-mandated goal of more than 20 percent of its customers choosing another supplier because of the shopping credit, and it wasn't about to undo that. The panel promised to review the matter in a year.