Ohio Breaking News

| News and Analysis | Other Resources |

Ohio Consumer Groups Criticize Utility Board's Plan to Seek Rate Increases 11/21

Citizen Power Welcomes Tongren's Resignation, Urges the General Assembly to Reign in PUCO 11/5

State Officials Grilled About Electric Competition in State 11/4

FirstEnergy Gives Regulators Two Options: Two-Year Freeze or Rate Auction 10/22

Residents in Northeast Ohio Must Make Natural Gas Decision by October 6 10/3

AEP Learns of CFTC Action 10/2

Regulators Reject FirstEnergy Request to Reduce Discounts 9/24

Ohio Consumer Groups Criticize Utility Board's Plan to Seek Rate Increases

(November 21)  Several consumer groups Wednesday are saying that the Public Utilities Commission of Ohio (PUCO) has put a rate proposal by FirstEnergy Corp. on a fast track that is unfair to rate payers.

PUCO last month set up three public hearings around northern Ohio to allow the public to respond to a FirstEnergy proposal concerning rates once Ohio's struggling electricity deregulation "market development period" expires at the end of 2005.

"They have picked one of the worst periods -- Thanksgiving week and at 4 p.m. (for the Cleveland meeting)," said Joseph Meissner, a legal aid attorney who filed a request with the PUCO on Monday to reschedule the meetings and for the state to fund a study into the proposal. Meissner filed the request on behalf of the Neighborhood Environmental Coalition, Consumers for Fair Utility Rates and The Empowerment Center of Greater Cleveland.

The PUCO said there will be no additional hearings. The groups also want the PUCO to take another look at FirstEnergy's "stranded costs," or the expenses utilities incurred under full regulation and can be recouped in the rates charged to customers under deregulation.

Ohio Citizen Action Cleveland Program Director Shari Weir said members of her group will not be in attendance at any of the hearings. "This is not an honest hearing. It's a sham," she said. "It's being slammed through at record speed."

Weir said the PUCO needs to slow down the case and do a "full and fair investigation." She said her group intends to file such a request with the PUCO.

The proposal outlines two choices: 1) Buy into an auction-based system similar to one now used in New Jersey, in which wholesale suppliers bid on electricity prices and then resell to retail customers. 2) Sign onto a "rate stabilization plan" that extends the current frozen electric generation rates through the end of 2008 while including provisions that could lead to retail price increases or decreases.

The Akron utility is asking state regulators to make a decision no later than Dec. 31. The proposal grew out of concerns from the PUCO that Ohio's deregulated electricity market is not fully developing, the company said.

Ryan Lippe, spokesman for the Ohio Consumers' Counsel, said the hearings involve "critical, serious issues."

"It's important that they let their voices be heard," he said.

Source: Akron Beacon Journal

Citizen Power Welcomes Tongren's Resignation, Urges the General Assembly to Reign in PUCO

(November 5) Citizen Power welcomes the resignation of Consumers' Counsel Robert Tongren. However, replacing Tongren will only fix a small part of a generalized imbalance in Ohio government dealings on utility issues, according to executive director David Hughes.

Citizen Power was a party to the FirstEnergy restructuring proceeding before the Public Utilities Commission of Ohio and opposed the settlement in that case that PUCO approved in July 2000. "We were aware of the LaCapra Study and were excited about the impact it would have when it was made public," said Hughes. "When Tongren signed off on the FirstEnergy settlement we knew he sold out because he agreed to give FirstEnergy billions in transition charges that his own consultant said it was not entitled to collect. Tongren should pay the price for this, but the real culprit is PUCO."

Only 15 of the 51 parties in the FirstEnergy restructuring case signed the settlement. Citizen Power urged PUCO not to approve the settlement because it contained provisions that were clearly harmful to ratepayers. "Freezing our rates 40% above where they should be was no bargain," said Hughes. Citizen Power appealed PUCO's decision to approve the anticompetitive provisions to the Ohio Supreme Court but the Court refused to hear the case.

"The PUCO approved an anticompetitive settlement and now we see the result of this bad deal. There is no competition in Ohio and now utilities are essentially blackmailing PUCO into approving an extension of stranded cost collection, or risk price gouging after the Market Development Period ends in 2005," Hughes continued. "PUCO is supposed to protect both the utilities and the ratepayers, but its track record is clearly pro utilities. A new Consumers' Counsel will not have the necessary leverage to extract concessions from utilities if the PUCO remains so pro utilities," said Hughes.

"Tongren was instrumental in permitting settlements that killed competition, but the buck stops at the PUCO," Hughes said. "PUCO has refused to implement the spirit of Senate Bill 3 and is making rules that allow utilities to increase market power through unfair advantages. That is why, other than the Northeast Ohio Public Energy Council, consumers have no choices. Once the MDP is over, PUCO will not be able to stop legal price gouging and the destruction of NOPEC."

Mr. Hughes testified at the Ohio Senate Public Utilities Committee hearing on electricity deregulation last week. He urged Senators to reign in PUCO while there is still time. "If the legislature doesn't act now, California-like problems are sure to eventually occur here. Tongren's resignation will not change that reality," Hughes concluded. Source: PRNewswire

Source: PRNewswire

State Officials Grilled About Electric Competition in State

(November 4)  The state officials responsible for monitoring progress in Ohio's two-year-old plan to restructure the electric industry say they're concerned about customers more than what the utility companies are getting out of it.

Public Utilities Commission of Ohio Chairman Alan Schriber and Consumers' Counsel Robert Tongren briefed the Senate Public Utilities Committee on Wednesday on the status of the plan designed to bring full competition to the electric power industry by the end of 2005.

Schriber said customers in Ohio have not been hit by price increases such as those that hit Californians when the power industry in that state was restructured.

"I'm not here to say it's a rousing success," Schriber said. "But no one has gotten hurt."

When the PUCO was implementing legislation that authorized competition in the $11 billion electric power industry, there were too many estimates on utilities' recovery of investments to come to a consensus, Schriber said. Instead, the commission approved a settlement that allowed the utilities to collect, through customer bills, parts of those costs, such as the construction of nuclear power plants. Those numbers have ranged from about $4 billion to $8.7 billion.

Tongren was questioned by Democrats on the committee over the shredding of a preliminary report that claimed FirstEnergy Corp. customers were paying too much for the utilities' past investments.

The report, from Boston-based consultant LaCapra, estimated FirstEnergy's stranded costs at billions of dollars under what the company claimed. The Consumer Counsel's office destroyed what it called a preliminary report last summer, about 18 months after the second of two media requests to see the report.

Tongren said he believed the document was no longer important because it had been more than a year since his office had been involved in the FirstEnergy case.

Some employees in Tongren's office had recommended against shredding the report, but Tongren played down its importance. "From a practical standpoint, the LaCapra work was a snapshot in time. It was one consultant's opinion as opposed to a number of opinions," Tongren said.

Source: Cincinnati Post

FirstEnergy Gives Regulators Two Options: Two-Year Freeze or Rate Auction

(October 22)  FirstEnergy Corp. has proposed two options for state regulators to either continue to freeze rates charged to customers after the current plan expires in about two years, or take a chance of getting lower rates at whatever the market might provide at that time.

The latest plan was in response to the Public Utilities Commission of Ohio, which hopes to prevent residents from experiencing "rate shock" when the state's electric utilities become fully deregulated on Jan. 1, 2006. At that time, electricity will be based solely on market prices, not a regulated formula, unless a deal is worked out soon.

The state's four major electric utilities have been asked to submit plans that would stabilize rates and allow more time for competition in the industry to develop.

FirstEnergy told regulators to pick one of the following by the end of this year:

--A modified version of the current rate plan, due to end Dec. 31, 2005. The rates would be extended three years. The average residential customer of FirstEnergy's Toledo Edison pays about $1,035 annually for power.

--An auction at the end of 2005, with the lowest bidder contracting to provide power for FirstEnergy customers. The gamble would be that a bid would be lower than current FirstEnergy rates; otherwise customers would pay more than they do now.

The full details of the offer won't be known until PUCO officials can study the proposal and hold hearings on its merit, commission Chairman Alan Schriber said.

But the Akron utility that supplies power through much of northern Ohio is not giving the commission much time. Still, Mr. Schriber said regulators should be able to decide by year's end.

Under the auction scenario, regulators could treat all FirstEnergy customers as one group, hoping to get a low bid from a supplier, or they could create small groups, but that could draw less interest from bidders. The latter approach was tried in New Jersey this year and customers ended up paying 15 percent more.

Under the other option, rates would be frozen through 2008 and customers would get a 5 percent discount, through 2010, on the portion of the bill that applies to electricity generation. State regulators could decide to solicit bids for electricity at the end of each year and end the FirstEnergy contract if a cheaper bid is submitted.

Source: The Toledo Blade

Residents in Northeast Ohio Must Make Natural Gas Decision by October 6

(October 3) The Ohio Consumers' Counsel (OCC), the residential utility advocate, alerts natural gas customers in many Northeast Ohio communities of an important natural gas decision that must be made by October 6.

Through the Northeast Ohio Public Energy Council (NOPEC), an energy aggregator, many residents in nine communities should have received information about how to join or withdraw from the NOPEC aggregation program. The mailing provides details about the rate being offered by Interstate Gas Supply (IGS), the Ohio-based company chosen by NOPEC to provide natural gas to customers. Consumers who have chosen a supplier on their own are not included in the buying pool and should not have received information from NOPEC.

According to the NOPEC opt-out offer, "Actual savings will vary depending on state and local taxes, the county in which you live, whether you have received service from a non-utility supplier during the last 12 months, and any other utility adjustments."

To help residents compare the offer, they can contact the OCC toll free at 1-877-PICKOCC (1-877-742-5622) as well as visit the website at http://www.pickocc.org to use the interactive natural gas calculator for Dominion East Ohio to input the rate and determine if the IGS offer best meets their needs.

Source: http://www.pickocc.org/

AEP Learns of CFTC Action

(October 2) American Electric Power has learned that the Commodity Futures Trading Commission (CFTC) has filed a civil action against the company in the United States District Court for the Southern District of Ohio.

AEP has not been served with a copy of the complaint, which was filed late yesterday, but believes that it is based on claims related to the submitting of natural gas trading information to certain trade publications by gas traders no longer employed by AEP.

After learning in September 2002 of false reporting of gas price information at an unrelated company, AEP immediately undertook its own internal investigation of gas price reporting practices. AEP determined that five then-current employees had submitted inaccurate gas trading information to trade publications. The company immediately terminated the five employees, self-reported the incident to the Federal Energy Regulatory Commission (FERC) and the CFTC, publicly announced the employee terminations and put into place procedures to prevent a reoccurrence of the inaccurate submission of gas trading information.

"We have been cooperating with the CFTC in an attempt to seek resolution to this matter," said Jeffrey D. Cross, AEP’s general counsel. "While the possibility of civil action always existed, we are surprised the CFTC chose to file at this time. We still believe that a settlement is possible and we are open to that possibility.

"We discovered and self-reported these activities," Cross said. "We have no indication that any current employees were involved in the activities."

American Electric Power owns and operates more than 42,000 megawatts of generating capacity in the United States and select international markets and is the largest electricity generator in the U.S. AEP is also one of the largest electric utilities in the United States, with almost 5 million customers linked to AEP’s 11-state electricity transmission and distribution grid. The company is based in Columbus, Ohio.

Source: AEP Website

Regulators Reject FirstEnergy Request to Reduce Discounts

(September 24)  The Public Utilities Commission of Ohio (PUCO) has told FirstEnergy Corp. that it must maintain subsidies to consumers who choose another electricity supplier until 2005 to help develop competition. The PUCO also asked the Akron utility to start prepping for ways to extend stable rates beyond 2005.

The shopping credits provide consumers with a lower price that they can use to compare electricity rates from sources other than FirstEnergy. Under the state's deregulation plan, if 20 percent or more of FirstEnergy residential, commercial and industrial customers switched to another supplier, which could include a FirstEnergy subsidiary, the utility could then ask regulators to reduce the amount of the shopping credits. FirstEnergy said it met or exceeded the 20 percent level.

Decreasing the size of the credits means other electricity marketers would have to lower their prices or lower their profit margins, jeopardizing the fledgling electricity deregulation plan in the state, said Rob Tongren, the Ohio Consumers' Counsel. He sided with electric customers and local governments that opposed FirstEnergy's filing.

The PUCO said that if it had approved FirstEnergy's request, it could hurt the development of a competitive electricity market.

The PUCO's decision asked FirstEnergy to develop plans for "rate certainty, financial stability for the electric distribution utilities and further competitive market development" beyond 2005. That's when the state's electricity market development period, which freezes electricity rates, is supposed to end.

Source: Akron Beacon-Journal

Back to news