FirstEnergy’s Ohio Utilities File Motion to Stay, Request for Rehearing and Application for Fuel Recovery

Citing inconsistencies with state law and potentially serious financial consequences that could result from a recent Public Utilities Commission of Ohio (PUCO) ruling, FirstEnergy Corp.’s Ohio utility companies filed a Motion to Stay, as well as an Application for Rehearing and an Application for a Fuel Rider, and requested an expedited ruling from the PUCO. The PUCO ruling involved the recent tariff filing for FirstEnergy’s Ohio utility companies, which included tariffs that would have continued current rate plans in accordance with Amended Substitute Senate Bill 221 (Am. Sub. SB 221), Ohio’s new electricity restructuring law.

If accepted, the Motion to Stay would permit the Ohio utility companies — Ohio Edison, Cleveland Electric Illuminating Company and Toledo Edison — to continue charging current rates until the PUCO rules on pending filings. Revenue collected above what was outlined in the PUCO order would be used to reduce future customer costs, and not to create additional financial benefit to the companies. The companies have not had a base distribution rate increase since the early- to mid-1990s.

The companies believe that the PUCO’s ruling in the tariff case was inconsistent with Am. Sub. SB 221 because it failed to recognize that, absent a new rate plan, current tariffs should remain in effect. Instead the PUCO selected certain rate components to remain in effect while disallowing others.

Because the Ohio utility companies are incurring wholesale generation costs at an average price that is above the generation price reflected in customer bills, the ruling further widens the gap between the companies’ expenses and the revenues they are authorized to collect.

In the Fuel Rider filing, the Ohio companies requested an adjustment to recover the difference between fuel costs — including purchased power, energy, capacity, alternative energy and credits, uncollectible expense, applicable taxes and other expenses to provide generation service — and the generation charges paid by their customers. The rider would be reconciled and updated quarterly so that customers who do not choose alternative suppliers would pay only the actual cost of generation supply incurred by the companies.

The Fuel Rider is necessary to ensure that the companies recover costs related to their provider-of-last-resort obligation to customers that the companies believe is mandated under state and federal law. Without the Fuel Rider, providing generation service to customers at rates that are well below actual costs would cause the companies to incur a cash shortfall of approximately $2 million per day. This would require the companies to make immediate and severe reductions in operating and capital expenses. The companies requested that the Fuel Rider remain in place until the PUCO authorizes either an Electric Security Plan (ESP) or a Market Rate Offer (MRO), as required in Am. Sub. SB 221.

The PUCO denied the companies’ MRO filing and significantly altered their ESP. The companies withdrew their ESP application, as allowed for under Am. Sub. SB 221. The companies, which do not own any electric generation, serve 2.1 million customers in Ohio.