Office of the Ohio Consumers' Counsel

Historical Journal

Supreme Court rules rate plans must follow electric choice

Lack of competition in the electric industry prompted the Public Utilities Commission of Ohio (PUCO), in September 2003, to ask investor-owned electric utilities to develop rate stabilization plans, which would determine the rates residential consumers would pay for electricity from 2006-2008.

The Office of the Ohio Consumers’ Counsel opposed the plans of American Electric Power (AEP), Cincinnati Gas & Electric (now known as Duke Energy) and FirstEnergy because they harmed residential consumers and violated Ohio’s electric choice law. The law requires that customers be provided a rate based on the price of electricity in the market and a rate determined by a bid among competitive suppliers.

The PUCO approved all three plans that increased rates for electric consumers beginning in 2006. The OCC was able to eliminate some of the violations from the original proposals but still opposed the unlawful plans. The OCC estimated that the proposed plans’ rate impacts ranged from $170 million for Duke customers, $400 million for AEP customers and $1 billion for FirstEnergy customers over three years.

The OCC appealed all three decisions to the Ohio Supreme Court and in 2006 received a victory when the AEP and FirstEnergy plans were struck down and sent back to the PUCO. In these decisions, the court ordered the PUCO to follow the electric choice law which requires that customers be offered a price determined through a competitive bid.

The OCC’s appeal of Duke’s rate stabilization plan is awaiting a decision from the Ohio Supreme Court, and is expected by the end of 2006.

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