Office of the Ohio Consumers' Counsel

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Coalition opposes FirstEnergy plan

CLEVELAND, Ohio – A coalition of pro-consumer organizations, including the Office of the Consumers’ Counsel (OCC), the Northeast Ohio Public Energy Council (NOPEC), the Northwest Ohio Aggregation Coalition (NOAC) and Ohio Citizen Action are speaking out in unison against a proposal by FirstEnergy that will lead to higher, more volatile rates.

If FirstEnergy’s proposal is approved by the Public Utilities Commission of Ohio (PUCO), residential customers’ bills would increase by 28 to 34 percent based on what they otherwise would pay for electricity beginning in 2006. The increase includes the relabeling of “transition charges,” which are required to be removed from customers’ bills at the end of 2005, as well as the potential for up to 50 percent higher generation rates.

“Together, our groups are working to inform FirstEnergy customers that the company’s plan fails to provide protection against unreasonable price increases,” the consumer coalition announced today. “Despite the company’s claims that this plan is positive for consumers, the public needs to know that this proposal could mean very significant increases to their rates.”

The proposal, which could collectively cost northern Ohio residents billions of dollars, is currently being considered by the PUCO. FirstEnergy is pressing the PUCO for a decision by the end of April. The coalition believes it is vital that consumers understand how the plan would affect their rates.

“Of course FirstEnergy wants this over quickly, before the people of Northern Ohio wake up to how much this is going to cost them,” said NOPEC Chairman Dan DiLiberto. “I am pleased to join Consumers’ Counsel Janine Migden-Ostrander in our combined effort to educate the public about what’s really in the plan. And I am pleased that Ohio Citizen Action also continues to stand up for ratepayers in this state.”

“I hope that the unified opposition to this plan shows how important fair and reasonable rates are to the residents of Northern Ohio,” said Consumers’ Counsel Janine Migden-Ostrander.

“FirstEnergy’s plan will hurt consumers and community aggregation efforts and destroy competition,” said Migden-Ostrander. “FirstEnergy handed us a plan on a ‘take-it-or-leave-it’ basis. The consumer representatives are here to say that based on our extensive analysis of the proposed plan, we prefer to leave it. We are saying ‘no’ to the plan.”

"FirstEnergy is asking consumers to pay billions of dollars more just to keep the highest rates in the state for another three years," said Mark Frye, President of Palmer Energy and Energy Consultant for NOAC. "This plan will stall competition until at least 2009 and will eliminate the millions in savings that northwest Ohio customers now receive from their governmental aggregation programs."

In PUCO hearings held in February and March, many consumer groups, including NOAC, NOPEC and the OCC, played an active role in pointing out the anti-consumer elements of the plan. In contrast to FirstEnergy’s contentions that its plan will stabilize rates, the plan actually:

Allows generation rates to increase by as much as 50 percent over three years. Generation rates account for approximately two-thirds of customers' total monthly bills.
Imposes an excessive charge. FirstEnergy's proposal calls for customers to pay a new "Rate Stabilization Charge" collectively costing over $1 billion for residential customers plus an additional cost of more than $1 billion for other customers such as small businesses

This charge is the same amount as what is currently shown as the "Generation Transition Charge" on customers' bills, a charge that must, by law, end no later than December 31, 2005. Even customers who switch to an alternative supplier may be forced to pay FirstEnergy's charge, which could result in some customers paying twice for a portion of their generation service.

Together, the Rate Stabilization Charge and FirstEnergy’s potential generation rate increases could equal an extra $27 per month for Ohio Edison residential consumers (a 34% rate increase), $22 per month for Cleveland Electric Illuminating residential consumers (a 28% rate increase) and $26 per month for Toledo Edison residential consumers (a 32% rate increase).

Destroys community aggregation efforts and the development of competitive choices. FirstEnergy's plan creates additional obstacles to electric choice. Ohio law has allowed local governments to aggregate and customers to choose an electric provider. FirstEnergy's plan would put the brakes on savings opportunities.
Violates the current PUCO-approved electric restructuring plan, including FirstEnergy's commitment to freeze distribution rates through 2007. The company is seeking to raise distribution rates if it spends money to "improve reliability of service." The rate freeze was a benefit agreed to by FirstEnergy and numerous stakeholders. The freeze does not allow the company to fail to provide reliable service, which is required under state law.

Consumers can call or submit online comments to the PUCO about FirstEnergy's plan. A link to the PUCO's online comment form is available through the front page of the OCC's website at www.pickocc.org. The PUCO can be reached toll-free at 1-800-686-7826.

About the Office of the Ohio Consumers' Counsel

The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. The state agency also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals. To receive utility information, brochures, schedule a presentation or file a utility complaint, residential consumers may call 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC website at www.pickocc.org.