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Consumers' Counsel reacts to Cincinnati Gas & Electric rate decision

Columbus, Ohio - September 29, 2004 - The Office of the Ohio Consumers' Counsel (OCC) is disappointed in an order issued today by the Public Utilities Commission of Ohio (PUCO) that will cause increases in monthly electric bills paid by residential customers of Cincinnati Gas & Electric (CG&E) beginning in 2006.

Among the OCC's concerns include the:

• Ability for CG&E to apply for annual customer rate increases without limit for a variety of costs, including those related to power, taxes and environmental compliance. According to a Cinergy press release, the company will invest more than $2 billion for emission reduction; and

• Failing to require a competitive bid, as required under Ohio's electric choice law.

The following statement can be attributed to Janine Migden-Ostrander, Consumers' Counsel:

"The PUCO has failed to address our concerns and consumers should be disappointed. This order fails to ensure that CG&E's rates remain reasonable. Instead of a competitive bid which could provide customers with the potential to lower their bills, the order demands that all residential customers pay more - potentially much more - over the next four years. That's not rate stability; that's a rate hike.

"We opposed CG&E's plan and the settlement because it would result in higher rates and failed to help a competitive market develop. Instead of unjustified rate increases, we need to work toward providing customers what lawmakers envisioned when they passed Ohio's electric choice law - a competitive market and the potential for lower rates."

The order issued by the Public Utilities Commission of Ohio (PUCO) modified and approved a rate plan proposed by CG&E in January 2003, and a settlement reached by some parties in May 2004. The OCC opposed both the CG&E rate plan and the negotiated settlement because they would raise costs for consumers.

In 2003, the PUCO requested several major electric companies - including CG&E - to file plans that would provide customers stable rates in the near future and allow time for the competitive market to develop. The request was made in light of the fact that under Ohio's electric choice law, a temporary "market development period," including a cap on generation rates, ends December 31, 2005.

Ohio's electric choice law requires that a competitive bid be conducted by the end of CG&E's market development period, December 31, 2005. The OCC believes this bid would serve as a safety net in case competitive choices do not develop for individual customers. Customers would then be assured that competitive suppliers would be able to bid to serve a large amount of energy at a reasonable, market-based price.

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.