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Consumers' Counsel argues against FirstEnergy rate plan at Ohio Supreme Court

Columbus, Ohio - September 28, 2005 - The Office of the Ohio Consumers' Counsel (OCC) argued before the Ohio Supreme Court today that a FirstEnergy rate plan is unlawful and will result in at least $3.25 billion in charges that customers should not have to pay.

In arguments held this morning, the OCC asked the court to overturn the decision made by the Public Utilities Commission of Ohio (PUCO) in June 2004 approving the rate plan. The plan, which would go into effect in January 2006, keeps FirstEnergy's rates the highest in Ohio and could cause significant increases each year through 2008.

"Not only is the rate plan a bad deal for customers, it violates Ohio's electric choice law," said Janine Migden-Ostrander, Consumers' Counsel. "Under the law, the charges customers have been paying FirstEnergy for stranded costs must end this year. The rate plan continues those charges dollar-for-dollar through 2008."

The OCC believes the rate plan violates the law and should be rejected by the Supreme Court because it:

• Imposes an unjustified and excessive "rate stabilization charge" on residential customers through 2008. This charge equals the amount of FirstEnergy's current generation transition charge which, by law, must end no later than December 31, 2005. The rate stabilization charge will cost all customers (residential, commercial and industrial) $2.9 billion over three years. The residential customer share will be $1 billion, with households paying as much as $20 per month, or a total of $720 through 2008, in rate stabilization charges.

• Allows rates that are not permitted under Ohio's electric choice law. The law mandates that beginning no later than 2006, the price consumers pay FirstEnergy for electricity must be tied to the cost of power in a broader marketplace. The law also requires an offer based on a bid among competitive suppliers. Instead of following the law, the plan continues FirstEnergy's current rates and allows the company to request increases each year if its fuel costs go up, without any limit.

• Violates an agreement signed by FirstEnergy that prohibits the company from collecting interest on certain electric choice related charges. In violation of an ongoing PUCO-approved agreement signed in 2000 by FirstEnergy and numerous other parties, the rate plan allows FirstEnergy to collect an additional $355 million in interest based on certain costs.

• Forces some customers who have chosen a competitive supplier to still pay for a portion of FirstEnergy's electricity. The rate stabilization charge is related to FirstEnergy's generation of electricity, which has been deregulated under Ohio law. The rate plan will force some customers who no longer purchase electricity from FirstEnergy to still pay this charge. The OCC believes all generation charges must be avoidable once a customer chooses a competitive supplier. Otherwise, the rates are unfair to customers and serve as an obstacle to electric choice.

The OCC also has appealed to the Ohio Supreme Court the rate plans for American Electric Power (AEP) and Cincinnati Gas & Electric (CG&E). Those rate plans were approved by the PUCO following its FirstEnergy decision. Together, the AEP and CG&E plans will likely cost residential consumers at least $570 million in new charges. Oral arguments in those two cases have not yet been scheduled.

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.