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Consumers' Counsel argues against Cincinnati Gas & Electric rate plan at Ohio Supreme Court

COLUMBUS, Ohio - April 25, 2006 - Cincinnati Gas & Electric's (CG&E) rate plan is unlawful and has resulted in significant generation rate increases, the Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, argued today before the Ohio Supreme Court.

"The rate plan violates Ohio law and has led to higher monthly bills for the approximately 600,000 residential customers served by Cincinnati Gas & Electric," said Janine Migden- Ostrander, Consumers' Counsel. "The rate plan's new electric charges have no basis in the law."

The OCC recently analyzed the impact of the CG&E rate plan and found that the typical residential customer has seen about a 50 percent increase in generation-related charges, which usually are about two-thirds of a total monthly electric bill.

In arguments held this morning, the OCC asked the Supreme Court to overturn the decision made by the Public Utilities Commission of Ohio (PUCO) in late 2004 to approve a rate plan that violates Ohio's electric choice law. The plan, which went into effect in January, adds a variety of new charges to customers' bills with the ability for rates to go up even higher until the plan expires at the end of 2008.

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

Allows rates that are not permitted under Ohio's electric choice law. The law mandates that beginning no later than January 1, 2006, the rate consumers pay CG&E for electricity must be tied to the price in the electricity market. The law also requires that electric utilities offer a rate based on a bid among competitive suppliers. The bidding process could be an auction held to help determine the lowest price at which competitors could offer electricity in CG&E's service area. Under the plan approved by the PUCO, neither the market-based nor bid-based rates will be offered to customers as the law requires.
Imposes unjustified new charges on residential consumers through 2008. Several new fees including an "annually adjusted component" and a "rate stabilization surcharge" have been added to customers' bills. The OCC argues that these new charges are not allowed because they are not based on the electricity market, as required by the law.
Increases customers' rates without the legally required scrutiny, including an evidentiary hearing. CG&E rejected changes made by the PUCO to an earlier rate plan and proposed that additional new charges be imposed on customers. The new charges were approved by the PUCO without the presentation of evidence on how much customers' rates could increase or any hearing to allow the OCC and other parties to cross-examine CG&E witnesses. The final plan's new charges included a "system reliability tracker," "infrastructure maintenance fund" and "fuel and economy purchased power" charges that were never in the original plan.

Through its appeal, the OCC has asked the Supreme Court to instruct the PUCO to correct its substantive and procedural errors.

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.