FirstEnergy will still charge customers more on base rates for storm repair expenses, but nearly $40 million a year less than initially expected over the next few years as a result of a ruling Wednesday by state regulators.
State utility regulators on Wednesday overruled their prior decision to allow FirstEnergy to charge customers $49 million per year over the next five years to cover storm-related expenses, calling it "overly burdensome" to ratepayers.
Instead, the Akron-based utility can only charge $9.8 milion per year for the next 25 years. COLUMBUS, Ohio— A ruling by state regulators on Wednesday will significantly reduce new annual costs to consumers that FirstEnergy can charge for storm repair expenses by spreading those expenses out over time. FirstEnergy will be allowed to bill its customers about $9.8 million in new charges -- nearly $40 million per year less than initially expected -- over the next few years. The change is a result of extending a payment period for those storm repairs from the next five years to the next 25 years. The revised base electricity rates, approved Wednesday by the Public Utilities Commission of Ohio, will still rise starting March 1 for customers of Cleveland Illuminating Company and Ohio Edison compared to what they pay now. However, they will see less dramatic increases thanToledo Edison ratepayers, who were already in line for a base-rate decrease, will now see an even bigger drop under Wednesday’s changes. Rough estimates provided by PUCO spokesman Matt Schilling show that an average residential customer consuming 1,000 kilowatt-hours of electricity per month will now see their base rates change by:$3.75 less per month for Toledo Edison. The new base rates, which will be in place for as long as four years, don’t necessarily mean FirstEnergy customers will pay less for their electricity going forward than they do now. That’s because base rates are just one component affecting their customers’ power bills. Among several other things, ratepayers will still have to deal withBut Wednesday’s changes mean that, instead of allowing FirstEnergy to increase its base rates by a net total of $34 million per year combined from all its subsidiaries, the Akron-based utility now will actually slash its base-rate revenue by a total of $6.3 million per year as a result of stretching out . Wednesday’s revisions to FirstEnergy’s base rates by the PUCO centered on how much time the utility can charge customers to pay for $245 million in deferred storm-related expenses. The PUCO initially permitted FirstEnergy to charge ratepayers $49 million per year over the next five years. However, Wednesday’s PUCO order sided with cost concerns raised by the Ohio Consumers’ Counsel, the state’s utility customer watchdog group. “We agree that, given the magnitude of storm restoration costs, the five-year amortization period may result in bill impacts that would be overly burdensome for customers,” the PUCO order stated. Instead, FirstEnergy can now only collect the $245 million over the next 25 years, thus reducing the amount that customers have to pay each year by 80%, to $9.8 million. The PUCO’s decision also stated that state regulators will review and audit FirstEnergy’s spending of the money to make sure it’s appropriate. Ohio Consumers Counsel spokesman JP Blackwood, in a statement, praised the decision, saying that “limiting sharp increases in annual charges is an important step toward protecting consumers.” However, Blackwood added, extending the payment period from five years to 25 years means FirstEnergy consumers could ultimately pay more over time. “That makes rigorous oversight essential,” he stated, adding that his office was “encouraged” by the PUCO’s pledge to ensure the $245 million is needed and spent reasonably. FirstEnergy spokeswoman Jennifer Young stated in an email Wednesday that the company is reviewing the PUCO’s decision. Under the revisions, the Illuminating Company will be allowed to raise its base rates to bring in $48.7 million more per year. However, that’s $27.2 million less than the $75.9 million annual increase that the PUCO initially signed off on. Ohio Edison and Toledo Edison were already in line to see base-rate revenue drop by a total of $17.4 million per year and $24.4 million per year, respectively. Wednesday’s decision means those decreases will become even larger, to $24.5 million less for Ohio Edison and $29.5 million less for Toledo Edison. Despite the overall revenue drop, Ohio Edison’s residential customers will still see a slight increase in their base rates going forward, as the PUCO determined that those customers weren’t paying as much as they needed to.that Ohio Edison customers would see a modest decrease under the new rate plan similar to recommendations made to the PUCO by a third-party auditor.The PUCO ruling is a far cry than the $190-million-per-year base rate increase that FirstEnergy initially proposed for its 2 million-plus customers in Ohio. The utility argued the extra money from ratepayers was needed to help modernize the Akron-based utility’s electric grid and improve reliability. However, the Ohio Consumers’ Counsel had called for FirstEnergy to slash its annual rates by more than $132 million in total – in part, as punishment for the company’s involvement in the massive House Bill 6 bribery scandal. Jeremy Pelzer has worked in the Columbus bureau of cleveland.com and The Plain Dealer since 2013. Prior to that, Pelzer worked for Gongwer News Service in Ohio and covered government and politics in Illinois,...
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