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NOPEC fights with FirstEnergy to extend discount
FirstEnergy bills to increase next year
Thursday, October 23, 2008
John Funk
Plain Dealer Reporter
Tens of thousands of Northeast Ohio residents probably will see their electric bills jump by as much as $12 per month the first of the year. And that's before FirstEnergy Corp.'s new rate plan is approved.
About 400,000 FirstEnergy customers have been saving between $6 and $12 a month since 2006 through a 5 percent discount that the Northeast Ohio Public Energy Council negotiated with the Akron-based utility.
NOPEC is a consortium of 126 communities organized under Ohio's deregulation laws. Its deal with FirstEnergy has saved consumers $28 million over the last three years, said Leigh Herington, the group's executive director.
The discount expires Dec. 31, along with FirstEnergy's current three-year rate plan. FirstEnergy has rejected NOPEC's request for an extension of the discount, even if NOPEC funds part of it, Herington said.
FirstEnergy's representatives were not immediately available Wednesday for comment.
Herington said NOPEC has asked to extend the discount in order to parallel the three-month extension that state regulators are expected to give FirstEnergy's expiring rate plan.
The utility's new rate plan, filed under the state's new utility regulation law, is being extensively litigated at the Public Utilities Commission of Ohio. The PUCO might not be able to act on it until March.
There is more at stake for NOPEC communities than just the extension of the discount, however. What's at stake is the future of competition, Herington said.
Here's how:
FirstEnergy insists it must charge certain fees to customers represented by groups like NOPEC that want to buy power from outside suppliers.
One of those potential suppliers, Florida Power & Light, has signed a letter of intent with NOPEC to supply up to 600,000 customers in FirstEnergy's territory - at a discount.
Whether FP&L and NOPEC ever pull the trigger on a contract depends on the outcome of the FirstEnergy rate case - specifically, on the fate of language the utility inserted in the rate plan that would make it hard for competitors to penetrate FirstEnergy's markets.
The FirstEnergy rate proposal calls for base rates of 7.5 cents per kilowatt-hour (1,000 watts for one hour) in 2009, 8 cents per kWh in 2010 and 8.5 cents per kWh in 2011.
Customers who buy from outside suppliers - for example, those represented by NOPEC - would not be allowed to skip all of FirstEnergy's charges, as the plan is currently written.
FirstEnergy is willing to drop part of its rate but argues that it should be allowed to keep at least a 1-cent-per-kilowattt-hour portion and tack that onto whatever an outside supplier charges - in this case, to whatever FP&L charges.
That penny per kilowatt-hour is necessary, FirstEnergy argues, to cover the risks Ohio Edison and the Cleveland Electric Illuminating Co. would take buying power for 2.1 million Ohio customers, including those who might end up getting their power elsewhere.
NOPEC has argued that the penny looks an awful lot like a "standby charge," which would cover the cost of buying power for customers who might return from another supplier. A standby charge is not allowed under the new law and would make FP&L's rates all the higher.
And there is another issue: FirstEnergy wants to defer some of its rate increase to keep it manageable for consumers. The utility would begin to collect the deferred portion in 2011.
In other words, FirstEnergy's new proposed rates - when the deferral is factored in - are actually higher than stated, about 0.75 cents per kWh higher, NOPEC calculates.
Herington thinks that three-quarters of a cent ought to be counted with FirstEnergy's stated charge as "the price to compare" when NOPEC signs a final contract with FP&L. FirstEnergy thinks otherwise.
"NOPEC believes that these two parts of FirstEnergy's application are anti-competitive, illegal and designed to prevent NOPEC's continued success," Herington wrote in a memo to the consortium's member communities Wednesday.
To reach this Plain Dealer reporter:
jfunk@plaind.com, 216-999-4138
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