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State panel approves FirstEnergy’s request; company says electric bills will decrease

By: Bob Downing|

Electric bills for FirstEnergy Corp.’s 1.9 million residential customers in northern Ohio were expected to increase if the Public Utilities Commission of Ohio approved a deal to keep two older, high-cost power plants operating.

The Akron company said bills would likely increase by an average of $3.25 a month.

That arrangement was approved Thursday by the PUCO by a 5-0 vote, although legal challenges by opponents and questions from federal regulators are likely.

The commission also approved a request from Columbus-based American Electric Power that will produce similar results.

About 2½ hours after the PUCO meeting ended, FirstEnergy — in a surprise twist — announced it is confident that the average consumer’s electric bills will actually decrease, not increase.

The reason?

The cost of producing electricity has dropped sharply in the two years the PUCO case was pending, FirstEnergy spokesman Doug Colafella said.

The lower power costs will offset the added costs to help FirstEnergy operate a nuclear power plant near Toledo and a coal-fired power plant in eastern Ohio for eight years, FirstEnergy spokesman Todd Schneider said.

It’s unclear whether the $3.25-per-month added cost to help operate the plants is still a valid estimate, according to FirstEnergy.

The PUCO ruled in the 137-page decision that FirstEnergy could not increase electric rates in the first two years, and that changed the entire financial picture and previous cost estimates, the company spokesmen said.

The average residential customer now pays $96 a month.

FirstEnergy is projecting that the electric bills will remain lower than what they are now for the next two years, Colafella said. How much the electric bills might drop is unknown and is dependent on April power auctions and having the PUCO approve new rates for FirstEnergy’s three Ohio utilities, including the Ohio Edison Co.

Rates to be filed

New rates are scheduled to be filed with the PUCO by May 2, he said. The lower rates would go into effect around June 1.

The PUCO approvals for FirstEnergy and AEP came with requirements for electric grid modernization, more renewable energy and reinstated energy efficiency programs, along with provisions to keep electric bills from climbing too much.

FirstEnergy is now obligated to reduce carbon dioxide emissions by 90 percent below 2005 levels by 2045.

It will contribute $102 million to help low-income residents with electric bills and to boost economic development in local communities.

Both orders were approved by 5-0 votes. Commissioner Lynn Slaby of Akron supported both measures.

The PUCO decision “will help protect our customers against rising electric prices and volatility in the years ahead, while helping preserve baseload power plants that serve Ohio customers and provide thousands of family-sustaining jobs in the state.” said Charles Jones, FirstEnergy president and chief executive officer, in a prepared statement.

Akron Mayor Daniel Horrigan said the PUCO decision is “good for Ohio and good for Akron.”

The deal will provide stability and balance the interests of customers, economic development and the environment, he said.

Opponents including environmental and consumer groups blasted the PUCO decision.

The Ohio Environmental Council said: “We are outraged that these proposals have been approved. These decisions lock in at least eight more years of harmful, unnecessary pollution, and force Ohioans to pick up the tab for corporate welfare of the worst kind. Bottom line, this decision by the PUCO is unacceptable.”

Freeze on standards

In 2014, Gov. John Kasich approved a two-year freeze on Ohio’s renewable energy standards that is due to expire at the end of 2016.

In 2008, Ohio had approved legislation requiring the state to acquire 12.5 percent of its energy portfolio from renewables and to reduce energy consumption by 22 percent by 2025 through energy efficiency. Utilities, however, pushed back against those mandates.

“Ohio regulators showed their loyalties lie with politically powerful polluters rather than the people they are supposed to serve,” said Jim Marston of the Environmental Defense Fund. “Instead of encouraging investment in abundant, clean energy solutions, these bailouts subsidize old power plants that are dirtying our air, a terrible deal for Ohioans’ health and wallets. Fortunately, since Ohio regulators refuse to defend fair markets and competition, we’re confident federal regulators and courts won’t let this harmful decision stand.”

Upset with decision

The Alliance for Energy Choice, a group representing other Ohio utilities, is “dismayed” that the PUCO approved the two requests, said spokesman Todd Snitchler, a former PUCO chairman from Stark County. His group said it will pursue “all available options” to promote fair competition in electric markets, he said.

The deal will help FirstEnergy continue to operate the coal-fired W.H. Sammis plant on the Ohio River at Stratton in Jefferson County and the Davis-Besse nuclear plant on Lake Erie in Ottawa County.

The company says it cannot afford to keep those two plants operating without additional customer support. They produce 25 percent of FirstEnergy’s electricity.

The plan also covers FirstEnergy’s share of Ohio Valley Electric Corp. coal-fired facilities in Gallipolis and Madison, Ind.

It owns an interest in those plants that were developed in the 1950s by a coalition of utilities to serve the Atomic Energy Commission and its now-closed uranium-enrichment facility at Portsmouth.