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PUCO Hears Testimony in Combative $3M FirstEnergy Rate Case

September 9, 2015 By Cheryl Kaften

The Public Utilities Commission of Ohio (PUCO) began hearing arguments on August 31 about a rate request from FirstEnergy (Docket 14-1297-EL-SSO) that would shift the financial risks of operating two of its generating plants away from the company’s subsidiaries – Ohio Edison, Cleveland Electric Illuminating, and Toledo Edison – and to their  2.2 million ratepayers  in the Buckeye State.

FirstEnergy claims that energy produced by the two traditional plants – one, a nuclear facility; and the other, a coal-fired generator – is vital in order to maintain grid reliability and cost stability in its combined service areas statewide.

Environmentalists argue that both plants should be shuttered – and renewable generators should take their place. What’s more, they assert that Ohio’s residents and businesses should not be asked to shoulder the costs of the failing generators – essentially “bailing out” power producers doomed by flawed economics.

Specifically, under the terms of the rate proposal, the Ohio-based utilities would buy all energy produced at the Davis-Besse nuclear plant in Oak Harbor and the Sammis coal plant in Stratton, Ohio, as well as FirstEnergy’s entire share of energy produced at two 1950s-era coal-fired plants owned by the Ohio Valley Electric Corporation.

“Essentially our utilities will buy the output of certain power plants and then sell that power into the marketplace,” explained FirstEnergy spokesperson Doug Colafella in a report by the newspaper, The Toledo Blade. “Depending on how those power plants perform in the market, customers will either see a charge on their bill or a credit on their bill.”

He further clarified that ratepayers would get credits against their bills whenever power purchased from the plants draws more on the competitive market than it cost to produce. But when the opposite occurs, customers would see riders on their bills to make up the difference.

“FirstEnergy takes its obligation to serve customers with affordable, reliable power seriously,” Mr. Colafella commented. “Recent extreme weather events have proven that a diverse supply of power generating sources, including scrubbed coal and nuclear plants that can run around the clock, is essential to our security and economic prosperity.”

While the utility holding company concedes that energy bills may be higher – by as much as $400 million – for the first few years of the 15-year proposal, Colafella said that amount was justified because customers would come out $2 billion ahead over the long haul.

However, about 20 environmental protesters who gathered outside the hearing were not so sure – and they pointed to expert testimony as proof of their positions.

The plan would have “a net cost to customers of about $3.1 billion to $3.2 billion,” Matthew Kahal, a consultant retained by the Ohio Consumers’ Counsel and the Northeast Ohio Public Energy Council, wrote in testimony filed with PUCO. “The commission should protect Ohio customers from this result and reject the … proposal.”

With many experts on both sides still to be heard, the hearing is expected to go on for several weeks.

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