Public Policy Research Education and Advocacy


FOR IMMEDIATE RELEASE                                                            Contact: David Hughes

June 12, 2001                                                                                                     412/421-6072




          PITTSBURGH, June 12/PRNewswire—The proposed settlement filed yesterday at the Pennsylvania Public Utility Commission by FirstEnergy and General Public Utilities is a bad deal for GPU ratepayers, for competition and for the environment, according to David Hughes, Executive Director of Citizen Power, a utility watchdog organization. In comments to be filed  tomorrow, Citizen Power will urge the PUC to reject this settlement proposal and protect ratepayers and Pennsylvania’s fledgling competitive electricity market.


            The settlement proposal, signed by only a few of the parties to the FirstEnergy-GPU merger and GPU rate cap relief cases, is designed to decide the case that has the Commission in a predicament. It appears that the Governor and the PUC do not want to grant the company’s request for a rate increase that would break the deregulation price cap, but they fear for GPU’s financial status if the merger is not consummated. The PUC is to vote on the case on Thursday.


            “The Governor and notable others have made it clear they wanted the promised benefits of deregulation to be preserved,” said David Hughes. “This deal gives FirstEnergy tremendous market power in Pennsylvania, while letting its proponents claim that it does not break the price cap. This claim is not true. GPU customers are going to pay higher bills if this settlement is approved,” said Hughes.


            The settlement includes language that lets FirstEnergy and GPU collect some, or all, of the difference between the costs of buying power and what it can charge it’s customers. This increase will be hidden from ratepayers because it will be collected through the “transition” charge on their bills. The actual “stranded costs”, supposed to be collected through the transition charge, will be deferred and collected from ratepayers beginning in 2010.


            “GPU voluntarily chose to sell all of it’s generating capacity, so if it has to pay increased prices for wholesale power, (known as “Provider of Last Resort (POLR)) that is a bill it’s shareholders should eat,” said Hughes. “It is outrageous to charge ratepayers again for the company’s mistakes and Citizen Power refuses to be part of this,” Hughes said.


            FirstEnergy has agreed to provide $15 million for renewable energy projects, but will completely control $10 million of the spending. “This is not a ‘green’ company. They cannot be trusted to spend this money on legitimate renewable energy projects,” said Hughes. “Citizen Power is not going to support a settlement that gives FirstEnergy the ability to limit competition and green power development in Pennsylvania,” continued Hughes.


            “If the merger fails for any reason, the settlement terms get worse,” said Roger Odisio, economist with Citizen Power. “GPU will not have to wait until 2010 to collect its POLR costs. GPU ratepayers will pay all of GPU’s POLR costs incurred beginning June 1, 2001, with only the precise timing yet to be worked out,” concluded Odisio.