CITIZEN POWER

Public Policy Research Education and Advocacy

FOR IMMEDIATE RELEASE Contact: David Hughes

June 14, 2001 412/421-6072

PUC DECISION: GPU RATEPAYERS TO PAY FOR MANAGEMENT

MISTAKES THROUGH HIDDEN CHARGE; MERGER WITH FIRSTENERGY ANOTHER BLOW TO COMPETITION

PITTSBURGH, June 14/PRNewswire---The decision today by the Pennsylvania Public Utility Commission gives General Public Utilities (GPU) the mechanism for a major revenue increase through a clever plan that is designed to let its supporters falsely claim it does not break the rate cap, according to utility watchdog organization Citizen Power. “Those charged with protecting consumers engineered a deal that rewards GPU mismanagement and gives ratepayers the shaft,” said David Hughes, executive Director of Citizen Power.

“No one should be fooled, the deal the PUC approved today will insure that GPU customers will pay more,” said Hughes. The new revenues, to be used to cover the difference between what GPU buys power for on the wholesale market and what it can charge its customers (i.e., Provider of Last Resort (POLR) costs) will be hidden in the ‘transition’ charge on customer bills. The actual transition charges will be deferred and collected between 2010 and 2015.

“A majority of the parties in this case did not support this settlement. Some of them were not even told discussions were going on,” Hughes said. “This deal is as rotten as it smells, and it is particularly outrageous that those who are supposed to fight for residential rate payers, negotiated it,” Hughes continued. “One of the more egregious aspects of the deal, which the PUC’s decision today doesn’t even mention, guarantees recovery of GPU’s POLR costs beginning this month, even if the merger collapses. This will insure that GPU’s POLR costs for the hottest months of this year are paid by ratepayers.”

The PUC overlooked its own concerns about the FirstEnergy-GPU merger that were noted in its May 24 decision, and approved a terrible settlement that gives blanket approval to the anti competitive merger, as well as the rate relief for GPU. In addition, the decision makes clear that the Commission fails to understand the settlement it approved today. The POLR costs will not be deferred, but in fact, collected first. The transition or “stranded costs” will be deferred to be collected later.

“There is no requirement in this settlement that any merger savings have to be shared with ratepayers,” according to Roger Odisio, economist with Citizen Power. “FirstEnergy got PUC approval to buy GPU without committing to do anything about GPU generation capacity problems or its financial situation,” Odisio said.

“This decision proves conclusively that this Governor and his PUC could care less about real competition,” Hughes said. “They’re more concerned with Wall Street than Main Street. This is just the latest clever little arrangement to keep up the appearance of competition when, in reality, customer bills are increasing and competitors are disappearing from the market, “ Hughes concluded.”

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