Public Policy Research Education and Advocacy


FOR IMMEDIATE RELEASE                                                        Contact: David Hughes

June 9, 2004                                                                                                       412/421-4163 





            MADISON, Ohio, June 9/PRNewswire—The Public Utilities Commission of Ohio approved FirstEnergy’s so-called “Rate Stabilization Plan”(RSP) today. The plan calls for a three-year extension (2005-2008) of the Market Development Period, including an extension of transition or “stranded cost” charges customers pay for FirstEnergy’s investment in the Perry 1 and Beaver Valley 2 nuclear units. However, the PUCO will require FirstEnergy to first attempt a “Competitive Bidding Process” to see if the marketplace can provide better prices than FirstEnergy’s plan does.


            Citizen Power, a regional energy advocacy organization and a party to the FirstEnergy proceeding at the PUCO called the Commission’s decision a smokescreen. “The public outcry over FirstEnergy’s RSP has forced the PUCO to conditionally approve it, but in the end, customers will likely pay an additional $1.2 billion in so-called ‘Rate Stabilization’ charges,” said David Hughes, executive director of Citizen Power.  The PUCO has called for a bidding process to see if customers can get a better deal from competition than from the RSP. “The problem is, and the PUCO admits this, there is no competition, so unless a miracle happens, we should expect the RSP to go into effect next January. That means three more years of an unjustifiable charge for FirstEnergy’s billions of dollars in construction cost overruns at Perry and Beaver Valley, only the name will change from ‘transition charge’” to ‘rate stabilization charge,’” said Hughes.


This will be the third hit FirstEnergy customers have taken for FirstEnergy’s nuclear fiasco. In 1989, the PUCO illegally permitted FirstEnergy to charge for the massive construction cost overruns at Perry and Beaver Valley. In 2001, deregulation permitted customers to switch electricity suppliers, but the PUCO approved FirstEnergy’s request to continue the “stranded cost” charges, even if customers switched to an alternative supplier. “Once again the PUCO is letting FirstEnergy charge customers for Perry and Beaver Valley construction mismanagement, even though the company says it will have collected all of these costs by the end of the year,” said Hughes.


            The “stranded cost” or transition charge ranges from one fourth to one third of a customer’s bill. The charge was due to end on December 31, 2005. “This is a transparent money grab, there is no justification for extending this charge,” continued Hughes. “FirstEnergy says this is the price customers have to pay for keeping rates at their current levels. The PUCO and FirstEnergy are not doing us any favors by extending our very high rates for three more years.”


            In addition, Hughes says today’s decision proves that deregulation is a failure. “The people that brought us the failed “Electric Choice” program are now trying to prevent a California-like mess in Ohio by extending regulated rates,” stated Hughes. “It’s a simple plan: ratepayers are promised choice and lower prices, but instead get no choices and continued high rates. It’s a win-win for utilities, a gift from their lapdog PUCO,” Hughes said.


            “It’s unfortunate that this rogue state agency is out of control thanks to the Ohio Supreme Court’s refusal to make PUCO abide by the law,” said Hughes. “Only the General Assembly can right this wrong, and it should be moving to dump deregulation and institute a system that will ensure fair rates and the increased use of efficient, clean and renewable energy technologies,” Hughes concluded.