10/25/03

Columbus - Consultants' findings once thought to be destroyed turned up late yesterday at the office of Ohio Consumers' Counsel Rob Tongren.

Tongren's decision to keep the findings from the public during Ohio's deregulation debate in 1999 and 2000, and his office's destruction of them last summer after a records-policy change, prompted the launching of four inquiries in the past week.

OCC spokeswoman Maureen Miller said the documents were discovered by the consultant, Boston-based LaCapra Associates, and delivered yesterday to the Ohio utility watchdog.

The papers are expected to contain critical figures on how much LaCapra believed FirstEnergy was entitled to recover for its past investments under deregulation. Sources have said the number is between $2 billion and $4 billion - far less than the estimated $8.7 billion that the company eventually received after negotiations with Tongren.

Tongren's office told The Plain Dealer, in response to an August request for the findings, that all its copies - and those of the consultant - were gone.

They had been classified as case litigation files by Tongren's office and were destroyed one year after the office extracted itself from the FirstEnergy restructuring case. A previous retention policy would have required the files to be kept at least two years.

LaCapra's Dan Peaco said the consultant's copies had been discarded in the normal course of business.

Miller said the documents would not be released until the necessary legal clearances had taken place, which would probably happen Monday.

Both state Inspector General Tom Charles and Ohio Attorney General Jim Petro have launched investigations into Tongren's handling of the report.

The appointed Consumers' Counsel Governing Board and Senate Public Utilities Committee are also exploring his actions.

The board that oversees Tongren's operation said yesterday that it will hold a public inquiry into Tongren's handling of closely guarded consultants' findings. In a written statement, the board's top two members said they "intend to exercise the full limit of our authority" to en sure that Tongren's office cooperates with various investigations into the office's conduct.

In tandem with the probes by the attorney general and the inspector general, the board has called a special meeting for Tuesday, when Tongren and his staff will be publicly questioned.

"They [investigators] have a right to expect, and will receive, the Board's full and complete cooperation . . . as they conduct their inquiries," wrote Chairman Jerome Solove and Vice Chairman Rhonda Johnson. The pair said they don't expect any decisions to be made at the meeting.

The statement appeared to represent a change of mind for Solove, who last week came to Tongren's defense after news broke that the consumer advocate had kept the study from the public.

The study, part of a $579,000 assessment of the costs of electricity deregulation, included estimates by LaCapra recommending the amount FirstEnergy should recover for its past investments. Those so-called "stranded costs" - which cover the costs of power plants and other infrastructure built before the market was deregulated - are built into consumers' electric rates, which were frozen under Ohio's plan.

Those familiar with the issue say LaCapra's estimate, had Tongren advanced it, could have brought down FirstEnergy's set tlement costs in the case. That, in turn, could have driven down the cost of electricity in FirstEnergy territory by making competition more robust.

Tongren says he used the estimate behind the scenes to negotiate a better deal for consumers than they otherwise would have gotten. He said he made a professional decision not to introduce the figure into litigation because he thought it would be a costly, and ultimately fruitless, battle.

He said he was unaware of a policy change in his office that led to the documents being discarded this summer.

To reach this Plain Dealer reporter:

jsmyth@plaind.com,1-800-228-8272