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Local
Companies | Article published November 20, 2002
FirstEnergy bid brings concern for
deregulation
By DAVID PATCH
BLADE STAFF
WRITER
A FirstEnergy Corp. proposal to reduce the rate
discount granted to customers who buy their electricity from other
suppliers has local officials worried that burgeoning electricity
competition in the region will be undermined.
The Akron
utility, parent company to Toledo Edison, has asked the Public
Utilities Commission of Ohio for permission to reduce its "shopping
credit" from about 4.6 cents per kilowatt-hour to about 4.2
cents.
Ralph DiNicola, a FirstEnergy spokesman, said the
change has been proposed because the current credit to consumers who
use electricity generated by competing firms effectively creates a
subsidy for those firms.
But Harry Barlos, a Lucas County
commissioner and spokesman for the Northwest Ohio Aggregation
Coalition, said PUCO approval of FirstEnergy’s application would
effectively wipe out the $20 to $30 annual electric-bill savings
that Toledo area residents had been led to expect from participating
in a power-buying pool.
"This action would be a stake right
in the middle of the heart" of electricity competition in northern
Ohio, Mr. Barlos said.
Mr. Barlos and other NOAC leaders have
scheduled a news conference for 10:30 a.m. today at Government
Center to detail their objections to the FirstEnergy rate
application. Toledo Mayor Jack Ford and Peter Gerken, chairman of
Toledo City Council’s utilities committee, also are scheduled to
participate.
Last year, Toledo contracted with FirstEnergy
Solutions, an unregulated FirstEnergy subsidiary, to supply
electricity to its aggregated electricity consumers at a rate of
4.35 cents per kilowatt hour. In doing so, the city split off from
NOAC, a consortium of seven suburban communities and Lucas County,
which negotiated a similar price from WPS, Inc., of Green Bay, Wis.,
to supply electricity.
Under deregulation, electricity has
been broken down into three components: generation, transmission,
and distribution. Only generation has been opened to competition in
Ohio; the transmission lines and distribution facilities FirstEnergy
and other utilities operate here continue to be operated as
regulated monopolies.
By reducing the generation credit
deducted from Toledo Edison bills to customers of WPS or FirstEnergy
Solutions, FirstEnergy effectively would raise the transmission and
distribution charge to those customers, said Mark Frye, president of
Palmer Energy, a consultant who has worked with local officials on
their aggregation plans. Still paying 4.35 cents per kilowatt-hour
to their suppliers, those customers would end up paying more for
electricity than those who continue with Toledo Edison’s
regulated-rate service, he said.
"What we’re likely to see is
a mass exodus from the market provisions" of deregulation, Mr. Frye
said.
Mr. DiNicola said, however, the nearly 850,000
customers of FirstEnergy’s three Ohio utilities who have joined
aggregation groups or otherwise begun "shopping" for power represent
about 40 percent of its previous 2 million customers, more than
twice the participation rate that the Ohio legislature anticipated
when it enacted deregulation.
He said the reduced "shopping
credit" still provides a 1-cent-per-kilowatt-hour spread between
FirstEnergy’s rate and the bargain rate the utility agreed to offer
on a pool of electricity it is selling to other suppliers to
stimulate local competition.
"Our goal here is to balance the
ability of the customer to shop with not having them subsidizing our
competition," Mr. DiNicola said.
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