Who pays for the mess at the
Davis-Besse nuclear plant?

May 15, 2002

Shari Weir, Consumer issues director
Ohio Citizen Action
(216) 861-5200

Can FirstEnergy find a way to get the Public Utilities Commission to let them pass along costs for Davis-Besse repairs or purchased power? Under the current law, the answer is no. What follows is a quick summary. If you want more details or statute language, let me know.

Rate freeze

The 1999 state electric deregulation bill (S.B. 3) caps rates at pre-deregulation levels for a specified time. For the FirstEnergy companies, the cap is through 2005.

State law still allows granting of emergency rate increases to avoid financial hardship to utilities. The catch is that the electric deregulation bill specifically exempts generation-related costs from this provision. If a major storm destroyed distribution lines, for example, FirstEnergy could file for an emergency rate hike because distribution is still regulated. Nothing in the current statutes would allow them to look for emergency relief for generation.

Rate reduction

The deregulation law also cuts the generation component of electric bills by five percent. For FirstEnergy companies that decrease will last through 2005. It can be taken away only if it is found to be a barrier to competition in the service area.

Regulated rates

FirstEnergy's transmission and distribution rates remain regulated by the Public Utilities Commission of Ohio. Only generation is competitive. In the plan with the Commission that gave FirstEnergy the $9 billion bailout, FirstEnergy agreed to freeze transmission and distribution rates through 2007, I think for all three companies. That's probably the weakest rate freeze, but it shouldn't be affected by generation expenses.

What FirstEnergy could do

If FirstEnergy wants customers to pay for Davis-Besse, they will have to go to the legislature. I'm not saying they won't, but it would be a tougher battle than exploiting a loophole already on the books.

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