Ohio Court won't allow electric company to charge extra

Legal News Line Aug. 29, 2007, 10:22am


COLUMBUS, Ohio - Ohio's Supreme Court on Wednesday approved nearly all of a rate-certainty plan for FirstEnergy Corp., though it struck down a provision that would have allowed the company to recover fuel costs incurred in power generation operations. The 6-1 opinion says the Public Utilities Commission of Ohio erred in allowing the stipulation. Elyria Foundry, an industrial customer of FirstEnergy, and WPS Energy Services, a competitor, objected to the PUCO decision and filed for review by the Supreme Court. FirstEnergy and three of the companies it owns -- Cleveland Electric Illuminating Company, Ohio Edison and Toledo Edison -- wanted to recover fuel costs incurred from 2006-2008 by applying them to the rates paid by power distribution customers from 2009-2034. WPS claimed PUCO violated an anticompetitive subsidy law in approving the measure. "The PUCO, however, contends that there are no unlawful subsidies in this matter," Justice Evelyn Lundberg Stratton wrote. "The PUCO maintains that the commission's order approving the rate-certainty plan was concerned with FirstEnergy's market-based standard service offer and deferrals that could affect future distribution rates. "According to the PUCO, the market-based standard service offer and distribution rates 'are firmly regulated activities and thus cannot encompass the kind of activity that the General Assembly meant to control.' We disagree." Stratton added that PUCO did not account for the fact that its decision authorized what state law restricts -- cross-subsidization of two of the three major electric-service components (generation, distribution and transmission). Justice Paul Pfeifer dissented. In three cases affecting businesses decided this month, he has dissented in all three. His short opinion offered little insight, though, focusing on his feelings about the fuel cost deferral plan. "It is a boon to people who leave the system, whose current rates are being subsidized by future ratepayers. And it is a travesty to think that a child born next year, who takes an apartment in 20 years, will be paying (however small an amount) for last year's higher-than-expected fuel costs," he wrote. "Providing rate certainty today does not justify the commission's decision to allow current costs to be deferred. I dissent."

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