FirstEnergy agrees to drop rate rider

The Public Utilities Commission of Ohio last week authorized revised decoupling rates for FirstEnergy’s Ohio distribution utilities, setting them to zero.
The utilities will stop including the decoupling charges on customer bills effective Feb. 9, the PUCO said.
FirstEnergy’s three Ohio utilities, Cleveland Electric Illuminating Company, Ohio Edison, and Toledo Edison, are affected by the change.
Dropping of the rates comes from an out-of-court settlement between FirstEnergy and Ohio Attorney General Dave Yost.
One purpose for decoupling is to compensate utilities for lost revenue stemming from customers participating in utility-run programs to increase energy efficiency. The programs help customers use less energy and lower their bills but potentially lower profits for utilities.
Days prior to the PUCO decision, State Senator Mark Romanchuk provided sponsor testimony on Senate Bill 10 before the Senate Energy & Public Utilities Committee. He said the decoupling provision was designed to “financially benefit a single company at the expense of Ohioans.”
He explained the revenue decoupling mechanism was included in House Bill 6 passed in July 2019 and it has only benefited the three operating companies of one Ohio utility. He didn’t name the companies but analysis by the Legislative Service Commission says SB 10 would repeal the decoupling mechanisms for Toledo Edison, Ohio Edison, and Cleveland Electric Illuminating Co.
“Once a decoupling mechanism is implemented, charges are levied in the form of a ‘rider’ on ratepayer bills. The purpose of the mechanism was to allow the utility to recover lost distribution revenue due to the implementation of energy efficiency programs, and to create an incentive for the utility to pursue such programs. Since mandatory energy efficiency requirements were eliminated by HB 6, the need for decoupling mechanisms no longer exists,” Romanchuk told the committee.
Prior to the passage of HB 6, decoupling mechanisms were set by the Public Utilities Commission of Ohio rather than the legislature.
When creating the mechanisms, the PUCO would consider factors such as economic and weather conditions so the utility would not ‘over recover’ revenue lost as a result of factors other than energy efficiency programs.
Sen. Romanchuk said neither weather nor economic conditions were included in HB 6 language for calculating the decoupling mechanism rider.
“Also, 2018 was chosen as the base year to calculate the HB 6 decoupling rider. Coincidentally or not, 2018 represented the highest distribution sales in the last 10 years for said utility, Sen. Romanchuk told the committee. “In 2018, the utility received $978 million in distribution revenue. Since 2018 was chosen as the base year to calculate the HB 6 decoupling rider, the utility will receive $978 million annually in distribution revenue regardless of consumer usage (demand) for the foreseeable future. This transfers the risk of weather and economic conditions to the ratepayers.”
Robert Kelter, of the Environmental Law and Policy Center, told the committee that HB 6 still bails out nuclear plants and pays for the bailout with revenue from the elimination of energy efficiency programs that helped consumers lower their bills.