FirstEnergy's electric security plan
Electric security plan 101
An electric security plan (ESP) is a rate plan for the supply and pricing of electric generation service. FirstEnergy’s current ESP is in effect through May 2016.
Under the current ESP, generation rates are determined through a competitive bidding process known as an auction. The auction is conducted by an independent bid manager.
FirstEnergy’s base distribution rates are frozen through May 2016.
What did FirstEnergy request in its new ESP application?
On Aug. 4, 2014, FirstEnergy filed an application for a new ESP for the period of June 1, 2016 through May 31, 2019. The application also proposes to freeze base distribution rates through the end of the requested ESP period.
In this application, FirstEnergy proposes to secure all supply needed for its standard service offer (SSO) for Ohio Edison, Toledo Edison and The Cleveland Electric Illuminating companies through a competitive bidding process. FirstEnergy proposes to conduct six auctions over a three-year period for products of one to three years in length.
In this application, FirstEnergy requests to add two new riders, modify 12 existing riders and remove six expiring riders.
FirstEnergy has requested approval of a Retail Rate Stability Rider to act as a retail rate stability mechanism through a 15-year power purchase agreement. In the proposed agreement, the companies would acquire generation from their share of Ohio Valley Electric Corporation and generation from the Davis-Besse and W.H. Sammis plants and then sell that capacity back to the PJM market. The new rider would include the net costs associated with legacy contracts, capital investments and credit the revenue from selling the capacity, energy and ancillary services from the three plants into the PJM market.
The Government Directives Recovery Rider is requested to recover costs incurred from implementation of programs required by legislative or governmental directives.
- FirstEnergy will commit to provide up to $1 million per year combined for economic development and energy efficiency during the three-year term of the ESP.
- FirstEnergy will commit to provide up to $5 million per year for low-income customers throughout the three-year term of the ESP.
- FirstEnergy will meet its renewable energy resource requirements during the term of the ESP by obtaining renewable energy credits (RECs) through a request for proposal process.
How can I make my voice heard?
In January 2015, the PUCO held three local public hearings to provide the public an opportunity to express their views regarding FirstEnergy's electric security plan application. Hearings were held in Akron, Toledo and Cleveland.
Consumers may also submit comments online at www.PUCO.ohio.gov or by mail addressed to the Public Utilities Commission of Ohio, 180 E. Broad St., Columbus, OH 43215. Correspondence should include the case number 14-1297-EL-SSO.
What happens next?
All testimony from parties that have intervened in the case will be filed by March 2, 2015, and PUCO staff will file its testimony by March 27, 2015. An evidentiary hearing is scheduled to begin April 13, 2015, at the PUCO offices.
History of deregulation
A law enacted in 1999 restructured Ohio’s electric industry by changing the way customers shop for electricity. The law, which took effect January 2001, provided for a five-year market development period. During this time, electric rates were frozen to allow a competitive retail market to develop.
As the end of the market development period neared, there was a growing concern that an immediate shift to market-based rates in 2006 would not be in the best interest of customers. To minimize the effects of rate “sticker shock” and transition customers to market-based rates, the PUCO worked with Ohio’s electric utilities to develop rate stabilization plans. The rate stabilization plans, along with other changes, eliminated market uncertainty and provided customers with stable rates. Most of these plans expired at the end of 2008.
In 2008, the Ohio General Assembly passed Senate Bill 221 to keep electric rates stable going forward, create jobs, implement energy efficiency and expand Ohio’s alternative energy industry. The new law incorporated a system under which rates would be approved by the PUCO beginning in 2009. Senate Bill 221 also outlined alternative paths for electric utilities to implement different forms of market-based pricing.