FirstEnergy has asked the Public Utilities Commission of Ohio to increase its base rate, the fixed monthly fee the electricity provider charges regardless of how much energy users consume. The request has gotten pushback from the Office of the Ohio Consumers’ Counsel (OCC), which says the utility should instead reduce its rates — or at least not raise them as much as FirstEnergy is asking.
The final decision will be made by PUCO commissioners, who will look at the rationale for the increase, who will pay for it and how much they will pay. Any party to the case can file an appeal once the decision has been made, first to PUCO, then to the Ohio Supreme Court.
Why is FirstEnergy asking for an increase?
The Public Utilities Commission of Ohio told FirstEnergy in 2021 that it needed to file a base rate case in May 2024. Because of that order, FirstEnergy filed a request last year to raise its base rates for electricity.
When did FirstEnergy last ask for an increase in its base rate?
The last time FirstEnergy asked for an increase in its base rate was in 2007. It received the increase in 2009.
Why does FirstEnergy say it needs the rate increase?
Since its last increase, FirstEnergy’s operating and other costs have “increased significantly,” the company said in a filing. On top of that, it has deferred costs that this rate case will help it pay for.
FirstEnergy said its current base distribution rates are “unjust and unreasonable” because they “are insufficient to yield reasonable compensation for the distribution service” the company renders. Additionally, it said, the current base rate does not provide FirstEnergy with a fair return.
A reasonable rate of return is 8.48%, the company said, while its top rate of return for Ohio Edison, Cleveland Electric Illuminating Co. and Toledo Edison (the companies it operates in the state) is Toledo Edison’s 1.3%.
So how much are they asking for?
FirstEnergy has proposed a 10.8% overall rate of return, with rates for its three Ohio companies ranging from 8.18% for The Illuminating Co. to 9.09% for Ohio Edison. The proposal also requests annual base rate revenue increases for the companies.
What would the base rate increase cost me?
A typical customer who uses 750 kilowatt hours of electricity per month should see their bills increase by $1 a month if they’re an Ohio Edison customer, the filing said. But the OCC said the increases would be higher — nearly $3 a month more for an Ohio Edison customer who uses 1,000 kilowatt hours of electricity monthly.
What does PUCO say about the proposed increase?
An auditor hired by PUCO suggested the rate of return should be 9.63%. PUCO said it usually recommends a range. It used the auditor’s recommendation as a midpoint, saying a rate of return of between 9.13% and 10.13% would align with the auditor’s recommendation. But a PUCO staff report did not take a position on the auditor’s recommended rate.
What does the Office of the Ohio Consumers’ Counsel say about the rate?
The organization, which represents 1.9 million FirstEnergy customers, said in a filing that there were a number of errors in PUCO’s staff report, including not challenging the assumptions that FirstEnergy would have no staff vacancies and that wages would increase 4% annually at the company when 2.5% increases are more normal.
It states the auditor’s suggested 9.63% rate of return “will result in unjust and unreasonable rates and charges to consumers.” A maximum 9.46% rate of return would be more reasonable, given the errors in the staff report, the filing said.
But the OCC didn’t stop there — it said FirstEnergy should pay a price for its involvement in the corruption and bribery scandal known as House Bill 6.
“The H.B. 6 scandal was such an egregious violation of laws and norms that the PUCO should take this action to hold FirstEnergy accountable in a way that benefits consumers — unlike the forfeitures in the H.B. 6 investigation cases that will not flow to consumers,” the filing said.
It suggests an additional reduction of the rate of return because of the scandal, bringing its recommended maximum rate to 8.96%.
What is the OCC?
The state office was created in 1976 to represent Ohio consumers regarding electric, natural gas, telephone and water services owned by investors. It advocates for consumers in front of the PUCO and elsewhere, educates consumers about utility issues that affect their bills and service and monitors public utilities’ compliance with regulations to protect consumers.
Can you remind me about the HB 6 scandal?
The issue dates back to 2019, when House Bill 6 was introduced to bail out two nuclear plants that FirstEnergy Solutions announced in 2018 would be closed. It also bailed out two coal-fired plants owned by the Ohio Valley Electric Co., one in Ohio and one in Indiana.
FirstEnergy gave $4.3 million to Sam Randazzo’s Sustainability Funding Alliance shortly before he became the head of PUCO; he resigned in 2020 after the Federal Bureau of Investigation raided his house. Randazzo was indicted in December 2023 on federal bribery and embezzlement charges and again in February 2024 on public corruption charges at the state level. He died by suicide in April 2024.
HB 6 went into effect in 2019 after a referendum attempt to overturn it missed a deadline to get on the ballot. The next summer, Speaker of the House Larry Householder and others were arrested on federal public corruption and racketeering charges. Householder was expelled from the House in 2021; in 2023, he was sentenced to 20 years in prison. Some of Householder’s allies also pleaded guilty or were found guilty. Householder still faces state charges.
By fall of 2020, FirstEnergy had fired its CEO, Chuck Jones, and Michael Dowling, a senior vice president. They were indicted in February 2024 in Summit County and charged with bribery and engaging in a pattern of corrupt activity. Jones was also charged by the Securities and Exchange Commission for participating in the scheme to provide Householder with $60 million to support legislation that benefited FirstEnergy. Earlier this year, both were indicted on federal racketeering charges.
FirstEnergy has paid more than $333 million in fines to the SEC, U.S. Treasury, Federal Energy Regulatory Commission and Ohio Development Service Agency. Many of the criminal cases are ongoing.
What is the ‘Ohio hole’?
As part of the HB 6 corruption scandal, FirstEnergy bribed PUCO Chair Randazzo to eliminate the requirement that it file its 2024 rate case, under the assumption that it would result in a significant decrease. Jones, then FirstEnergy’s CEO, called the action “fixing the Ohio hole” by avoiding the presumed lower rates. In a filing, the OCC said neither FirstEnergy nor the PUCO staff report explain why what was expected to be a rate decrease by the company has become a rate increase. They suggest an audit to answer that question.
Would the new base rate be the only cost increase?
In addition to a higher base rate, the OCC said, PUCO recently approved a settlement that will charge residential customers up to $77.64 more each year. FirstEnergy also filed an electrical security plan case that could charge residential customers up to $288.36 annually for investments in a more modern, more reliable electric grid. On top of the rate case application, which the OCC said could mean consumers spend a maximum total of $173.22 a month, electricity costs could rise more for residential customers. The OCC said that increase is neither “just nor reasonable.”
“Moderating rates is especially important for consumers,” the OCC filing said. “High inflation and high interest rates have led to higher prices for everyday necessities such as rent, groceries, gasoline, and energy bills.”
Why would a base rate increase make a difference to the company?
FirstEnergy said a base rate increase would support its efforts to promote reliability, affordability and stewardship.
The base rate increase would help the company recover the cost “of significant capital investments” it made in its distribution system, according to a filing in the rate case, in addition to letting it recoup maintenance costs. That would promote system reliability.
“Planning ahead and operating in a cost-conscious manner results in affordable rates for customers,” the filing said.
And to promote stewardship, FirstEnergy said it wants to “improve the customer experience,” especially for its most vulnerable customers.
How many people would this affect?
FirstEnergy serves more than 2 million customers in Ohio, all of whom would be subject to the increase. The OCC said many customers have limited incomes and raising costs would be a burden to many families. The staff report should have addressed the affordability question, it said.
Were there any recommendations to make electricity more affordable?
The staff report suggested FirstEnergy end the practice of compounding fees for late payments because it harms customers who are in distress. The OCC said FirstEnergy should eliminate all fees for late payments.
“Needy consumers who should not be confronted with the problem of paying a late fee to avoid disconnection (or paying on time to avoid a late fee) or using the money to purchase other essentials for their households,” the OCC said.
The staff report also suggests FirstEnergy reduce and eventually eliminate fees to reconnect service after meter upgrades have been completed.
Didn’t I get a letter about this, telling me I might want to choose a new energy provider?
You might be thinking about letters from the City of Akron’s electrical energy provider, Dynergy, sent to those who have opted in to the city’s electrical aggregation program. Those letters say higher costs from energy providers are expected to raise rates for those who use the rate lock-in service by $40 a month.
What are people saying about the proposal?
More than 200 public comments have been filed, some of them in public meetings, including one held in Akron last month. Many are opposed to the rate hike, with some referencing the HB 6 scandal as a reason FirstEnergy shouldn’t get the increase. Others say they can’t afford higher costs. Governments, including Lucas County, Put-in-Bay and the City of Chardon, have registered their opposition.
How can I share my thoughts?
You can file a public comment here. Make sure you include the case number, 24-0468-EL-AIR. Comments can be shared anonymously; all will be part of the public record for the case. You can also send a letter referencing FirstEnergy and PUCO Case 24-0468-EL-AIR to:
Public Utilities Commission of Ohio
180 E. Broad St., 11th Floor
Columbus, Ohio 43215