This article comes from Canary Media’s Ohio Utility Watch newsletter, a monthly update on Ohio’s HB6 power plant bailout scandal. Visit our newsletter page to sign up.
Welcome to Ohio Utility Watch, a newsletter tracking Ohio’s ongoing public-corruption saga, often referred to as the House Bill 6 or HB 6 scandal. If you’re new to the story, it revolves around the use of dark money by utility companies and others to pass roughly $60 million in bribes to secure more than $1.5 billion in ratepayer subsidies for aging, uneconomical coal and nuclear power plants.
Here are some developments from the last few weeks:
The state’s consumer advocate wants regulators to reduce FirstEnergy’s rate of return to reflect poor management practices that enabled bribes and corruption.
Environmental advocates say FirstEnergy’s ratemaking case should consider grid disparities in disadvantaged communities.
Legislation that would remove HB 6’s coal plant subsidies is moving full-speed ahead, along with incentives for more in-state power plants.
At a March 13 hearing, former FirstEnergy executives again declined to answer questions, citing their Fifth Amendment rights.
Should ‘abysmal’ management mean less profit from ratepayers?
Ohio’s state consumer advocate and others say FirstEnergy should be penalized with a lower rate of return in its rate case due to the company’s “egregious violation of laws and norms” in connection with the HB 6 scandal.
The Office of the Ohio Consumers’ Counsel filed testimony on March 24 arguing, among other things, that the Public Utilities Commission should cut the company’s requested rate of return on capital investments by at least half a percent. All told, the consumers’ counsel says Ohio customers should pay FirstEnergy roughly $132 million less for annual distribution charges.
FirstEnergy responded on March 31, arguing the corruption scandal has no bearing on its first ratemaking case since 2007. Although the company expected five years ago that it would need to reduce rates when a new ratemaking process began, it now wants $183 million more per year from Ohio ratepayers.
The company has proposed that it earn a 10.8% rate of return on equity. That income generally functions as a reward to the firm for capital investments. An auditor hired by the commission suggested 9.63% based on its market analysis.
Ashley Brown, a former PUCO commissioner and past executive director of the Harvard Electricity Policy Group, said the company’s “abysmal” management should be a factor, regardless of whether it’s also addressed in other regulatory cases.
“I’ve never seen a better case for arguing performance should play a huge role in determining the rate of return,” Brown said.
Read more:
FirstEnergy asks regulators to raise rates by $183 million. Auditors say $8.5 million (Cleveland.com)
FirstEnergy wants to raise prices following repeal of scandal-tainted legislation (Ohio Capital Journal)
Should equity affect rates?
Ohio environmental advocates say FirstEnergy’s ratemaking case needs to address grid disparities for disadvantaged communities compared to elsewhere in the company’s service area.
The Ohio Environmental Council filed testimony last month criticizing the utility’s efforts to maintain and improve infrastructure for lower-income areas. The environmental group’s filings include testimony by Shay Banton, a regulatory program engineer and energy justice policy advocate for the Interstate Renewable Energy Council.
“When utilities are requesting a return on investment, I think it’s prudent for customers to know why those investments are being made and to make sure those investments are being made in an equitable way,” Banton told Canary Media.
FirstEnergy’s March 31 response argued that its ratemaking case is unrelated to the equity issues raised by the Ohio Environmental Council. However, company testimony filed on March 24 talks about various investments to maintain and improve reliability.
Read more:
