Ohio senate approves electric rate plan

The plan would lock current rates in place as the new starting point for talks with utilities about future rate increases. That means consumers would continue to pay what were supposed to be temporary surcharges on their bills to help Toledo Edison's parent, FirstEnergy Corp., recoup past power plant and other investment costs, including those at the Davis-Besse nuclear power station near Port Clinton.

Consumer's Counsel Janine Migden-Ostrander said that translates into $580 a year that otherwise would have dropped off bills when FirstEnergy's current regulatory plan expires at the end of 2008.

"The way things are being evaluated is pretty generous to the utilities at the expense of residential customers," she said. "This is not a good deal for residential customers." With the exception of the new rate floor, the Senate version does not deviate dramatically from the plan Gov. Ted Strickland proposed about two months ago. The cooperation to date has been a far cry from the contentious battle in 1999 when lawmakers first set Ohio on a course toward a competitive electricity market that they are now backing away from.

"Today is a major step in this bipartisan effort to ensure that we protect Ohio jobs by ensuring stable and predictable rates while bringing the jobs of the future by encouraging an advanced energy boom in our great state," Mr. Strickland said. "The Ohio Senate took my energy proposal and made it even better."

The rhetoric against the bill from utilities has softened considerably in recent days, although FirstEnergy said it still wants to stay the course into a competitive electricity market that the state says doesn't exist yet.

"We don't want our customers precluded from the benefits of a competitive marketplace," spokesman Ralph DiNicola said. "We still have concerns in that area. Does it make sense to go down this path (toward an open market) and then throw the baby out with the bath water?"

While rates for electricity customers throughout the rest of the state are largely expected to climb, Ms. Migden-Ostrander and power marketers have argued that FirstEnergy customers would stand a decent shot at lower bills in a competitive market. FirstEnergy customers pay the highest rates in the state, rates that are considered closer to current market prices than other utilities' rates.

FirstEnergy brought in a big gun, former U.S. Solicitor General Ted Olson, to lobby lawmakers on its constitutional concerns over government again involving itself in power plants that, in FirstEnergy's case, are now privately owned and interfering in interstate commerce decisions over where Ohio utilities can sell their power.

But Mr. DiNicola said Mr. Olsen's involvement was not a threat that a constitutional challenge to the law is planned. "With these power plants no longer under the purview of the (Public Utilities Commission of Ohio), obviously this is a bell that can't be unrung," Mr. DiNicola said. "It makes no sense for legislation to be held up in court because of somebody's misunde standing of constitutional issues."

Sen. Bill Seitz (R., Cincinnati) supported the bill, despite concerns that it breaks promises to utilities made in 1999. He cited Popeye's comic cohort Wimpy's trademark saying, "I'd gladly pay you Tuesday for a hamburger today." "It seems to me the utilities in this state made a deal in 1999," he said.

"We, the people of the state, asked them to reduce their rates by 5 percent, freeze them for (five years) with modest increases in the last two or three years. "We said we would gladly pay them next Tuesday when they could go to market," he said. "Like Wimpy, what we're asking them for is another hamburger today."

The bill still includes Mr. Strickland's call for electric utilities to find at least 25 percent of their power from advanced energy sources, a menu that includes cleaner-coal and nuclear technology, fuel cells, and renewable sources such as wind, solar and hydroelectric. But the Senate has added a provision allowing the PUCO to waive full compliance if utilities demonstrate that meeting the mandate has raised customers' bills by more than 3 percent.