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Consumer advocate appeals FirstEnergy rate case approval to Ohio Supreme Court

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Consumer advocate appeals FirstEnergy rate case approval to Ohio Supreme Court

Ohio's top consumer advocate is asking the Ohio Supreme Court to reverse regulatory approval of an eight-year electric security plan and related distribution rider for FirstEnergy Corp.'s utilities.

The Office of the Ohio Consumers' Counsel, or OCC, filed its notice of appeal Nov. 27 with the Supreme Court of Ohio and the Public Utilities Commission of Ohio. The appeal stems from PUCO's decision to approve a three-year, $204 million distribution modernization rider for FirstEnergy's Ohio utilities as part of their electric security plan.

PUCO on Aug. 16 largely affirmed its October 2016 decision to approve the annual rider. PUCO's order also allows for a possible two-year extension of the rider.

"This appeal seeks to stop customers from paying hundreds of millions of dollars ($204 million per year for at least three, but possibly five years) for rates that include unlawful charges to support the credit of FirstEnergy Corp., under the guise of a so-called 'distribution modernization rider,'" the OCC wrote in its notice of appeal.

FirstEnergy began collecting the nonrefundable charges Jan. 1 and opponents argue there is no specific requirement that FirstEnergy use the funds for grid modernization.

The OCC contends that the "credit support rider is an unreasonable and unlawful charge" that violates state regulations against market transition revenues and funding unlawful subsidies.

"The PUCO's unlawful and unreasonable rulings are allowing the FirstEnergy utilities to charge customers more than what is allowed by law," the OCC wrote. The consumer advocate requests that the court reverse or modify PUCO's orders with instructions to the commission to correct its errors. (Case No. 17-1664)

PUCO approved the distribution rider to protect FirstEnergy's credit rating and access to capital markets. FirstEnergy, however, advocated for a modified version of a previous PUCO-approved generation rider, which would eliminate a power purchase agreement between its Ohio utilities and corporate affiliate FirstEnergy Solutions Corp. The company revised this rider in response to the Federal Energy Regulatory Commission's decision that it must review the power sales contract between affiliates.

PUCO staff recommended regulators reject the revised generation PPA and instead approve a three-year, $131 million distribution modernization rider as the best option to protect FirstEnergy's credit rating while providing benefits to customers through grid modernization.

PUCO Commissioner Asim Haque has suggested "ring-fencing" FirstEnergy's regulated Ohio utilities to protect them from any financial distress experienced by the parent company and its unregulated business.

"The Commission does not intend to be, nor will it be, nor should it be the entire solution for FirstEnergy's current financial difficulty," Haque wrote in his opinion tied to the October 2016 order. "The Commission is an economic regulator. It is not a bank. It is not a trust fund. We authorize rates and charges that come directly from the pockets of consumers and businesses in this state." (PUCO docket 14-1297-EL-SSO)