FirstEnergy Corp. won approval on Wednesday for a process to determine the electricity prices that customers who buy their power directly from the utility will pay through 2016.
The Akron-based utility had asked the Public Utilities Commission of Ohio that its current process, known as an “Electric Security Plan,” be extended for another two years beyond 2014.
FirstEnergy will continue to use a series of competitive auctions to determine the price that customers pay for generation, said company spokesman Doug Colafella. The price determined by the auctions is paid by what are called default service customers, who have not chosen another supplier. However, many competitive suppliers, such as FirstEnergy’s own subsidiary FirstEnergy Solutions and companies that supply government aggregation plans, offer prices to customers based on a discount, Colafella said.
According to the PUCO, 75 percent of eligible customers in FirstEnergy’s Ohio Edison territory are served by other suppliers, meaning 25 percent of customers still purchased what’s called the Standard Service Offer, or utility price — that will be determined by auctions.
Consumer advocates, including the Office of the Ohio Consumers’ Counsel, on Wednesday said they were reviewing the commission’s order and did not have any comment. However, in May the consumers’ counsel had called for the rejection of the FirstEnergy plan, saying it could lead to higher prices.
As part of the approved plan, FirstEnergy’s base distribution rates will remain frozen. The company will also contribute more than $10 million in annual economic development funding for Ohio communities and assistance to low-income customers.
The company’s current plan, which remains in effect until mid-2014, has “been widely considered a success,” Colafella said. “It’s resulted in price certainty for those customers who aren’t shopping for a supplier. Since last July, electric generation rates have gone down almost 10 percent. Essentially, we were looking to extend our current plan for two years.”
Electricity prices are at historic lows and by allowing a competitive bidding process to purchase power over a three-year term, that will allow the utility to “take advantage of current low prices and blend prices over the long term to help shield our customers from potential price spikes in future years,” he said.
Prices won’t be known until the auctions take place, Colafella said.
An independent bid manager will conduct four auctions between October 2013 and January 2015. Auctions previously scheduled for this October and January 2013 will now cover a three-year period and be blended with subsequent auctions.
“Today’s decision supports the already growing competitive marketplace in Ohio,” Todd Snitchler, PUCO chairman, said in a news release. “By blending upcoming auctions, we’re able to mitigate potential future market fluctuations, ensuring more favorable rates for FirstEnergy customers over the long term.”