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PUCO modifies AEP ESP rate proposal:
OCC concerned about customer impact

Customers will see hundreds of millions of dollars in new rate increases following a decision in August by the Public Utilities Commission of Ohio (PUCO) authorizing a new American Electric Power (AEP) rate plan.

The new rate plan (called an electric security plan) will affect how much customers pay for their electric bills for the next several years and beyond. The rate plan involves further deregulating AEP, and transitioning its customers to electricity prices that are more controlled by the market than regulation. The Office of the Ohio Consumers' Counsel (OCC) supports the use of competitive markets where they are effective for setting the prices that consumers pay. But the OCC opposed the AEP proposal because residential customers were being asked to pay for AEP to make the transition to electric competition. While the OCC made numerous proposals for protecting consumers in the case, the PUCO rejected most of the proposals.

"Ohio consumers, who have faced challenges in a difficult economy, should be benefiting now from historically low prices in the electricity market," Ohio Consumers' Counsel Bruce J. Weston said. "Unfortunately, the result of this case is that Ohioans will pay dearly for AEP's transition to competition."

The most significant increase will result from an extra charge on customers' bills called the "retail stability rider." This additional charge was approved by the PUCO at a rate greater than what was requested by the utility. This charge will be added to customers' bills to compensate AEP for money it could lose to competition. As individual customers choose to purchase their electricity from competitive electric suppliers (known as "shopping"), the retail stability rider will increase. All customers will pay more for their electricity as more customers choose to shop.

As of May 2012, approximately 15 percent of residential customers had chosen to shop for their electricity by switching to a competitive electric supplier, according to AEP. When comparing residential consumers to business and industrial customers, the residential consumers are the least likely to take advantage of electric competition.

At the time of publication of this "Consumers' Corner" newsletter, the OCC was still analyzing the PUCO's order. The next step in the case is an opportunity to request that the PUCO rehear issues. The OCC is considering its options for consumer protection.

By Beth Gianforcaro

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Fall tip: check furnaces and water heaters

Leaves are starting to turn and temperatures are finally beginning to cool. It's a great time to start preparing your home for the cold winter months ahead.

The Office of the Ohio Consumers' Counsel (OCC) offers a comprehensive fact sheet detailing basic energy efficiency tips that can help you save money on your utility bills throughout the year. Consumers can access this information by downloading A customer guide to improving home energy efficiency at http://www.pickocc.org/publications/factsheets-smart_energy.shtml.

Early fall is when Ohioans turn off their air conditioners, open their windows and enjoy the fresh air. But as temperatures continue to dip, consumers start using their furnaces for the first time in several months. This is the time to check your furnace filters to make sure your furnace will run at maximum efficiency.

Not all furnace filters are equal so its best to check the manufacturer's instructions to guide you as to how often they should be replaced. The dirtier the filter, the harder the furnace will have to work to provide warm airflow. Dust and dirt particles released into the home by a poorly performing furnace can also create a problem for people with breathing difficulties.

A professional tune-up for your furnace is advisable every few years, to ensure it is in good working order. If your furnace is 10 years old or older, an annual tune-up is recommended. A typical furnace tune-up includes making sure the blower is clean and properly lubricated, checking the fan belts and wiring for cracks, and most importantly examining the furnace area for the presence of carbon monoxide.

For consumers with hot water heaters, a different but equally important level of care is advisable. First, check the temperature setting. The ideal reading should be no higher than 120 degrees. The OCC also recommends wrapping an insulation blanket around older water heaters to prevent heat loss. Attaching foam insulation around water pipes to prevent them from losing heat or freezing is recommended.

These are simple and relatively inexpensive steps that consumers should begin to think about this fall. Following these tips should result in better appliance performance and, hopefully, lower energy bills throughout the winter.

Stay tuned for more energy efficiency tips and a run-down of Ohio utility-run energy efficiency programs in the Nov./Dec. issue of Consumers' Corner.

By Marty Berkowitz

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A look back at Ohio's summer power outages

During late June and early July, nearly a million Ohioans were without power, in some cases for as long as 10 days, after a severe storm blew through Ohio and other Midwestern states. Governor John Kasich declared a state of emergency and President Barack Obama declared a federal emergency in Ohio. The American Red Cross opened a number of emergency shelters. And Cooling Centers were opened to help consumers affected by the prolonged outages.

Power outages can present safety risks. The Office of the Ohio Consumers' Counsel (OCC) encourages consumers to take precautions before and during such outages and offers the following safety tips:

• If you lose power, contact your utility as soon as possible. Some utilities prioritize their power restoration efforts based on the amount of calls received from an area;
  
  
• Monitor your and other people's health (especially the elderly) in extreme
  weather conditions;
  
  
• Contact the electric company to learn more about participating in the critical care list if you have friends or family who require electricity for medical needs;
  
  
• Stay away from downed wires, which still can be connected to electricity. Report them immediately to the local electric company;
  
  
• Report any damage to wires, transformers or other utility equipment immediately to the utility;
  
  
• Identify (from a distance) trees that have broken branches that could fall or cracks that may lead to a falling tree;
  
  
• When repairs crews are at work restoring power or clearing downed power lines, please stay clear of the work area and equipment, for your and their protection;
  
  
• Any use of gas-powered generators should be in accordance with safety instructions and never inside a home or garage where there is the danger of poisonous exhaust;
  
  
• If you are running a generator, please disconnect it when repair crews are at work in your area, for their protection;
  
  
• Turn off all major appliances and electronic equipment in the house. This will help protect equipment from surges when the power is restored. Also turn off or unplug all heat-producing appliances such as curling irons and electric ovens, to reduce the risk of fire or injury;
  
  
• Use caution to avoid consuming spoiled food that needed refrigeration. The U.S. Department of Agriculture offers a variety of fact sheets about food safety during an outage. Please visit: http://www.fsis.usda.gov/fact_sheets/
  
  
• Consider any options for housing and food storage alternatives if needed.

"The storms, the power outages and the extreme heat combined to create very serious conditions for Ohio residents this past summer," said Ohio Consumers' Counsel Bruce J. Weston.

Some electric utilities might seek to collect costs of the outages from customers, by filing with the Public Utilities Commission of Ohio (PUCO). In that event, the OCC will participate in the cases to represent the interests of residential utility consumers.

For additional information, please visit OCC's online fact sheet: Summer Power Outages: Safety Tips and Customer Rights:

http://www.pickocc.org/publications/factsheets-electric.shtml

By Beth Gianforcaro

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Duke Energy proposes electric and natural gas rate increases

Duke Energy Ohio is asking the Public Utilities Commission of Ohio (PUCO) to approve proposals for increasing the rates that customers pay for electric and natural gas service. The Office of the Ohio Consumers' Counsel (OCC) is participating in both cases on behalf of consumers and, as of the writing of this article, was still studying both proposals.

The OCC represents approximately 610,000 residential electric customers and approximately 380,000 residential natural gas customers of Duke.

The utility is seeking an $86.6 million annual increase in electric rates and a $44.6 million annual increase in natural gas rates. Duke has estimated that a typical residential customer would see an increase of about $6.50 in his/her monthly electric bill and $8 in his/her monthly gas bill. Customers who receive both gas and electric service from Duke could see even larger combined increases.

Duke claims the proposed electric rate increases are due to system improvements to its distribution infrastructure, a decline in electric sales and increased operations and maintenance expenses. It is requesting natural gas rate increases to collect its costs to clean up two former manufactured gas plant sites and to account for a decline in natural gas sales. Manufactured gas plant sites are locations where gas was once created from the combustion of coal, oil and other fossil fuels.

Customers can choose an alternative provider for their electricity or natural gas supply. However, customers cannot avoid paying Duke for distribution rates, which will be determined in this case. No matter who supplies natural gas or electricity to customers through Duke's systems of electric wires and natural gas pipelines, customers must pay the utility's rates associated with the distribution of that energy.

The OCC will continue to evaluate the impact of Duke's requests on residential customers. During the next few months, the PUCO may be scheduling local public hearings to hear from Duke customers. Visit www.pickocc.org to sign up for more information about this case, for our e-newsletter and for other important updates.

By Marty Berkowitz

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What are manufactured gas plants?

Before the invention of electricity, people used manufactured gas to light and heat their homes. This gas was produced and stored at hundreds of manufacturing sites across the United States for more than a century. There are almost 100 manufactured gas plant sites throughout Ohio.

The gas was manufactured by burning coal and converting it into gas. Enclosed brick ovens were used to convert the coal. Other materials, such as oil, wood and water were also used to create gases like hydrogen, carbon monoxide and methane, among others.

Manufactured gas produced a great deal of waste, in the form of tar, coke and ash. Typically these materials were buried on-site. Manufactured gas plants became inactive during the late 1960s due to the increased use of natural gas, which was cleaner and came directly from the ground. When the manufacturing plants closed down, contaminated byproducts from the production of the gas were left behind.

Federal regulations have required the cleanup of these deserted sites and the removal of the toxic wastes. Duke Energy (see accompanying story) is asking the Public Utilities Commission of Ohio to approve its proposal to pass these costs to its customers.

By Marty Berkowitz

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PUCO approves FirstEnergy rate proposal: Customers will see increases

FirstEnergy residential electricity consumers will see higher rates beginning June 1, 2014. The Office of the Ohio Consumers' Counsel (OCC) opposed many elements of FirstEnergy's application (called an electric security plan) and proposed numerous cost reductions. Despite these concerns, the Public Utilities Commission of Ohio (PUCO) approved the settlement offered by FirstEnergy and others in July.

"It is disappointing that so many of the proposals to protect consumers' rates were rejected in the PUCO's 4-1 decision," Consumers' Counsel Bruce J. Weston said.

One of the OCC's major concerns in this case was the utility's request to charge consumers up to $405 million for maintenance and infrastructure costs related to its distribution system. In the past, the OCC has supported reasonable charges to customers to maintain a safe and reliable electric system. But the OCC opposed FirstEnergy's request, saying the utility failed to demonstrate there was a need for the money, how the money would be spent and how customers would benefit. FirstEnergy's rates already include money to maintain the reliability of the electric infrastructure. In its ruling, the PUCO allowed the costs to be added to customers' bills as an additional charge (or rider).

Another major consumer concern relates to FirstEnergy's earnings. Ohio law requires the PUCO to review the earnings of any electric utility company that is not fully deregulated. This law still applies to FirstEnergy. If the PUCO finds that the overall earnings of the utility are "significantly excessive," the utility must return those excess profits to its customers. Previously, the OCC has raised concerns about significantly excessive earnings by AEP Ohio. In a case involving the 2009 earnings of Columbus Southern Power, customers received refunds that totaled tens of millions of dollars. And the PUCO has yet to decide a case regarding the 2010 earnings of AEP Ohio.

In this case, the PUCO allowed FirstEnergy to exclude certain revenues from this important review. By excluding revenues from the overall review of FirstEnergy's earnings, customers are less likely to receive a refund.

In a dissenting opinion against the commission's decision to approve the settlement, Commissioner Cheryl Roberto wrote "I find the proposed [plan] does not benefit ratepayers and/or violates important regulatory principles or practices … I find that this proposal provides too ambiguous of a benefit, if any benefit exists at all, to value."

In August, the OCC and some other parties filed applications requesting that the PUCO reconsider its decision to approve the plan. The PUCO has until mid-September to consider the requests.

By Beth Gianforcaro

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