Akron, OH, July 11, 2007 — FirstEnergy Corp. subsidiaries Ohio Edison, The Cleveland Electric Illuminating Co. and Toledo Edison filed a comprehensive generation supply plan with the Public Utilities Commission of Ohio (PUCO) that supports the goals outlined in Ohio’s deregulation law and reflects the key priorities of current state energy policies and initiatives. The plan is designed to help protect customers from generation price fluctuations, promote energy efficiency and demand response, and support advancement of renewable resources and economic development when price caps end in 2009, said the companies. Under the companies’ current rate plans, generation prices are capped through December 31, 2008.
The filing outlines a bidding process for providing competitively priced generation service to customers who do not purchase electricity from alternative suppliers, said the companies. The process is designed to minimize customers’ exposure to price volatility in the electricity market by averaging the results of multiple bidding sessions conducted at different times during the year. Also, if the residential customer class would experience a change in the average total price of 15 percent or more, the plan would provide the PUCO with an option to phase in the increase over time, said the companies.
The competitive bidding process also is designed to encourage lower prices by minimizing supplier risk through the use of seasonal rates that align suppliers’ revenues with their costs and a process to address unanticipated new regulatory or regional transmission organization charges. The process will offer customers time-of-day and hourly pricing.
The proposal, said the companies, is designed to help support the development of renewable resources by designating that a portion of the generation supply come from renewable sources.
Under the proposal, suppliers would bid for portions of customers’ supply needs — called tranches — equaling approximately 100 megawatts. A descending clock format would be used with the bid price per tranche declining until there are just enough bids to supply all customers. Individual bidders would be limited to no more than 75 percent of the total customer load to encourage supplier participation.
The proposal envisions multiple bids being held in 2008. The final price per kilowatt-hour included in rates would reflect an average of the prices resulting from all bids. The companies offered two alternatives for structuring the bids, either by customer class, with residential, small business and large business customers being bid separately, or by combining all classes for tranches that represent a portion of the total customer load. In either case, rates would be established by customer class, based on the bidding results. Bidding would be conducted by an independent manager to ensure that the process is conducted in an open, transparent manner.
Following the 2008 bidding process, multiple bids would be held annually for one-third of the total amount of customer supply for a 36-month period, with resulting prices being averaged with existing prices, further insulating customers from volatility.
The companies requested that the PUCO issue an order by November 1, 2007.
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