Ohio Consumers’ Counsel challenges electric charges at Ohio Supreme Court

COLUMBUS, Ohio, Jan. 16, 2004 — For more than a year, some electric customers have been paying new “line extension” charges during a period when they were guaranteed that their rates would be capped.

The Ohio Consumers’ Counsel (OCC), the residential utility advocate, today argued in front of the Ohio Supreme Court that these additional fees should not be charged to consumers for having power lines extended to their new homes.

As part of Ohio’s electric restructuring law, each utility was required to cap existing electric rates beginning January 1, 2001, through the end of the market development period in December 2005.
Those rates already included charges for electric line extensions. In November 2002, despite this cap on rates, the Public Utilities Commission of Ohio (PUCO) approved requests from American Electric Power, First Energy and Monongahela Power to impose additional line extension fees.

“One of the benefits promised to residential consumers when the electric market opened to competition in January 2001 was a cap on their electric rates for a period of five years,” said Eric Stephens, Deputy Consumers’ Counsel. “The PUCO’s action violates that promise and Ohio law.”

The PUCO’s decision gave Ohio’s investor-owned electric utilities the ability to charge residential consumers a new one-time fee of $300 to $375 for extending electric lines to single-family homes not previously connected to the power system. For a multi-family home that fee is $100. In addition, consumers in a single-family home must pay an $8 monthly fee while a $4 monthly fee is charged to consumers in multi-family homes. For some consumers, these fees could be collected through December 2008.

“By approving these new fees, the PUCO is allowing electric companies to double recover line extension costs that consumers are already paying for in their rates,” said Stephens. “A rate cap is a rate cap. This violates the law.”

The PUCO also violated the rate cap by giving companies the ability to defer, with approximately 19 percent interest, any costs not covered by these new one-time line extension charges and monthly fees. Once the electric rate cap ends, each utility could pass these remaining costs onto all customers through higher electric rates.

The OCC has consistently opposed these new electric line extension fees at the PUCO. Over the OCC’s objections, and the testimony of several consumers affected by these new charges, the PUCO approved the fees in November 2002. Today, the OCC asked the Supreme Court to reverse the PUCO’s decision and force it to observe the rate cap mandated by law.

About the Ohio Consumers’ Counsel

The Ohio Consumers’ Counsel (OCC) is the residential utility advocate serving as a resource for individuals who have questions and concerns, or would like more information about the services provided by their publicly owned electric, natural gas, telephone and water companies. The state agency also educates consumers about utility issues and resolves complaints from individuals.

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