Ohio Consumers’ Counsel opposes electric companies’ line extension agreements

COLUMBUS, Ohio, June 28, 2002 — Some Ohio electric utility companies are proposing significant price increases for customers whose new single-family or multi-family homes require a connection to poles, wires and other components necessary for electric service, the Ohio Consumers’ Counsel (OCC), the residential utility advocate, said recently.

The OCC believes these “line extension” price hikes, if permitted by the Public Utilities Commission of Ohio (PUCO), would violate the state’s electric choice law.

In a brief filed recently with the PUCO, the OCC opposes settlements agreed to by the PUCO Staff, FirstEnergy, American Electric Power (AEP), Allegheny Power, homebuilders and developers. The settlements authorize new charges for line extensions and allow companies to defer additional costs, potentially increasing all customers’ rates at a later date.

“Residential consumers were promised that their electric rates would be frozen as we move toward a competitive marketplace,” said Robert S. Tongren, Ohio Consumers’ Counsel. “The line extension settlements break that promise and burden some customers with thousands of dollars in new charges.”

The PUCO opened an investigation into line extension policies and ordered a moratorium on new line extension costs on October 24, 2001 after receiving complaints about high charges by FirstEnergy and AEP to extend electric service to some new homes. The investigation resulted in a PUCO staff report on February 15, 2002 recommending rate increases through new customer charges.

The line extension hearing lasted four days and included testimony by residential consumers. A consumer near West Jefferson told the PUCO that he was required to pay over $3,600 to Ohio Edison before line extension work began. He testified “[I] was trying to figure out why I was charged so much or at all, and [the Ohio Edison representative] said it was deregulation … “

A consumer near Delphos testified that her family was told by Ohio Power in January 2001 that underground service would be provided for approximately $600. The next month, the company gave the customer a new estimate of $7,200. “[An Ohio Power representative] told us it was due to deregulation … he kind of explained deregulation and told me the distribution part of the company had to be able to show a profit,” the customer testified.

“The OCC has heard from residential customers who have already paid thousands of dollars in line extension costs,” said Tongren. “Electric choice should have frozen the costs paid by consumers, but these customers tell a much different story.”

Following the release of the Staff Report, each utility negotiated separate agreements with the PUCO Staff, developers and homebuilders that required these customers to pay new up-front and monthly payments. On behalf of residential consumers, the OCC is urging the PUCO to reject these agreements, maintaining that imposing additional line extension costs would violate the rate cap mandated under the law and agreed to by electric companies in related cases.

The restructuring law went into effect on January 1, 2001 and opened up the generation, or supply, of electricity to competition. Transmission and distribution services remain regulated services. Electric companies’ distribution rates include estimated line extension costs and cannot increase until after the end of a market development period.

About the Ohio Consumers’ Counsel

The Ohio Consumers’ Counsel (OCC) is the legal representative and 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. To receive utility information brochures, schedule a presentation or file a utility complaint, residential consumers may contact 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC website at www.pickocc.org .


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