OHIO FirstEnergy softens stance on rate plan

Opponents say the utility's plan would drive competition out of the state.
COLUMBUS (AP) -- FirstEnergy Corp. might accept some changes to its proposed rate plan that has been criticized as a "take it or leave it" attempt to quash competition, the utility's leader testified Wednesday before the Public Utilities Commission of Ohio.
FirstEnergy has proposed its customers keep paying the same utility rates from 2006 through 2008 to avoid price spikes in an open market. The state is set to move to a deregulated electricity market after the end of 2005, but the Akron-based utility says competition won't have developed sufficiently by then.
Opponents including the office of Ohio Consumers' Counsel, which represents residential customers in rate cases, agree consumers are at risk for price spikes when the current rate freeze expires. But most opponents say the PUCO should make drastic changes to FirstEnergy's plan to keep rates stable. The utility has said it would withdraw its plan if it were modified.
FirstEnergy argues that state regulators could end the plan and allow rates to be set by the market if competition improves during those three years.
"In a sense, the whole plan is structured around providing ... a natural hedge," said Anthony J. Alexander, president and chief executive. "From a customer standpoint, it's kind of the best of both worlds."
Questioning
Alexander, the first witness in a hearing expected to last up to two weeks, was set to be questioned by several opponents.
They argue the plan would effectively drive competition out of Ohio and have protested the speed at which the PUCO is moving.
They object to FirstEnergy's proposed rate stabilization charge, averaging $15 monthly, which customers would not be able to bypass. Only those who enter a three-year contract with another supplier would get 65 percent off that charge, which FirstEnergy says is needed to offset its power generation costs if consumers switch back.
Bruce Weston, attorney for Green Mountain Energy in Austin, Texas, asked if FirstEnergy would be willing to fully rebate the charge.
It's possible, if a way could be found to make the rebate work with other aspects of the plan, said Alexander, who didn't elaborate.