ELECTRIC POWER Savings will not be immediate, group says

FirstEnergy may freeze rates for three years for a customer fee.
COLUMBUS (AP) -- The first steps toward competition in the electric power industry won't mean savings right away, but customers should do better than they would in a continued regulated market, the state's utility watchdog says.
State regulators authorized power suppliers Wednesday to bid to provide electricity to FirstEnergy Corp. customers. If competitors cannot beat FirstEnergy's price by January, the company will be allowed to freeze rates for three years in exchange for a customer fee, estimated at $15 for a customer with an average bill.
The Public Utilities Commission of Ohio, in a 4-1 vote, said the plan will provide the best price for FirstEnergy's customers, financial security for the utility and further development of competitive energy markets.
Consumers should not expect immediate savings under either plan, said Janine Migden-Ostrander, Ohio consumers' counsel.
"Customers should expect some increases in prices. The question is will the increase be less under competition than it will be under regulation. I believe the answer will be yes," Migden-Ostrander said.
Deregulation law
The electric deregulation law that went into effect in 2001 requires the industry to open up to competitors by 2006. The Legislature envisioned competition driving down prices, especially in FirstEnergy's service territory, which stretches across northern Ohio.
"We all know that has not materialized as we have hoped," PUCO Chairman Alan Schriber said.
FirstEnergy's rates are higher than other parts of Ohio, in part because the commission has allowed the company to charge customers for past investments, including its nuclear power plants. FirstEnergy's territory has seen the most competitors, mostly because communities have banded to buy electricity in bulk. But competitors have not been able to provide significantly lower prices.
A commission-ordered rate freeze will end for FirstEnergy customers at the end of 2005. FirstEnergy may reject the PUCO order, but then it would have to move to direct competition at that time. Schriber would not speculate on the plan's effect on prices.
"That's exactly what we need to find out," he said.
FirstEnergy was reviewing the plan and had no immediate comment, spokeswoman Ellen Raines said.