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FirstEnergy downplays rate concerns in spite of coal-burning plant closures
YOUNGSTOWN
Although utility regulators say the closings of nine coal-burning power plants by FirstEnergy Corp. could bring higher electricity rates to northern Ohio, the company says it’s unlikely.
The Public Utilities Commission of Ohio said this week the closings may have a significant impact on Akron-based FirstEnergy Corp.’s electric prices several years down the road.
“I think it’s a common opinion. FirstEnergy currently has competitive auctions, and I assume there’s speculation that the upcoming auctions will have higher prices,” said Matt Schilling, utilities commission spokesman.
During the auctions, suppliers bid on the right to supply FirstEnergy for its customers. The next FirstEnergy competitive auction is Oct. 23.
The auction price “is going to reflect the market at that time. We’ll just have to wait and see,” Schilling said.
FirstEnergy spokesman Mark Durbin said worries about future higher rates are highly speculative.
“Right now customers are benefiting from lower rates that probably will continue into the next several years. Any impact those retirements might have on the rates in the future, it really would be speculative at this point,” Durbin said.
FirstEnergy announced Wednesday it will shut down three aging coal-fired power plants in West Virginia later this year, in addition to the six coal-fired power plants in Ohio, Pennsylvania and Maryland that already are scheduled to be retired.
The decision means there will be fewer plants to meet the demands for power, and that has the potential to increase the electric rates for FirstEnergy customers across most of northern Ohio and in the central part of the state, including Toledo, Cleveland and Youngstown.
Durbin said those nine plants are responsible for about 12 percent of the electricity the company produces.
For now, electricity prices should remain relatively low. About two weeks ago, the utilities commission announced that customers can expect electricity prices to decrease this summer after it approved the results of the fourth in a series of six wholesale auctions that will determine FirstEnergy’s retail generation service rates through May 2014.
The auction establishes a new generation price of $53.37 per megawatt hour (MWh) for June 2012 through May 2013, a decrease of 4 percent from the current price of $55.60 per MWh.
“There are so many factors in the marketplace, and [the retirements] would only affect the generation portion” of the bill, which is about two-thirds of an electric bill, Durbin said.
The other third of the bill includes distribution and service charges.
Durbin urged Ohioans to shop around for the generation service rates of the service. For example, Ohio Edison customers who choose not to shop around for the service become a provider of last resort and receive rates determined through the competitive auctions, Durbin said.
“The trend has been the price has been declining. If you decide to go with competitive supplier, you might be able to find a better rate. I suggest they focus on that and look to save money now,” he said.
The nine shutdowns are expected to directly affect 634 employees. FirstEnergy attributed the shutdowns to new federal environmental regulations that are designed to reduce emissions of mercury and other toxic pollutants from coal- and oil-fired plants.
— The Associated Press contributed to this story.