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Electric Bills Face Overhaul in 2009: That's When Market Price Replaces FirstEnergy Plan

Posted on: Wednesday, 17 May 2006, 09:05 CDT

By Dave Scott, The Akron Beacon Journal, Ohio

May 17--Starting in 2009, deciphering your electric bill is going to be a lot more challenging.

For instance, the electric rates charged in Ohio will vary according to which way the national energy market is going at any given time.

That was the prediction FirstEnergy Corp. CEO Anthony J. Alexander offered in a brief meeting with reporters after the power company's annual meeting Tuesday at the John S. Knight Center in Akron.

Alexander made the remarks to reporters after reading shareholders a list of achievements, including the utility's new generation record and successful debt reduction.

Until the end of 2008, the rates consumers pay for electricity are locked in under terms of FirstEnergy's "rate stabilization plan" with the state.

After that, the market will set the rates.

"In time, we will be moving toward a market price for generation in the state of Ohio," Alexander said. "The price could be higher or lower, depending on the market at a given point in time."

The market-determined part of the bill will apply to the cost of making the electricity. The cost of delivering that power through lines to homes and plants will continue to be regulated by the state.

Ohio has already held two auctions to determine a market price for the generation costs. In the first auction, no bids beat the price offered by FirstEnergy. The second auction received no bids.

Because of recent court cases and the failed auctions, the Public Utilities Commission of Ohio has not announced how the market price will be determined for 2009.

Alexander promised that consumers will be given choices for how to handle their electricity bills. In some cases, they will be able to lock in rates for a period. Other options will enable customers' rates to float with the market.

FirstEnergy intends to remain an active marketer of electricity in addition to power generation, Alexander said.

The natural gas market already is deregulated. The market has proven complicated.

Generation record

FirstEnergy plants generated 80 billion kilowatt hours in 2005, breaking last year's record by nearly 4 billion kilowatt hours.

"These additional kilowatt hours were worth about $140 million to your company," Alexander told shareholders.

Alexander also said:

-- Net cash from operations increased by more than $300 million.

-- The company completed a $4 billion debt reduction program that started four years ago.

-- Stock price increases sent market value (total shares times stock price) up more than $3 billion.

Patricia K. Woolf, Robert N. Pokelwaldt and Paul J. Powers retired from the board of directors and were not replaced. The board now has 12 members, including the following eight who were re-elected Tuesday: Alexander, Carol Cartwright, William T. Cottle, Robert B. Heisler Jr., Russell W. Maier, George M. Smart, Wes M. Taylor and Jesse T. Williams Sr.

FirstEnergy stock closed Tuesday up 51 cents at $52.98, an all-time high. The previous high was $52.73 on Sept. 9, 2005.

Dave Scott can be reached at 330-996-3577 or davescott@thebeaconjournal.com.

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Copyright (c) 2006, The Akron Beacon Journal, Ohio

Distributed by Knight Ridder/Tribune Business News.

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Source: Akron Beacon Journal (Akron, Ohio)

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