Update:  On July 18, 2012, the PUCO issued an order on the merits of FirstEnergy’s request to extend pricing for customers who do not shop in FirstEnergy’s (Ohio Edison, Cleveland Electric Illuminating, and Toledo Edison, collectively, FirstEnergy) service territory for the years 2014-2016.

Recollect that on April 13, 2012, FirstEnergy filed an application for a two-year extension of its current ESP and a stipulation and recommendation, including the OMAEG as a signatory party.  FirstEnergy sought expedited approval of its stipulated ESP in order to allow it to bid demand response resources and energy efficiency resources into the 2015/2016 PJM base residual auction and to extend the length of the auction products from 1 year to three in order to smooth out the anticipated rate increases over a greater period.

In a 4-1 decision, the PUCO agreed with the positions of FirstEnergy and the signatory parties to the settlement.  Specifically, the PUCO found that: 1) maintaining current base distribution rates through a freeze will smooth out generation prices and mitigate the risk of price volatility; 2) continued use of the Delivery Capital Recovery Rider (“DCR”) is reasonable; 3) extending the recovery period for renewable energy credit costs over the life of the ESP is appropriate; 4) the energy efficiency/peak demand reduction riders should be collected from all customers; 5) the lost distribution revenue collection is a reasonable compromise and should be adopted; and, 6) deferred carrying costs should be excluded from the significantly excessive earnings test (“SEET”).

Commissioner Roberto issued a dissenting opinion.  She stated that FirstEnergy failed to meet its burden of proof and that the proposed ESP is not superior to an MRO.  Commissioner Roberto also stated that the ESP does not benefit ratepayers or the public interest and that it violates regulatory principles and practices with provisions such as, contracting with an affiliated company for an un-bid contract to serve PIPP customers, paying above-market rates for demand response, and continuing the Rider DCR and the lost revenue recovery mechanism.

The parties who opposed the settlement (the Ohio Consumers’ Counsel, the Northeast Ohio Public Energy Council, AEP Retail, among others) have the opportunity to file an application for rehearing requesting that the PUCO reverse itself on any or all specific holdings.  An application for rehearing is due by August 17, 2012.