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PUCO Rules FirstEnergy Overcharged Customers $43 Million

After a week long delay, state regulators have issued a decision on whether FirstEnergy overcharged its 2 million customers for credits it bought to comply with a state law requiring electric utilities get 22 percent of their power from renewable resources by 2025. The 50 page decision was summed up this way:

The commission disallows the recovery of $43.3 million as a result of the audits of FirstEnergy’s alternative energy rider.

In that quick sentence, the Public Utilities Commission ruled that FirstEnergy unfairly charged customers more than $43 million for renewable energy credits, or RECs, that it bought to comply with the state’s energy efficiency law passed in 2008. That law requires utilities to get 22 percent of their energy from renewable and alternative sources by 2025. Doug Colafella with FirstEnergy says it bought the RECs years ago in a competitive bidding process approved by the PUCO. “At the time we bought these credits, there was virtually no data available on the cost of renewable energy credits in Ohio. We had no way of knowing at that time what renewable energy credits may cost in the future or if they would be available.â€? Colafella says the RECs were within the law’s three percent cost cap, so the company bought them. And now several years later, renewable energy costs going down - so Colafella says this decision amounts to Monday morning quarterbacking.

We believe we’re being punished for following the law. We don’t understand how an agency can rule that we should have ignored Ohio law and then penalize us for following Ohio law.

The Ohio Environmental Council is on the other side of the decision. Brian Kaiser with the OEC notes that FirstEnergy was buying RECs from its subsidiary, FirstEnergy Solutions, which he says was a win for FirstEnergy and a loss for customers, and the utility had multiple opportunities to go back to the PUCO to ask for input on the deal.

Their program, and this deal that they made with their own subsidiary resulted in costs that exceeded 15 times what they should have, and then they simply tried to pass it along to customers. That’s wrong, no matter how you look at it.

Environmentalists had actually wanted the PUCO to determine that customers overpaid by as much as $126 million. But even though this decision - that FirstEnergy overcharged by $43 million, a third of the max that the OEC was hoping for - Kaiser says it’s still a win. “We see this as a positive step in the right direction that the PUCO has finally stopped doing the bidding of FirstEnergy and started working on behalf of customers across the state.â€? The case doesn’t have an impact on other utilities, since FirstEnergy was the only one that bought RECs at that time. FirstEnergy says it will appeal the decision. Customers could eventually get credits on their bills, but not until the case is settled.