Part way through the Feb. 27 conference on electric competition, it was so quiet you could hear a hockey puck slide across the ice. No, hell had not frozen over. Rather, it was Commissioner Marc...
Ohio Recommends $1.25 Billion Write-off for Centerior
The Ohio Public Utilities Commission (PUC) has granted rate increases for Toledo Edison Co. and the Cleveland Electric Illuminating Co. (subsidiaries of Centerior Energy Corp.) in the full amount requested, but at the same time has recommended that Centerior remove from its regulatory books $1.25 billion in electric utility assets over a five-year period. The order approved rate increases of 4.86 and 4.17 percent for Cleveland Electric and Toledo Edison, reflecting an authorized 12.69-percent return on equity.
The PUC found a write-off necessary given Centerior's failure to address its declining financial and market position, making its rates "uncompetitive" despite PUC-sanctioned accounting deferrals and cost-containment measures. It cited the modest rate request (much lower than Centerior's proven $750-million revenue deficiency) as evidence of the company's "concession to competitive pressures."
The PUC warned: "Centerior cannot simply sit back, leave large rate base amounts not fully collectible today on the regulatory books, and expect that the Commission will provide 100-percent recovery of assets that may ultimately be considered 'stranded' absent any proactive mitigation." It said it "would potentially remove the entire $1.25 billion from rate base," if the utility fails to follow its recommendation. Re Toledo Edison Co., et al., Case Nos. 95-299-El-AIR, April 11, 1996 (Ohio P.U.C.).
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