Ohio Edison Co. has asked the Ohio Public Utilities Commission (PUC) to reduce rates and cap base rates until 2006, thereby extending its present rate freeze for an additional 10 years. The plan, which is supported by the Office of Consumers' Counsel and the Industrial Energy Users-Ohio, would decrease base rates, currently frozen at 1990 levels, by almost $600 million over the next 10 years. Residential and small business rates would decrease by $1 a month until January 1, 2001, and by $1.50 per month thereafter. Major industrial and commercial customer rates would decrease based on electric use. In 2006, rates for all customers would be cut by about 20 percent, or $300 million annually, below current levels. Plan rates would not be affected by future Edison plans to build new plants, remove or retire generating plants from service, or purchase bulk power.
Fitch Investors Service says the filing places the PUC in the position of having to balance the public interest in achieving competitive rates in the near term against the longer-term financial viability of Ohio electric utilities. Fitch predicts that if the PUC withholds the choice of electric supplier from Edison customers for 10 years, it would enable Edison as well as other Ohio utilities to enter the competitive era in a financially viable manner.
Fitch notes that Centerior Energy Corp. subsidiaries Cleveland Electric Illuminating Co. and Toledo Edison Co. have asked the PUC to hike base rates by $118 million. (Current Centerior retail pricing is "very comparable" to that of Edison, excluding the proposed rate cut.) Due to Centerior's weak financial position, Fitch believes Centerior will continue to press for higher rates and earnings incentives.