The Ohio Public Utilities Commission has approved a rate plan for Toledo Edison Co. and Cleveland Electric Illuminating, under which the two electric utilities will freeze both base rates and fuel charges and agree to reduce their present investment in generating station and related assets.
The plan will take effect only if Centerior Energy Corp., the holding company for both utilities, is successful in its proposed merger with Ohio Edison Co. (The approved plan is similar in many ways to one the commission had authorized for Ohio Edison in 1995 (em see Case No. 95-830-EL-UNC, 165 PUR4th 22.).
Under the proposal, the rate freeze will end Jan. 1, 2006. The proposal also calls for: a $310-million rate reduction at the end of the rate freeze period; scheduled rate reductions for residential customers beginning shortly after the merger; and a post-merger rate cap under which the utilities will pass "excess earnings" to ratepayers during the life of the plan.
The rate freeze contained in the proposal is significant, in the view of the commission, because commitments accompany it to reduce the value of some "uneconomic assets" on the companies' books. The commission also noted that the companies had made a similar commitment without rate increases and without seeking recovery of stranded costs that might occur as markets become more competitive. The commission cautioned, however, that approval of the revaluation language contained in the rate plan does not imply approval of any offsetting transmission or distribution plant depreciation changes or any upward revaluation of assets. Re First Energy Corp., et al., Case No. 96-1211-EL-UNC, Jan. 30, 1997 (Ohio P.U.C.).