FirstEnergy (FE) Receives $132.5M Annual Increase for 3 Years in Ohio
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(Updated - October 12, 2016 1:55 PM EDT)
Ohio rejected FirstEnergy's (NYSE: FE) request for a $558 million rate hike, according to bizjournals. FirstEnergy received an increase of $132.5 million annually for 3 years, which could be extended 2 years.
The Public Utilities Commission of Ohio (PUCO) today rejected FirstEnergy’s modified Retail Rate Stability (RRS) rider or “virtual PPA” proposal. The Commission ordered FirstEnergy’s Ohio utilities to establish PUCO staff’s recommended Distribution Modernization Rider (DMR) instead, and to eliminate the existing RRS rider.
In its application for rehearing, FirstEnergy proposed to modify rider RRS such that it would continue as a financial hedge, but would not be tied to the physical operation of generation in the state. The Commission rejected FirstEnergy’s proposal because it lacked important benefits related to reliability, resource diversity and economic development.
Rider DMR, set at $132.5 million per year (to be grossed up for taxes annually), will provide FirstEnergy with an infusion of capital so that it will be financially healthy enough to make future investments in grid modernization. The Commission limited Rider DMR to three years, with the possibility of a two-year extension, subject to Commission approval. FirstEnergy requested that Rider DMR be granted in the amount of $558 million per year for eight years.
During the term of rider DMR, FirstEnergy will maintain its headquarters in Akron, Ohio, and make sufficient progress in grid modernization initiatives ordered by the Commission, including its deployment of smart grid technology in the companies’ service territories.
“The DMR’s primary purpose is to ensure that FirstEnergy retains a certain level of financial health and creditworthiness so that it can invest in future distribution modernization endeavors,” stated Chairman Asim Z. Haque. “We expect that these future endeavors will advance the electric industry in FirstEnergy’s service territory and benefit Ohio’s consumers and businesses.”
In May, FirstEnergy and other interested parties filed applications for rehearing following the PUCO’s March 31, 2016 opinion and order establishing an electric security plan. An evidentiary hearing was held at the PUCO in July and August 2016 in order for interested parties to provide testimony on the rehearing applications.
For more information about today’s order, visit this fact sheet.
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