Ohio Orders $43 Million Refund to Customers on Default Service

The Public Utilities Commission of Ohio has ordered that $43 million be refunded to customers on the Standard Service Offer (SSO) at the FirstEnergy electric distribution utilities -- Ohio Edison, Cleveland Electric Illuminating, and Toledo Edison.

The refunds relate to what PUCO determined to be excessive costs incurred by the FirstEnergy electric distribution utilities to meet their alternative energy compliance obligations, which are charged to customers on a bypassable basis under Rider AER.

PUCO found that recovery of $43.4 million for 2011 vintage RECs purchased in August 2010 should be disallowed. "Although the Companies' management decisions are presumed to be prudent, there was more than sufficient evidence produced at hearing to overcome this presumption," PUCO said.

PUCO noted that the purchases resulted from a bilateral negotiation with a bidder that had been active in a prior RFP during which the FirstEnergy EDCs rejected the RFP results.

"First, the Companies knew that the market was constrained and illiquid at the time of the RFP but that the market constraints were projected to be relieved in the near future. Second, the Companies failed to report to the Commission that the market for in-state RECs was constrained and illiquid. Third, the actual purchase price was not the result of a competitive bid but a negotiated purchase price. That negotiated purchase price was unsupported by any testimony in the record," PUCO said.

Finally, PUCO noted that, as other companies had done, the FirstEnergy EDCs could have sought a force majeure determination from the Commission instead of purchasing the vintage 2011 RECs

"Therefore, the Commission directs the Companies to credit Rider AER in the amount of $43,362,796.50, plus carrying costs, and to file tariff schedules within 60 days of the issuance of a final appealable order in this proceeding, adjusting Rider AER to reflect the refund and associated carrying cost."

Case No. 11-5201-EL-RDR