Municipalities Allege FirstEnergy Solutions Behavior Violates Ohio Code

FirstEnergy Solutions' decision to pass-on higher PJM ancillary costs to customers on fixed contracts is in violation of several rules, a coalition of municipalities alleged in comments to PUCO.

The municipalities include the City of Toledo, joined by the Lucas County Board of Commissioners, City of Sylvania, Village of Ottawa Hills, City of Perrysburg, City of Northwood, City of Maumee, the Village of Holland, and the Village Of Waterville

The municipalities alleged that FES prepared and sent municipal aggregation opt-out notices that "guaranteed" small business participants 4% off the Price to Compare each month, and noted that FES has stated an intent to charge business customers a surcharge equal to 1% to 3% of their annual generation bill for PJM ancillaries.

"The FES ancillary surcharge would eliminate not just the promised savings for January but, if the full 3% charge was imposed, it would eliminate as many as 9 months savings," the cities said.

"FES actions are in violation of the PUCO’s Rules at Chapter 4901: 1-21 and its conduct is 'unfair, misleading, deceptive or unconscionable' under OAC 4901: 1-21-03 and -05," the cities alleged, with both provisions dealing generically with disclosures.

However, the cities also raise a novel argument related specifically to opt-out aggregation notices.

The cities noted that OAC 4901: 1-21-17 provides that, "No governmental aggregator or electric services company serving a governmental aggregation may impose any terms, conditions, fees, or charges on any customer served by a governmental aggregation unless the particular term, condition, fee, or charge was clearly disclosed to customers at the time the customer chose not to opt-out of the aggregation."

Relevant here is that the cities alleged that FES on April 18, 2011 sent opt-out notices to all eligible small commercial customers which stated, "As a member of the aggregation, you are guaranteed each month to pay 4% less for the competitive portion of your electric supply through May 2014 than if you had not joined the community’s government aggregation program."

The cities alleged that a December 2, 2013 refresh opt out notice set out in a chart: "Price: 4% off Price to Compare. Term End Date May 2014."

"Each FES opt-out notices contained only a fixed price term (6% off the Price to Compare for residents, and 4% off the Price to Compare for small commercial) for the service period ending May 2014. It was FES obligation -- and in its own business interests -- to make sure that any other terms, conditions, fees, or charges sought was 'clearly disclosed' in the opt-out notices and met all the requirements of the Opt-out Rule. Because FES disclosed only the fixed fee, OAC 4901: 1-21-17 prohibits FES from imposing the RTO Expense Surcharge it now seeks or from seeking any future 'extra' costs," the cities said.