COLUMBUS, Ohio--State rules to prevent significantly excessive profits by FirstEnergy and other Ohio utilities would be loosened by language slipped into Ohio’s massive two-year budget bill.
If passed, the Akron-based utility would stand to make more money from ratepayers, rather than having to issue refunds to more than a million customers in northeast and north-central Ohio.
The amendment, one of dozens added by lawmakers last week, would change the state’s calculation of what constitutes “significantly excessive” profits in a way that allows the utility’s subsidiaries -- Ohio Edison, Cleveland Electric Illuminating Company and Toledo Edison -- to “artificially dilute” the profits they report, said Jeff Jacobson of the Ohio Consumers’ Counsel, during legislative testimony Tuesday.
Currently, the three subsidiaries are each restricted from making “significantly excessive” profits (a term that isn’t specifically defined in Ohio law, though two recent Public Utilities Commission of Ohio rulings indicate the profit limit is about 17 percent per year).
Under the amendment, the PUCO would consider the profits made by all three subsidiaries averaged together. This would allow Ohio Edison to make a windfall, Jacobson said, as its higher profits would be grouped with the lower profit margins of Toledo Edison and Cleveland Electric Illuminating companies.
FirstEnergy reported an overall profit of $981 million in 2018.
Mark Durbin, external communications manager for FirstEnergy, noted in a statement that Ohio Edison, Cleveland Electric Illuminating Company and Toledo Edison have all consistently passed the state’s Significantly Excessive Earnings Test, or SEET.
“Because our three utilities operate under a single PUCO-approved rate plan, we believe it is appropriate to apply a single SEET to our three Ohio utility companies,” Durbin stated. “This change to a single, or aggregate SEET would provide FirstEnergy’s Ohio utilities more flexibility to allocate investments across their entire footprint, which benefits our customers.”
Durbin didn’t immediately reply to an email Tuesday afternoon asking whether FirstEnergy had a role in crafting the amendment, as well as how much the company stood to make if the measure becomes law.
On Tuesday, Jacobson (a Republican former state lawmaker) and the Ohio Manufacturers Association urged state lawmakers to remove the budget item, saying it would allow “price-gouging.”
Jacobson said the current profit regulations, passed in 2008, are already “woefully inadequate.
“Under the budget bill, Ohio Edison customers would have the unfortunate distinction of losing even that minimal protection,” Jacobson said.
It wasn’t immediately clear which lawmaker offered the amendment to the state’s multi-billion-dollar budget plan.