FirstEnergy's Ohio Utilities Seek Review of Electric Rates to Continue Service Reliability Enhancements and Support New Customer Assistance Program

Rhea-AI Summary

FirstEnergy's Ohio electric companies, including Ohio Edison, The Illuminating Company, and Toledo Edison, have filed a request with the Public Utilities Commission of Ohio (PUCO) to review their base electric rates. The proposed annual revenue increase is approximately $93.6 million. This increase aims to recover investments in strengthening the distribution system, enhancing customer service, and supporting a new customer assistance program for income-eligible residential customers. Key investments include a $516 million Grid Modernization Plan, installation of automated devices to reduce outages, and transitioning to energy-efficient LED streetlights. If approved, typical residential customers could see a 1.5% increase in their monthly bills. The rate reviews are subject to PUCO approval, with public comments and meetings planned.

Positive

• Proposed $93.6 million annual revenue increase to strengthen distribution system and enhance customer service.
• Investments include a $516 million Grid Modernization Plan aimed at reducing power outages.
• Introduction of a new customer assistance program for income-eligible residential customers.
• Plan to transition company-owned streetlights to energy-efficient LED lighting.
• Typical residential customers may see only a modest 1.5% increase in their monthly bills.

Negative

• Rate request could lead to higher electricity bills for customers, potentially affecting affordability.
• Public Utilities Commission of Ohio (PUCO) approval required, introducing uncertainty regarding the implementation timeline.
• Rising energy costs may cause concern among customers despite the assistance programs.
• Past investments since 2007 have already cost billions, raising questions about continuous rate increases.

Insights

Financial Analyst

FirstEnergy's request for a rate review is notable for investors as it involves a significant $93.6 million annual revenue increase. This move comes after extensive investments to modernize the electric grid since 2007, including a $516 million Grid Modernization Plan approved in 2019. The financial analyst's perspective focuses on the implications of these rate increases for both the company's revenue and customer base.

Short-term implications: For investors, the immediate concern is the impact on earnings. If approved, the rate increase could modestly boost FirstEnergy's revenues. The proposed monthly increase of $1.88, or 1.5%, is relatively small for customers, likely minimizing any significant backlash from consumers about the rate hike. This small increase might help maintain customer satisfaction while supporting revenue growth.

Long-term implications: The company's investments in grid modernization and reliability improvements are aimed at reducing outage durations and enhancing service quality, which could lower operational costs in the long run. Additionally, transitioning to energy-efficient LED streetlights might result in lower maintenance costs and energy usage over time. These changes, while initially costly, could improve operational efficiency and profitability.

Investor considerations: Investors should closely monitor the PUCO's decision, as approval would directly impact earnings forecasts. The approval process and public feedback might also provide insights into potential regulatory hurdles. A positive ruling could signify regulatory support for further investments in the grid, which might enhance the company’s long-term growth prospects.

Energy Market Analyst

The request for a rate review encapsulates the broader trend in the energy sector towards modernization and customer-centric approaches. With approximately 34% of FirstEnergy’s Ohio residential customers eligible for financial assistance, the introduction of a new customer assistance program is designed to support a significant portion of their customer base.

Customer impact: The Energy Assistance Outreach Team aims to increase awareness of available financial aid programs. This move is important for maintaining customer loyalty and mitigating the financial impact on low-income households, which is a growing concern amid rising energy costs.

Industry context: The transition to LED streetlights and the installation of automated outage systems reflect industry shifts towards energy efficiency and tech-driven solutions. These enhancements align with broader industry goals of sustainability and reliability, potentially setting a benchmark for other utilities. Automated systems that can redirect power during outages are not just technical innovations; they represent significant operational improvements that reduce downtime and improve customer satisfaction.

Investor considerations: From an investor's perspective, these initiatives underscore FirstEnergy's commitment to modernizing its infrastructure and improving customer relations. These factors can enhance the company's reputation and market position, potentially translating to long-term value increases.

AKRON, Ohio, May 31, 2024 /PRNewswire/ -- FirstEnergy Corp.'s (NYSE: FE) Ohio electric companies – Ohio Edison, The Illuminating Company, and Toledo Edison – today are filing a request with the Public Utilities Commission of Ohio (PUCO) to review their base electric rates. The rate request includes recovery of investments to strengthen the distribution system, improve the customer experience and establish a new customer assistance program to aid residential customers who qualify as income-eligible for financial assistance. The proposed change in annual revenue is approximately $93.6 million compared to current rates.

Since their last rate review in 2007, FirstEnergy's Ohio electric companies have collectively invested billions of dollars to modernize and strengthen the electric grid through initiatives such as the four-year, $516 million Grid Modernization Plan that was approved by the PUCO in 2019.  These investments, which help reduce the size and length of power outages, include the installation of automated devices and technology that can sense an outage and automatically transfer customers to an adjacent power line to limit the number of customers who experience a lengthy outage.

The rate review proposes investments in the distribution system, storm restoration work and a bill assistance initiative aimed at keeping customers' needs and expectations top of mind.  The rate filing includes:

• Recovery of investments the companies have made to help create a more reliable and resilient distribution system, including the installation of additional animal guards and lightning protection on electrical equipment that will help prevent outages caused by factors outside of the companies' control.
• Creation of an Energy Assistance Outreach Team to enhance the companies' ongoing efforts to increase awareness, education and participation in energy assistance programs available to eligible customers. Approximately 34% of FirstEnergy's Ohio residential customers are income-eligible for financial assistance.
• A plan to transition company-owned streetlights to state-of-the-art energy-efficient LED streetlights.

If approved by the PUCO, a typical non-shopping FirstEnergy Ohio utility residential customer using 750 kilowatt-hours of electricity per month on average could expect to see an increase of $1.88, or 1.5%, on their monthly bill.  As part of the rate review process, a supplemental filing will be made at the end of July, which among other things, will incorporate impacts from the PUCO's recent decision in the ESP V case.  

Rising energy costs may cause concern for customers. To help them manage their bills, FirstEnergy's Ohio companies offer budget plans, special payment plans and access to energy assistance programs. To apply or learn more about other utility bill assistance programs, customers are encouraged to visit firstenergycorp.com/billassist or contact customer service at 1-800-633-4766.

The requested rate reviews are subject to PUCO review and approval. Any increase in rates resulting from this would not become effective until approved and authorized by the commission. The public will have the opportunity to comment on the filing through the PUCO's public comment process, and the companies will participate in public meetings about the plan and engage key stakeholders to ensure an open and thorough review of the proposal.

FirstEnergy Corp. is dedicated to integrity, safety, reliability, and operational excellence. Its electric distribution companies form one of the nation's largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland, and New York. The company's transmission subsidiaries operate approximately 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions. Follow FirstEnergy online at www.firstenergycorp.com and on Twitter @FirstEnergyCorp.

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SOURCE FirstEnergy Corp.

FAQ

What is FirstEnergy's proposed annual revenue increase?

FirstEnergy's proposed annual revenue increase is approximately $93.6 million.

How will the proposed rate changes affect FirstEnergy's Ohio customers?

A typical residential customer could see an increase of $1.88, or 1.5%, on their monthly bill if the rate changes are approved.

What is included in FirstEnergy's rate review proposal?

The proposal includes investments in the distribution system, storm restoration work, and a new customer assistance program.

When was the last rate review for FirstEnergy's Ohio electric companies?

The last rate review for FirstEnergy's Ohio electric companies was in 2007.

What key investments have FirstEnergy's Ohio electric companies made?

Key investments include a $516 million Grid Modernization Plan and the installation of automated devices to reduce power outages.

What new programs are being introduced in the rate review proposal?

A new customer assistance program for income-eligible residential customers and the transition to energy-efficient LED streetlights are being introduced.

What is the approval process for FirstEnergy's rate review request?

The rate review request is subject to PUCO review and approval, with opportunities for public comments and meetings.