It appears that action will be taken soon to restore discounted FirstEnergy rates for all-electric homeowners.  See John Funk’s article in today’s Plain Dealer: All-electric home rates to be restored

Apparently no decision has been made about who will pick up the cost of those discounts — FirstEnergy or other customers.  In the meantime, all-electric homeowners can take some simple steps to reduce their electric costs by reducing their consumption:

• Replace incandescent light bulbs with compact fluorescents or LED’s
• Turn down the heat to about 55 to 60 degrees at night or when nobody is home.  You may either use a programmable thermostat or adjust your thermostat manually.
• Turn off appliances, like DVD players, when they are not in use.
• Don’t leave phone chargers plugged in when not in use.

To get more ideas for longer-term energy conservation, see our reports on the pursuit of a net-zero energy home and  insulation.

The 14th Annual Ohio Energy Management Conference was held in Columbus earlier this week.  With a record number of attendees, it was a big success.  Some highlights from the conference were:

• The keynote address by Lawrence Solomon, author of The Deniers: The world-renowned scientists who stood up against global warming hysteria, political persecution, and fraud. His topic was Advancing Scientific Arguments Against the ‘Alarmist’ View of Global Warming.
• A panel discussion on Ohio’s electricity marketplace and implementation of Ohio’s landmark energy law.  The distinguished panel included Tony Alexander, President & CEO of FirstEnergy; John Bentine, General Counsel to American Municipal Power (AMP); Mike Morris, President & CEO of American Electric Power (AEP); Sam Randazzo, General Counsel of IEU-Ohio; Dr. Alan Schriber, Chairman of the Public Utilities Commission of Ohio (PUCO).  Matt Brakey, who was emcee of the conference, is shown below introducing the panel.
• Workshops led by Mike Brakey and Matt Brakey.  Their presentations are available  on the presentations and reports page.  Note that Mike’s presentation is best viewed with Firefox.
  

  Panel Discussion Feb. 24, 2010

John Funk had another article in the Plain Dealer today (Feb. 26) about efforts to seek relief for all-electric homeowners.  There was no mention of who would have to pay extra costs to make up for any discounts offered to those customers.

Consumers’ counsel seeks aid for all-electric homeowner

John Funk of the Plain Dealer has confirmed with FirstEnergy that their proposal for restoring discounts to all-electric homeowners would result in increases for certain small businesses.  You may read the article at:

FirstEnergy Corp.’s plan to help all-electric homeowners may hurt small businesses

John Funk had another article today (February 19^th) in the Plain Dealer about all-electric homeowners in northern Ohio and the 2009 change in FirstEnergy’s electric rates.   You may read the article at the following link:  http://www.cleveland.com/business/index.ssf/2010/02/puco_takes_blame.html

The article mentions that FirstEnergy has proposed to the PUCO partly restoring the all-electric discounts and phasing in increases over the next eight years.  However, we have learned that the proposal includes recovering these lost revenues by adding a new charge to business customers who are billed under the Secondary and Primary Rates.  In our opinion, this would be the worst of all worlds.  This would not encourage the residential customers to conserve energy and it would help drive more businesses out of Ohio.  We agree with Ohio Consumers’ Counsel Janine Migden-Ostrander when she said she could not justify defending the all-electric discounts because the rest of FirstEnergy’s customers would have to make up the difference. While electric costs are around 13¢ per kilowatt-hour in northeast Ohio, they are over 20¢/kWh on the east coast and as high as 43.6¢/kWh in California.  We all need to encourage energy efficiency while finding some means of aiding the all-electric users to transition to standard tariffs over the next decade.

An alternative approach

We see this proposed 8-year phase-in period as an opportunity for all parties to work together to lower electric consumption, especially the heavier residential users.  We would hope that the PUCO and FirstEnergy might find some way of using the $100 million of future revenues generated annually from the Alternative Energy Rider (AER) and the Demand Side Management and Energy Efficiency Rider (DSE) to aid residential customers who have lost their discounted rate with finding ways to reduce their energy consumption.

For example, the utility could provide funding for residential energy efficiency projects such as tank-less water heaters, energy audits, geothermal heating and cooling systems, etc.  Then, the customers can be well prepared to handle increasing costs per kWh over time.  For more residential energy saving ideas, see our reports: Pursuit of a Net Zero Energy Home Feb 17 2010 and Reducing Gas Consumption with Insulation Sept 2006.  We see this as an excellent opportunity for the utilities and customers alike, working together, to control energy consumption and fulfill the requirements and objectives under Senate Bill 221.

This could be a long-term solution to enviable skyrocketing energy prices in northeast Ohio.  It could be a win-win for all in keeping Ohio competitive for businesses and homes alike.  It would be a win for the utilities because FirstEnergy can show a reduction in consumption that will help them meet the Ohio legislature’s energy efficiency mandates.  And, of course, it is a win for consumers because they will have lower electric consumption leading to lower bills.  This also helps keep business operating costs down.

If at all possible, we can’t allow short-sighted politics to harm local businesses.  If we do, there would be an added truth to what State Senator Tim Grendell was quoted as saying when FE initially suggested backing down the recent residential increase to 20% and then gradually increasing the charges to the standard residential rates by 2017-18.   John Funk quoted him to say, “That is not a solution.  That is a stay of execution.  But you are still dead at the end of the day.”  Not only would all-electric homeowners have higher costs, but also Ohio would have the loss of more jobs.

We believe the Senate Bill 221 legislation can help all-electric homeowners gain the technology to lower energy consumption and costs without harming businesses in a recession.

As John Funk discussed on February 17^th in the Plain Dealer, some all-electric homeowners in northern Ohio are suing over a 2009 change in FirstEnergy’s electric rates.   You may read the article at the following link: All-electric owners sue FirstEnergy over rates

The article mentions that FirstEnergy has proposed to the PUCO partly restoring the all-electric discounts and phasing in increases over the next eight years.  We see this proposed 8-year phase-in period as an opportunity for all parties to work together to lower electric consumption  This could be a long-term solution to skyrocketing energy prices.  It could be a win-win for all.  It would be a win for the utilities because they can show a reduction in consumption that will help them meet the Ohio legislature’s energy efficiency mandates.  And, of course, it is a win for consumers because they will have lower electric bills.

For example, the utility could provide funding for residential energy efficiency projects such as tank-less water heaters, energy audits, geothermal heating and cooling systems, etc.  Then, the customers can be well prepared to handle increasing costs.  For more residential energy saving ideas, see our report: Pursuit of a Net Zero Energy Home Feb 17 2010 We see this as an excellent opportunity for the utilities and customers alike, working together, to control energy consumption and fulfill the requirements.

In 2009, with the approval of the PUCO, FirstEnergy reorganized and consolidated its rate schedules.  As part of this change, the favorable all-electric rate schedule was eliminated.  One concession was that homes that had the all-electric rate now receive a special delivery discount of 1.7 cents per kilowatt hour during the nine “winter” months.  Nevertheless, owners of all-electric homes are seeing their average costs per kilowatt hour more than double (from 5.1 cents to 11.7 cents per kilowatt hour).  Other residential customers have seen increases of about 70% (from 7.7 cents to 13.4 cents per kilowatt hour).

In the Plain Dealer on Saturday, February 13th, John Funk provided an update on attempts to get relief for owners of all-electric homes.  See the link below for more information.

http://www.cleveland.com/business/index.ssf/2010/02/firstenergy_told_to_fix_proble.html

In any event, we recommend shopping for generation with alternative suppliers and considering ways to reduce electric consumption.  Watch for future posts in which we will show two detailed real-life examples of ways to reduce residential energy consumption by 40% or more.

You are invited to attend a free energy forum for local businesses on Wednesday, March 3, 2010, from 4:00 to 6:30 P.M. at Glickman Miller Hall, Roberta Steinbacher Atrium, Cleveland State University, 1717 Euclid Avenue, Cleveland.  Matt Brakey will be among the speakers.  Register at www.urban.csuohio.edu/forum or call 216-523-7330.  For more information, see the flyer: March 3 Forum Flyer

http://www.crainscleveland.com/article/20100211/FREE/100219947

FirstEnergy agrees to buy Allegheny Energy in $8.5B stock deal

By SCOTT SUTTELL

8:49 am, February 11, 2010

FirstEnergy Corp. (NYSE: FE) said it has agreed to buy Allegheny Energy Inc. (NYSE: AYE) of Greensburg, Pa., in a stock-for-stock transaction valued at about $8.5 billion that would create one of the largest electric companies in the country.

Under terms of the agreement, Allegheny shareholders would receive 0.667 shares of FirstEnergy common stock in exchange for each share of Allegheny they own. Based on the closing stock prices for both companies on Feb. 10, Allegheny shareholders would receive a value of $27.65 per share — a 32% premium — or $4.7 billion total. Akron-based FirstEnergy will also assume about $3.8 billion in Allegheny net debt.

When the deal is complete, FirstEnergy shareholders would own about 73% of the combined company and Allegheny shareholders would own about 27%.

The deal is expected to close in 12 to 14 months. FirstEnergy said it expects the deal to add to its earnings in the first year after closing.

The combined company would retain the FirstEnergy name and would be headquartered in Akron. It would have 10 operating utilities in seven states serving more than 6 million customers.

FirstEnergy president and CEO Anthony J. Alexander would continue to serve in those positions at the combined company. Paul J. Evanson, currently chairman, president and CEO of Allegheny, would become executive vice chairman of the combined company, reporting to Mr. Alexander.

The FirstEnergy board would be expanded to 13 people from 11, with two additional directors from Allegheny.

In a statement, Mr. Alexander said the combination of the companies “is a natural fit that will accelerate our efforts to strengthen the operating performance of our generating fleet while building on our long-standing dedication to customers, shareholders and employees.”

He said the transaction “will provide outstanding value to both companies’ shareholders, offering enhanced earnings growth potential and a more competitive cost structure.”

For instance, Mr. Alexander said FirstEnergy would be able to produce 70% more electricity while improving its overall environmental performance.

The combined company would have about $16 billion in annual revenue and $1.4 billion in annual net income, based on figures from FirstEnergy and Allegheny as of Dec. 31, 2009.

The deal “supports our strategy of being a leading regional energy provider, focused on both regulated utility operations and our competitive generation business,” Mr. Alexander said. “Simply put, it provides a far better platform for growth than either company would have been capable of achieving on a stand-alone basis.”

John Funk reported in the Plain Dealer on Thursday, February 11th that Dominion East Ohio gas customers may see a price drop in the spring.  For more information, see the link below.

http://www.cleveland.com/business/index.ssf/2010/02/natural_gas_prices.html