COLUMBUS, OHIO (Aug. 3, 2021) – Today the Public Utilities Commission of Ohio’s (PUCO) issued an expanded audit report of FirstEnergy’s Ohio electric distribution companies’ delivery capital recovery rider for the 2020 calendar year. The audit report recommends $6.6 million should be returned to customers.
This audit report is a part of the PUCO’s four separate and ongoing proceedings to investigate issues related to FirstEnergy and the passage of House Bill 6 during the 133rd General Assembly.
The audit report examined expenses identified by FirstEnergy Corp. in its Feb. 18, 2021 report to the Securities and Exchange Commission (SEC) to be improperly classified, misallocated, or lacked supporting documentation. The audit examined payments to 17 vendors over a 10-year period, totaling $24.5 million.
The audit report identifies $6.6 million of the $24.5 million total that were included in customer bills and should be refunded. Specifically, the vendor payments include $2.4 million that were charged to customers in base distribution rates, $4.15 million charged to customers through the demand side management and energy efficiency rider. The audit also identified $82,850 charged to customers in pole attachment rates. Pole attachment rates are generally only paid by other utilities, telecom providers and municipal corporations.
Other vendor payments were allocated to the utilities’ Delivery Capital Recovery Rider. The audit report indicates the companies had already reached annual revenue caps used in the ratemaking formula for rider DCR, meaning removing these vendor payments would have no impact on customer bills.
Additionally, the audit report identifies $7.4 million in expenses that were recorded as capital and should be excluded from future ratemaking during the companies’ next distribution rate case. The companies are required to file an application with the PUCO to set base distribution rates by May 2024.
The purpose of the audit report is to determine if any of the identified vendor payments were included in rates paid by customers and should be refunded. PUCO staff nor the audit report make any conclusions or recommendations on the prudency or appropriateness of how the vendor payments were selected.
A PUCO administrative law judge will establish a procedural schedule in this case to determine the next step.
RELATED AND ONGOING CASES
The PUCO has four separate pending investigations related to FirstEnergy and the passage of Amended Substitute House Bill 6 (133 G.A.)
The PUCO regulates FirstEnergy’s three Ohio electric distribution utilities: Cleveland Electric Illuminating, Ohio Edison and Toledo Edison.
On Feb. 18, 2021, FirstEnergy Corp.’s 10-K to the SEC disclosed it had identified “certain transactions … that were either improperly classified, misallocated … or lacked supporting documentation.”
On March 8, 2021, PUCO staff filed a letter stating it had reviewed the transactions disclosed by FirstEnergy Corp. and requested to expand the scope of an ongoing audit of the delivery capital recovery rider for Cleveland Electric Illuminating Company, Ohio Edison and Toledo Edison to determine if any of the identified transactions were included in rates paid by customers.
On March 10, 2021, the Commission granted PUCO staff’s request and directed the Commission’s third-party auditor, Blue Ridge Consulting Services, Inc., to expand the scope of its audit.
8/4/21: Edited to correct legal name of consultant