What business or individual wouldn’t like to know that no matter what the market for the services, products, or skills they possess, they would always be rewarded with sufficient income no matter the circumstances? Who among us would refuse a guaranteed income, a base of economic security regardless of market forces, regardless of whether or not we can deliver on our promises, or whether we can perform our job in a proficient and efficient manner? And who would not want that guaranteed for the next eight years?
That is exactly what First Energy of Akron, Ohio and American Electric Power of Columbus, Ohio have just received from the Public Utility Commission of Ohio (PUCO). Basically, a gift that keeps on giving – for at least eight years.
On March 31, 2016 the PUCO issued a decision to approve the anti-competitive proposals of First Energy and AEP that basically force Ohio ratepayers to subsidize income guarantees for their aging, uncompetitive power plants for the next eight years.
The Office of the Ohio Consumers’ Counsel estimated that each FirstEnergy residential customer could pay as much as $1,100 extra and each AEP residential customer could pay as much as $1,000 more in supply costs. It estimated that total extra costs could exceed $8 billion.
Through certain politicking and no doubt, lobbying, the PUCO is allowing First Energy and AEP to regulate pricing in what is supposed to be a competitive, unregulated energy market. This decision virtually destroys the entire premise for passing legislation for unregulated energy markets in Ohio which is to ensure competitive pricing for consumers of electricity and natural gas.
There is a fight brewing and Gov. Kasich’s office has received over 100,000 comments from consumers and various state regulators against this proposal. There are several consumer groups fighting this anti-consumer legislation. Peak 5 Advisors firmly opposes this decision as it negatively affects our clients and we support policies that encourage competition for fairly priced energy. We are watching this very closely and will keep our clients updated as the story continues to unfold.