Power Engineering - FirstEnergy asks Pennsylvania for rate increases

11 April 2006 -- Metropolitan Edison Company (Met-Ed) and Pennsylvania
Electric Company (Penelec), subsidiaries of FirstEnergy Corp., filed
with the Pennsylvania Public Utility Commission (PUC) April 10 a comprehensive transition rate plan. The filing addresses transmission, distribution and power supply issues while promising that customers will continue to pay below-market prices for generation through 2010.

"We've been able to hold the line on electricity prices for a long time," said
Douglas S. Elliott, president of Pennsylvania Operations for FirstEnergy. "Unfortunately, the costs we incur to serve customers have continued to rise over the years – by hundreds of millions of dollars annually for such items as higher market prices for power, transmission services from the PJM Interconnection, taxes and other expenses we must pay to meet our customers' needs.

Penelec has requested an overall increase of $157 million, or 15 percent, for 2007 if its preferred approach of using certain deferrals and accounting treatments in its filing is approved. If an alternative approach is approved, the increase could be up to $206 million, or 19 percent. Penelec also has proposed changes in its generation rates for 2008, 2009 and 2010 that could increase revenues by up to $135 million a year.

If Penelec's preferred approach is approved for 2007, the total bill for a residential customer using 500 KWH a month would increase 13.5 percent, or $6.42 on a current bill of $47.62. The total bill for a commercial customer using 15,000 KWH per month would increase 12.1 percent, or $153 on a current bill of $1,265. Rates for an industrial customer using 500,000 KWH per month would increase 12.5 percent, or $3,764 on a current bill of $29,994.

Met-Ed has requested an overall increase of $216 million, or 19 percent, for 2007 if its preferred approach of using certain deferrals and accounting treatments in its filing is approved. If an alternative approach is approved, the increase could be up to $269 million, or 24 percent. Met-Ed also has proposed changes in its generation rates for the years 2008, 2009 and 2010 that could increase revenues by up to $165 million each year.

If Met-Ed's preferred approach is approved for 2007, the total bill for a residential customer using 500 KWH per month would increase 17.6 percent, or $8.83 on a current bill of $50.10. The total bill for a commercial customer using 15,000 KWH per month would increase 19.3 percent, or $261 on a current bill of $1,349. Rates for an industrial customer using 500,000 KWH per month would increase 16.4 percent, or $5,179 on a current bill of $31,660.

If approved by the PUC, the new rates could be effective as early as June 10.

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