FirstEnergy’s (NYSE:FE) Mid-Atlantic Interstate Transmission (MAIT) subsidiary and Jersey Central Power & Light (JCP&L) recently filed forward-looking formula rates with FERC, and those filings will support 2017 transmission investments of more than $170m in New Jersey, and more than $260m in FirstEnergy’s Metropolitan Edison (Met-Ed) and Penelec service areas, FirstEnergy President and CEO Charles Jones said on Nov. 4 during his company’s 3Q16 earnings call.
“In both cases, we have requested the new rates to take effect on Jan. 1, 2017,” he said.
He also discussed distribution rate cases, noting that FirstEnergy has reached positive settlements with the parties in its Pennsylvania rate cases.
“The settlements, which have been filed with the Pennsylvania Public Utility Commission [(PUC)], allow for incremental revenue of approximately $291m across our four utilities,” he said. “The terms of the settlements will provide us with the necessary resources and technology to continue improving our infrastructure and help ensure continued safe and reliable electric service for our two million utility customers in Pennsylvania. We expect the [PUC] to issue its final orders on the settlements before Jan. 26, 2017, and the new rates are expected to take effect on Jan. 27.”
As noted in an Oct. 17 statement by the company, if approved by the PUC, the settlement agreements would result in the following increases for residential customers using 1,000 kWh a month:
- Met-Ed customers would see an average increase of 10.7%, or $13.91, for a total bill of $143.73, including an increase in the monthly customer service charge, which helps offset the costs for billing, meter reading and other services, from $10.25 to $11.25. Overall, Met-Ed would receive an increase of $96m
- Penelec customers would see an average increase of 12.8%, or $17.62, for a total bill of $155.51, including an increase in the monthly customer service charge from $9.99 to $11.25. In total, Penelec would receive an increase of $100.4m
- Penn Power customers would see an average increase of 10.4%, or $13.51, for a total bill of $143.57, including an increase in the monthly customer service charge from $10.85 to $11.00. Penn Power would receive an increase of $29.2m as a result of the settlement
- West Penn Power customers would see an average increase of 7.2%, or $8.09, for a total bill of $121.08, including an increase in the customer service charge from $5.81 to $7.44. Overall, West Penn Power would receive an increase of $65.6m
Jones noted during the call that the company has reached an agreement in principle with the parties in its rate case in New Jersey, including Rate Counsel and New Jersey Board of Public Utilities (BPU) staff, that would provide an $80m annual revenue increase beginning Jan. 1. The terms of the agreement must still be finalized, filed and approved by the BPU, he said, adding, “JCP&L remains committed to providing customers with strong reliability, with some of the lowest rates in the state.”
He also noted that the Public Utilities Commission of Ohio (PUCO) has authorized a distribution modernization rider that will allow FirstEnergy’s Ohio utilities to collect $204m per year through 2019, with a possible two-year extension.
Strategic plans for competitive generation business
Jones also discussed FirstEnergy’s strategic plans for its competitive generation business, saying that the company still does “not believe competitive generation is a good fit for FirstEnergy and our regulated growth strategy.”
However, he said that one of his goals since becoming CEO has been to keep as many of the company’s generating units running as possible.
“We believe that a vertically integrated, or regulated-like construct, is the best way to provide reliable and affordable electric service to customers, both now and in the future,” he said, adding that preserving the units would benefit FirstEnergy’s communities and employees, “who have dedicated their careers to keeping the units operating safely and efficiently.”
FirstEnergy has worked for meaningful market reforms and while it has delayed investments where possible at its fossil fleet, the company remains committed to making all of the appropriate investments in its nuclear units in order to maintain safe and reliable operations, he said.
“The competitive market conditions continue to deteriorate, punctuated by weak power prices, insufficient results from recent capacity auctions, and anemic demand forecast,” Jones said. “The fact is, competitive generation is weighing down the rest of our company, and while we have fought hard, we cannot continue to wait for an upturn. Instead, a strategic review of our competitive business is underway and we are pursuing options to thoughtfully, yet expeditiously, move away from competitive markets. We will be assessing several different alternatives in the near term, with a goal to implement these strategic options over the next 12 to 18 months.”
First, he said, after the upcoming presidential election is over, FirstEnergy plans to begin legislative and regulatory efforts, designed to preserve the company’s remaining generation assets.
“We’re looking to convert competitive generation to a regulated, or a regulated-like construct in Ohio, [and the company is] seeking a solution for nuclear units in Ohio and Pennsylvania that recognizes the environmental benefits of these established baseload generating resources,” he said. “And in West Virginia, Mon Power plans to issue an RFP to address its generation shortfall by the end of this year.”
FirstEnergy on Nov. 4 reported 3Q16 GAAP earnings of $380m, or 89 cents per basic and diluted share of common stock, on revenue of $3.9bn. Operating (non-GAAP) earnings for 3Q16 were 90 cents per basic share of common stock, the company said, adding that those results compare to 3Q15 GAAP earnings of $395m, or 94 cents per basic share of common stock (93 cents diluted), on revenue of $4.1bn. Operating (non-GAAP) earnings for 3Q15 were 98 cents per basic share of common stock, the company said.