FirstEnergy Corp., the parent firm of Toledo Edison, on Friday filed a stipulated agreement with the Public Utilities Commission of Ohio whereby the utility will return $900 million to customers that it received as a result of windfall savings generated by the federal Tax Cut and Jobs Act passed in December, 2017.
However, FirstEnergy also tied the agreement to its plan to upgrade its electric distribution grid to new “smart” technology. The upgrade will cost a total of $516 million over three years, and the utility is seeking approval to recover its costs through a special fee it will charge customers.
Once that project is done, FirstEnergy is proposing a second grid upgrade immediately afterward, although the cost of that upgrade has not yet been calculated.
For the returns savings, Akron-based FirstEnergy said typical customers using 1,000 kilowatt-hours of electricity would see immediate savings of $3.90 on their monthly bills.
The utility plans to pass on the savings to customers over the next 25 years.
The agreement is subject to approval by PUCO. But the commission’s staff already has recommended approval of the proposed settlement, and the deal also has the support of representatives of industrial and commercial customers, environmental advocates, hospitals, competitive generation suppliers, and other parties.
But Ryan Augsburger, vice president and managing director of public policy for the Ohio Manufacturers’ Association, said his organization was unclear why tax-cut savings and grid upgrades should be linked in one proposal.
“We are still reviewing a rushed settlement that seems to require another customer charge,” he said in a statement. “Manufacturers appreciate the PUCO’s work to return tax savings to customers, but it’s unclear why the two issues have been combined.”
Under the tax cut, the corporate tax rate was lowered from 35 percent to 21 percent, creating a windfall for some businesses while penalizing others because some business deductions and credits were reduced or eliminated.
FirstEnergy promises in the settlement that its Ohio customers will receive 100 percent of the tax savings it received under the tax cut law.
The upgrades to the distribution system, known as “Grid Mod I,” will include installing 700,000 advanced metering devices, or “smart meters,” that will be able to communicate with the utility and provide both the company and customers with feedback on electric usage.
The meters also can help pinpoint and reduce power outages, eliminate the need for meter readers, and communicate with other electronic devices, such as smart thermostats, to achieve energy and capacity savings, FirstEnergy said.
“The agreement filed with PUCO will deliver financial and service reliability benefits for our customers now and in the future,” said Samuel L. Belcher, senior vice president and president of FirstEnergy Utilities. “The grid modernization initiative is consistent with the technology supported by the PUCO and the initial deployment of smart meters for our Ohio utilities will ultimately help customers make more informed decisions about their energy usage.”
FirstEnergy has requested the utilities commission approve its agreement by Dec. 31. If approved, it plans to start developing for its “Grid Mod II” plan no later than June 1, 2020.
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