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Enron Mail |
By now, most of you have heard about the FirstEnergy Settlement, underwhich
FE will recover as best we can ascertain at this time, all of its stranded costs. Key components of the setllement include: 1. FE makes 1120 mw of power available at a price that varies by customer class and increases gradually over the 5 years. (The price does not include line losses which the Company agreed to throw in if another marketer signs on - none did), The market price is also the shopping credit. The shopping incentive is then added to the credit . The shopping credit for residential and commercial customers is low but could possibly work pending analysis from structuring. The industrial credit is very low. 2. Customers on special contracts (approximately 800 of them), can during the first year either opt to cancel their contract or extend it through the RTC recovery period, which is unlawful in my view, although that observation did not slow anyone down. 3. The settlement creates an implicit cap on shopping of 20% since the Company will seek to have the incentive removed once the 20% is reached. The agreement states that if the incentive is not removed, then customers will pay for the incentive as a deferral which will extend the recovery period. This too is also unlawful because it allows the recovery of generation related costs beyond the market development period. 4. Barring extension of the shopping incentive and other caveats, the RTC rolls off on December 31, 2006 for Ohio Edison, June 30th, 2007 for Toledo Edison and December 31, 2008 for Cleveland Electric Illuminating Company. 5. Distribution rates are frozen until 2007. 6. There is a 5% residential rate cut. 7. FE absorbs the pancaking charges for power coming through PJM and MISO until the RTO is up and running. This settlement is basically political. Over the past several weeks, FE has cut a host of sidebar deals with each of the intervenors and customers who signed on to this travesty. When the parties were assembled for settlement talks, they lasted 2 days before parties surrendered their litigation positions. The hearing schedule is equally aggregious. Coincidentally, the hearing examiners had a schedule in mind that was extremely similar to FE. Our testimony is due on April 24 with no further discovery prior to its filing. The testimony of FE and defenders of the Stip is due on April 26. We then have 3 days for depositions with supplemental or rebuttal testimony being a big IF. The hearing commences May 2. The parties who thought it was fine to give FE $8.9 billion without quantification or review are Consumers Counsel, Staff, Industrial Users, Retail Merchants, Low income (some), Ohio Manufacturers, Shell Energy, Kroger, AK Steel, Ohio Hospital Association. Those fighting the stipulation are all the other marketers, the Cleveland Growth Association, the City of Cleveland, Citizens Action, Citizens Power, Safe Energy Communications Council. By separate e-mail, Laurie Knight will send you the shopping credit and shopping incentive numbers. Also, if you would like a copy of the settlement, please let Laurie know. Two final points. We are doing everything we can to try to improve or derail acceptance of the settlement, although it appears to be a fait accompli. Second, the stage has been set for similar type negotiations with the other utilities Please pass this memo along to anyone else who you think has an interest in knowing this information. Thanks, Janine
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