Just got confirmation that FirstEnergy's Ohio Edison rate increase went into effect January 1st as scheduled. Industrial customers on Schedule TOD-1 are seeing demand charges increase from $10.50 to $12.75 per kW, and the energy charges went up about 8% across all time periods. One of my Youngstown manufacturing clients is looking at an additional $35K annually just from the tariff changes. The ESP III settlement really hurt large users.
FirstEnergy rate increase effective January - heads up Ohio clients
Jim we're seeing similar impacts here in western Pennsylvania with West Penn Power. The demand charge increases are brutal for manufacturing operations that can't easily shift their peak usage. One steel fabrication client is considering moving production to off-peak hours just to avoid the new demand structure. The PUCO really didn't protect industrial customers in this ESP approval.
Walt exactly - the PUCO seemed more concerned with residential rate impacts than commercial and industrial. The irony is that large users are the ones with options to potentially leave the system or significantly reduce load. I've got three clients seriously looking at behind-the-meter generation now that the economics have shifted with these new rates.
The FirstEnergy increases are getting attention here in Iowa too. MidAmerican Energy is watching how Ohio handles the industrial customer reaction. We're facing similar coal plant cost recovery issues and the utility is hinting at demand charge increases in their next filing. The regulatory trend seems to be shifting more costs to demand charges rather than energy charges.
Norm you're right about the demand charge trend. Pennsylvania utilities are all moving that direction. The argument is that transmission and distribution costs are driven by peak demand, so demand charges should recover those costs. But the reality is it's just easier to get large rate increases approved through demand charges than energy charges.
Update: MidAmerican just announced they're filing their rate case next month and confirmed demand charge increases are part of it. They're using the FirstEnergy precedent as justification. These Ohio rate increases are going to ripple across the Midwest. Industrial customers need to start preparing for higher demand charges everywhere.