Public Utilities Commission of Ohio orders FirstEnergy to establish recommended DMR

The Public Utilities Commission of Ohio (PUCO) rejected a proposal on Wednesday for FirstEnergy’s modified retail rate stability (RRS) rider, ordering FirstEnergy’s Ohio utilities to instead instate PUCO’s recommended distribution modernization rider (DMR) and eliminate the existing RRS rider.

FirstEnergy proposed modifying the existing RRS rider so that it would continue as a financial hedge. The proposed rider would not be tied to the physical operation of generation in Ohio. PUCO rejected the proposal, finding that it lacked benefits related to reliability, resource diversity and economic development.

The recommended DMR is set at $132.5 million per year, and would offer FirstEnergy an infusion of capital allowing the utility to remain financially healthy enough to invest in future grid modernization. PUCO limited the DMR to three years, with a possible extension for an additional two years. FirstEnergy requested that the DMR be granted for eight years, permitting $558 million per year.

“The DMR’s primary purpose is to ensure that FirstEnergy retains a certain level of financial health and creditworthiness so that it can invest in future distribution modernization endeavors,” PUCO Chairman Asim Z. Haque said. “We expect that these future endeavors will advance the electric industry in FirstEnergy’s service territory and benefit Ohio’s consumers and businesses.”

During the term of the DMR, FirstEnergy must sufficiently fulfill grid modernization initiatives order by PUCO. Initiatives will include deployment of smart grid technologies throughout the utility’s serviced territories.