The company that wanted to hand-deliver two CFL bulbs to your front porch and charge you more than $21 is ending its lightbulb program and nearly all of the less controversial consumer efficiency programs offered by utilities across the nation, a move that its many critics say will lead to higher power prices.
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View full sizeFirstEnergy is abolishing is energy efficiency programs for consumers and businesses, paving the way, say critics, for more expensive power to flow through transmission substations like this one in Avon Lake. AKRON, Ohio -- FirstEnergy is abolishing most of its Ohio consumer and business energy efficiency programs by the end of the year -- on the grounds that the elimination will lower monthly electric bills.
The company will continue similar programs in Pennsylvania and in other states where FirstEnergy also operates local power companies, but where lawmakers have not changed state laws to create an opportunity to end efficiency subsidies.
In Ohio, where the Republican-controlled General Assembly did change the law, FirstEnergy will on Dec. 31 end consumer cash rebates for everything from LED light bulbs to ceiling fans, from household appliances to whole house air conditioning, from heat pumps to geothermal heating.
Also going away are discounted household energy audits and cash rebates to homebuilders and buyers of very high-efficiency homes. Parallel programs for businesses are also disappearing.
A company spokeswoman explained Wednesday that since customers have been paying for those subsidized programs through increases in rates, monthly bills would be lower when the programs are eliminated.
Spokeswoman Diane Francis said the company had not calculated the extent of consumer savings when the programs are gone but that overall savings for FirstEnergy's Ohio customers -- including commercial and heavy industry -- would be "tens of millions of dollars."
But Tuesday, FirstEnergy's top executive for rates and regulatory affairs, William Ridmann, said consumers on average are paying about $4.50 a month in extra charges to pay for the efficiency programs.
In the last five years the total cost of the efficiency programs, including programs to help heavy industry become more efficient and competitive, had led to about $1 billion in temporary charges, he said. Ridmann did not say how much the upgrades had saved customers in power costs.
FirstEnergy told a happier customer story in reports to the Public Utilities Commission of Ohio in 2012 comparing the anticipated cost of the programs over the coming three years to the savings created by reducing the amount of power purchased.
And in individual attachments for each of its Ohio companies accompanying that overall report, the company said it had achieved a balance between costs and anticipated savings.
"The Company believes that it has prepared an EE&PDR (energy efficiency & peak demand reduction) strategy as reflected in this three year Plan that balances near-term energy savings opportunities among all rate classes with longer-term programs that continue to create jobs and build capacity for delivering greater energy and demand reduction impacts in the future," those introductory remarks noted.
A 2013 report to the PUCO looking back at costs and benefits for that year and 2012 showed generally that for every $1 spent on energy efficiency, customers had saved more than $2 in power costs.
The company's conclusion was based on a series of complicated calculations, a process that FirstEnergy's spokeswoman Francis on Thursday said may not have been the most accurate way of figuring, though the company has not amended the reports to say otherwise.
Francis pointed to a footnote in the reports stating that the calculations did not take into account customers who did not apply for the rebates, and said only 7 percent of its residential customers participated.
Still, that two-to-one assertion caught the eye of energy efficiency advocates and environmental groups earlier this year when they were opposing the passage of legislation backed by FirstEnergy that weakened the state's efficiency standards and opened the door to what the company is doing now.
"The facts don't bear this out," said Samantha Williams, a staff attorney for the Natural Resources Defense Council, of FirstEnergy's current claim that the programs are a financial burden to customers.
"FirstEnergy's own analysis shows that efficiency works and saves customers two-to-one on their investment," she said, referring to the series of complicated calculations in the reports, calculations used by all utilities.
As for the issue in the footnote, Williams said the company's argument ignores the system-wide benefit, namely that efficiency suppresses overall demand, lowering power prices.
"Actually, what's best for customers is keeping the efficiency programs and helping them save money," she said, adding that FirstEnergy is the only Ohio utility ending the programs.
Robert Kelter, an attorney with the Environmental Law and Policy Center in Chicago, said FirstEnergy has steadily resisted creating the programs. Staffs from the ELPC and the NRDC meet regularly with employees from each Ohio utility to suggest efficiency programs, he said.
The company then files details of its programs with the PUCO under protective order, preventing others from revealing details.
"It's clear from this filing that they want their unregulated affiliate (FirstEnergy Solutions) to be able to sell more higher-priced electricity and are throwing their customers under the bus," said Kelter.
"They are cutting out 50 to 75 percent of all their efficiency programs. Demand will not continue to fall as it has. There is no question that prices will go up and that shareholder profits will go up."
Kelter was referring in part to industrial customers.
FirstEnergy notes in its amended plans filed Wednesday with the PUCO that its large industrial customers will no longer have to participate at all in the utility's efficiency programs but instead will have to run their own programs and report directly to the state. That is another provision of the recent changes in state law. Industry has chaffed at having to abide by state-mandated efficiency rules and pay hefty extra charges. And as they leave, FirstEnergy will no longer have to count the power they use or save in its calculations.
FirstEnergy's move to scrap the programs comes less than two weeks after a bill imposing a two-year freeze on Ohio's energy efficiency standards became law.
The language in that legislation -- Senate Bill 310 -- is what FirstEnergy is relying on to amend its programs. While the entire bill is temporary -- the freeze is for only two years -- FirstEnergy's changes to its efficiency programs are permitted to be permanent. And that may lead other utilities to follow FirstEnergy.
"FirstEnergy is playing its traditional role of driving a train through the loopholes ahead of all other utilities, said Mark Shanahan, energy adviser to former Gov. Ted Strickland. "And doing it under the guise of helping customers."