Utilities’ poor credit ratings could cost consumers

State lawmakers propose to make consumers pay for utilities’ poor credit ratings, something that could lead to higher electric bills.

The provision, slipped into the state budget proposal, is drawing opposition, although supporters say the concerns are overblown. The budget is headed toward passage in the week or so.

The budget amendment, made public by the Ohio Senate on Tuesday, says a utility company may be able to charge consumers for expenses related to maintaining an acceptable credit rating. A poor rating leads to higher costs for borrowing money.

It was inserted with no warning or discussion, according to consumer and business groups that are now asking for it to be removed.

“(The) legislation would only worsen Ohioans’ predicament with their already rising electric bills

and charges above market prices,” said a letter signed by Ryan Augsberger of the Ohio Manufacturers’ Association and Bruce Weston of the Office of the Ohio Consumers’ Counsel.

A coalition of business groups, including Industrial Energy Users-Ohio, said in a separate letter that the provision gives regulators the “vaguely specified” ability to “increase electric bills through non-bypassable charges in order to maintain or improve an electric distribution utility’s credit rating.”

Utilities that would be affected were contacted for comment. Dayton Power & Light confirmed that it had requested the item. The company said in an email that it’s a minor change that would allow the Public Utilities Commission of Ohio the option to consider credit-worthiness when making rate decisions.

“It simply gives the PUCO an optional tool in their toolbox on how they can balance the needs of the utilities and customers to ensure reliability,” the company said. “There is not a subsidy or bailout, and all parties will still have their opportunity to weigh in on rate cases just like today.”

John Fortney, a spokesman for Senate Republicans, said the provision codifies something that the PUCO does already, which is consider an array of factors when making rate decisions. Those factors can include a company’s financial health and the cost of borrowing money, which has implications for a company’s ability to provide reliable service.

American Electric Power, FirstEnergy and Duke Energy have taken no position on the proposal.

“We did not ask for this,” said FirstEnergy spokesman Doug Colafella.