On Friday, the WV PSC staff and the PSC’s Consumer Advocate Division filed their testimony in preparation for the hearing on the FirstEnergy billing investigation starting on December 17. Those of us in the Coalition for Reliable Power were glad to see that both the staff and the CAD supported our solution to the wildly inaccurate estimation that Mon Power and Potomac Edison have been doing with our electric bills. The Coalition has pushed for the PSC to order FirstEnergy to read all meters every month for a year. This is the only way for FirstEnergy to stop the crazy practice of generating new estimates based only on past bad estimates. Because FirstEnergy created this problem in the first place, Coalition members believe that the additional costs of this corrective measure should be paid by FirstEnergy shareholders and not passed on to WV rate payers.
Here’s what the PSC staff economist Michael Fletcher recommended in his testimony:
If the changes recommended by Staff and/or those by EPRI are not sufficient to address the recurring and significant level of complaints or should the Companies report to the Commission that the FirstEnergy billing system cannot be modified by MP and PE in ways to correct existing problems, then Staff believes the Commission would need to reconsider the current approval of monthly billing and bimonthly meter reading. The two most important functions of a utility are to provide reasonable service and bill customers properly. If all fails to address the current problems affecting MP and PE customers, the Companies should be required to bill and read meters monthly. Based on the Companies’ response to Staffs First Data Request Question No. 1, the average MP annual meter reading costs for 2010-2012 was approximately $3.9 million and the average PE annual meter reading costs for 2010-2012 was approximately $1 .0 million, If the Companies were required to perform actual meter readings every month the estimated increase in meter reading costs for MP and PE would be about double. However, an increase annual meter reading costs of $3.9 million for MP would be a percentage increase in total operation and maintenance costs of about 0.4% based upon MP’s 2012 Commission Annual Report. For PE the prospective increase as a percentage of 2012 reported total operation and maintenance costs would be about 0.5%.
Mr. Fletcher leaves the issue of who is to pay for these increased costs of monthly meter reading up in the air, implying that he might accept passing these costs along to rate payers.
Utilities Analyst Suzanne Akers recommended in her testimony for the Consumer Advocate Division:
The CAD is concerned that unless the Companies take necessary steps to obtain accurate historical data for all customers, the problem with inaccurate estimates will continue in a never-ending cycle. The Companies acknowledged the need to read some meters that they “deemed necessary” every month for a certain period of time to help address the situation, but the CAD recommends that the Companies increase their number of meter readers in order to perform actual reads every month for at least a year to obtain months worth of actual reliable data for every customer. Once there is reliable customer usage data, it can be determined whether there are systemic problems with the new FE software estimation procedures that should be addressed.
Like Mr. Fletcher, Ms. Akers did not identify who should pay for fixing FirstEnergy’s estimation system.
Mr. Fletcher provides specific estimates of the costs of reading every meter every month for both Mon Power and Potomac Edison. These increased costs would be about 1/2 of one percent of each company’s annual operations and maintenance spending for a year, for Mon Power about $4 million and for the smaller Potomac Edison about $1 million. Those companies’ rate payers have clearly already paid more than $5 million in aggravation over the past three years of FirstEnergy’s billing failures. Why should those rate payers be forced to pay that amount again for problems they didn’t cause?
Mr. Fletcher provides a detailed analysis of the information Ohio-based FirstEnergy has provided to the WV PSC throughout the investigation. His testimony is worth a look if you want to see how bad the situation has gotten for FirstEnergy and its customers.
Both FirstEnergy and the WV PSC initially claimed that all of the company’s billing problems happened in 2012 and were not subsiding. That’s not what FirstEnergy’s reporting has shown.
Here is what Ms. Akers testified:
It is important to note that although the number of meters with 2 or more consecutive estimates fell during the summer months of 2013, there was a significant increase in October 2013. The total number of meters with 2 or more consecutive estimates rose from 12,439 in September 2013 to 30,935 in October 2013 (i.e., a nearly 150% increase).’’
Furthermore, the number of increased in October 2013, as well. The number of complaints had fallen complaints handled by the customer contact center. Similar to the number of estimated meter readings, during the summer months of 2013, but increased in October by nearly 14 percent. Although the Companies provided a partial explanation for the increase in the number of meters with 2 or more consecutive estimates in October, there was no explanation provided by the Companies for the increase in both formal and informal complaints. According to the Companies’ Monthly Report, billing disputes were up by 12 percent in October and complaints about customer credits and deposits rose by75 percent from September 2013 to October 2013.
It appears that FirstEnergy’s billing and service have continued to deteriorate throughout the PSC investigation. The Commissioners need to take decisive action to fix the financial distress that FirstEnergy has caused many of its West Virginia customers. As Mr. Fletcher stated, “The two most important functions of a utility are to provide reasonable service and bill customers properly.”