PUCO OKs sale of bonds by FirstEnergy
By Jamison Cocklin
The Public Utilities Commission of Ohio has approved a request from FirstEnergy Corp., allowing the company to sell low-interest AAA-rated bonds, a move the company says will help pay down deferred costs and slightly reduce its customers’ monthly bills.
A bond rating is a measure of the likelihood of a bond’s default by the bond issuer. AAA is the highest rating.
FirstEnergy, which operates Ohio Edison, the Illuminating Co. and Toledo Edison, will use the initial bond sales to curb $555 million worth of deferred costs that it passes on each month in small increments to its customers.
Those costs stem from old projects, fuel costs, power purchased on the open market and discounts the company provides, such as those going to customers who use nothing but electricity for all their power needs, company officials said.
Typically, Ohio Edison customers see those deferred costs as a line-item on their monthly bills, said Doug Colafella a FirstEnergy spokesman.
Though it is unclear when the company will begin selling the bonds, Colafella added that Ohio Edison customers will see a slight decrease when they are issued, with the line-item going from $3.46 a month to about $3.20, a savings of 26 cents per month.
Colafella said it’s too early to tell when those savings will begin.
In all, FirstEnergy estimates Ohio Edison customers will save $44 million over the term of the bonds, which the company expects to pay back by 2035.
Because interest rates will be low, it will allow First- Energy to pay back a smaller portion of interest and principal during that time and effectively save all its customers $104 million.
FirstEnergy will be the first utility company to issue bonds in Ohio. Last year, the Ohio Legislature passed a law allowing electric distribution utilities to sell low-interest, long-term bonds.
The PUCO also will retain an independent financial adviser to assist in reviewing the final financing terms upon the company’s issuance of the bonds.