) business wings, Mon Power and Potomac Edison, submitted
additional rate information to West Virginia's Public Service
Commission ("PSC") regarding its proposed scheme to offer
consistent, reliable and low-cost power to the state's
The plan involves Mon Power buying the remaining 80% interest
in the Harrison Power Station. Mon Power already has a 20% stake
in the power station. Located in Haywood, WV, the Harrison unit
is a 1,984 megawatt coal-fired plant which is equipped with next
generation emission control features.
The Harrison buyout represents investments of roughly $1
billion by Mon Power. Besides the consent from the PSC,
FirstEnergy needs sanctions from the Federal Energy Regulatory
Effective Jan 1, 2013, the electricity rates are $94.31 per
month, reflecting a 5% decline, as the benefits of lower fuel
costs are passed on to consumers. If new rates are approved,
household customers of Mon Power and Potomac Edison consuming
1,000 kilowatt-hours per month will witness an 87 cent increase
in their monthly bills from the 2012 rate.
The rate increase would be accounted as a temporary surcharge
for now until the next base rate cases of both Mon Power and
Potomac are concluded. FirstEnergy is expected to file a base
rate any time after the completion of the Harrison purchase.
Previously, the two business segments had filed an application
with the PSC which entailed plans relating to ensuring stable
rates and diminishing the spot power market sensitivities to
safeguard customers. The idea behind the plan was to fulfill
customer usage growth of 1.4% per year by optimally utilizing the
adequate resources at the company's disposal.
A rate base sanction would definitely boost the company's top
line. Meanwhile pending approvals from regulatory bodies will
continue to be an overhang on the stock.
On the brighter side, FirstEnergy's transmission investment
and development of natural gas prospect in Ohio will sit well
with its broad growth objectives. Currently, the company retains
a Zacks Rank #3 (Hold).
Other stocks who have come across positive rate revisions are
NextEra Energy Inc.
Headquartered in Akron, OH, FirstEnergy Corp. together with
its subsidiaries engages in the generation, transmission, and
distribution of electricity. With a market capitalization of
$16.98 billion, the company has 20,000 total employees.
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