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Staff Supports Approval of FirstEnergy’s Corporate Separation Plan
Staff of the Public Utilities Commission of Ohio (PUCO) have recommended approval of an amended corporate separation plan (CSP) filed by the FirstEnergy Ohio utilities.
As background, the FirstEnergy Ohio EDCs’ amended corporate separation plan modifying the language to remove the “plan” qualifier, and rather explicitly states that the EDCs do not jointly market or jointly advertise with a competitive affiliate. As such, combined with the FirstEnergy Ohio EDCs’ witness’s 2024 testimony, it appears that the position of the FirstEnergy Ohio utilities is that the shared use of the FirstEnergy name by an EDC and competitive affiliate is not permitted under the amended corporate separation plan.
In PUCO Staff’s recommendation for approval of the FirstEnergy Ohio EDCs’ amended corporate separation plan, Staff observed that, “The Companies no longer have their home warranty affiliate, FirstEnergy Home, or a competitive retail energy services supplier affiliate, FirstEnergy Solutions[.]”
Staff had noted that former competitive affiliates were at the “core” of one of the auditor’s recommendations to ban the use of a shared name or logo. As such the subsequent elimination of any competitive affiliates appears to have addressed the auditor’s recommendation.
Staff Review and Recommendation states that, “Staff believes the amended corporate separation plan changes are reasonable and recommends approval of the Application.”
As background, on September 3, 2024,the Ohio FirstEnergy Companies filed an application to amend their corporate separation plan. The FirstEnergy companies application was filed in response to recommendations made in audit reports by SAGE Management Consultants, LLC (“SAGE”) and Daymark Energy Advisors. SAGE and Daymark made various recommendations to improve the corporate separation plan that was approved by the Commission in Case No. 09-462-EL-UNC and is currently in place.
Excerpt from Staff Recommendation
“Staff reviewed the Amended Corporate Separation Plan (“Plan”). The Companies are amending the corporate separation plan to address multiple deficiencies reported by SAGE and Daymark, as well as to reflect changes in offerings and corporate structure.
SAGE recommended that the Companies’ plan align with Ohio rules in addition to FERC compliance, segregate competitive employees, and reexamine FERC employee classifications. The Companies aligned their amended plan with Ohio rules. The Companies no longer have a competitive affiliate to segregate as recommended by SAGE. Finally, the Companies have reclassified certain competitive employees as recommended by SAGE.
Daymark recommended that affiliates no longer use the FirstEnergy name or logo, and that the Companies no longer only provide affiliates with competitive advantages for products and services. Daymark also recommended that the Companies provide training, track customer complaints, and enhance the cost allocation manual (CAM) with a more robust auditing system and internal controls. The Companies no longer have their home warranty affiliate, FirstEnergy Home, or a competitive retail energy services supplier affiliate, FirstEnergy Solutions, which were at the core of Daymark’s recommendations. The Companies have sufficiently updated training, internal controls, and CAM to address the remainder of the Daymark’s audit recommendations.
“Staff has no concerns about the amended corporate separation plan as filed.”
