By Mike Boyer
The Cincinnati Enquirer

More than a decade of unchanged electric rates for Cincinnati Gas & Electric Co. customers could end this year, if Ohio regulators agree with the utility.

In exchange for delaying until 2009 full deregulation of electric rates - and the possible "price shocks" that could come with it - the utility is proposing a plan that could allow it to raise rates up to 7 percent annually starting in 2005 and running through 2008.

For example, the current average monthly electric bill of $66.35 could rise to $70.99 in 2005, if the full 7 percent increase was requested and approved. State regulators would have to review and approve any proposed annual increase.

If the utility requested and received the entire 7 percent each year, the average monthly bill could reach $86.97 in 2008.

The Office of Ohio Consumers' Counsel, which represents consumers before the commission, said Tuesday that it was still reviewing CG&E's filing.

"But we have serious concerns that (CG&E) is backing out on commitments made to customers and to the commission,'' spokesman Ryan Lippe said.

Since the end of 1999, residential electric rates for CG&E's 640,000 customers in 10 southwestern Ohio counties have been frozen under the state's electric deregulation law. CG&E's proposal would end the freeze a year earlier than the law requires.

Before the current freeze was put into law, CG&E rates were frozen for five years under an agreement that allowed it to merge with PSI Energy in Indiana to create Cinergy Corp., its parent holding company.

While the consumer price index has risen 26 percent in the last decade, CG&E says its average electric rate has actually dropped. The utility says it now charges $79.62 for 1,000 kilowatt-hours of electricity, compared with $82.86 in 1994.

CG&E, which adds that its rates are consistently below the Ohio and national averages, says it is seeking the hike for three key reasons:

• The plan offers customers relative price stability as deregulation continues.

• The company wants to ensure it can provide a reliable delivery system for southwest Ohio. The company has spent more than $700 million on improving its transmission and distribution systems since 1994.

• CG&E wants to recover a range of higher power-generating costs, which make up about 65 percent of a residential customer's bill. The company says it has spent $177 million on better pollution controls on its Ohio plants since 2001. It also is paying more for fuel and security.

How these costs have affected the company's profits isn't clear. In the past 10 years, CG&E parent Cinergy's profits have ranged from a low of $227 million in 1994 to a high of $473 million last year.

The proposed adjustment is a key element of an electric rate stabilization plan filed this week by CG&E. The Public Service Commission of Ohio, expressing concern that a competitive retail market hasn't developed under Ohio's four-year-old electric deregulation law, last month asked CG&E to develop the stabilization plan.

The commission took no action on a market-based rate plan that CG&E filed a year ago for its commercial and industrial customers.

CG&E president Greg Ficke conceded there are tradeoffs involved in the utility's plan.

"The reason we're bringing residential in is that we've done an incredible job of maintaining the system here, but we also think to continue that we need to address transmission and distribution rates which have been frozen," he said.

The commission has set a hearing on the proposal for April 19 in Columbus, and a public hearing will be held in CG&E's service area.

E-mail mboyer@enquirer.com