By Mike Boyer
The Cincinnati Enquirer

After a decade of frozen electric rates, Cincinnati Gas & Electric will ask Ohio regulators for its second rate increase this year.

CG&E filed notice with the state Friday that it would seek a 6.5 percent rate boost to pay for improvements to its power transmission and delivery system. Transmission and distribution charges make up a third of a residential customer's bill, with the rest coming from power-generating costs.

RAISING RATES

Cincinnati Gas & Electric has two proposals before Ohio utility regulators. Both would mean higher rates for consumers, but would increase different parts of your electric bill. • A 6.5 percent rate boost, proposed Friday, would pay for CG&E's investments in its transmission and distribution network in the last decade. For a residential customer using 1,000-kilowatt hours a month, the hike would add $5.19 to a monthly bill (from $79.62 to $84.81). These costs appear on your CG&E statement as the distribution customer charge (for such services as meter reading and service line maintenance), the distribution energy charge (for moving power along CG&E's distribution line and the use of wires, transformers and substations along the way) and the transmission energy charge (for the operation and maintenance of CG&E's high-voltage transmission line system). • A rate restructuring plan would end CG&E's rate freeze under Ohio's electric deregulation law a year ahead of schedule. The plan, filed in January, also would let the utility cover higher generation costs. The generation energy charge typically represents two-thirds of a customer's bill. CG&E's proposal would cap increases at up to 7 percent a year through 2008. If the full amount were approved, it would add $5.57 to a monthly bill in the first year. State regulators also would have to approval each annual increase.

Consumer advocates attacked CG&E's plan, saying it violated the state's electric deregulation law.

The Cinergy Corp. subsidiary said the $78.1 million rate increase would raise the monthly bill of a typical residential customer (using 1,000 kilowatt hours of electricity) by $5.19 to $84.81. CG&E, which has 640,000 customers in Southwest Ohio, said the same typical customer paid $82.86 in 1994 when it got its last rate increase.

Greg Ficke, CG&E's president, said the company has incurred about $700 million in higher capital costs for its network of 17,646 miles of wires and poles in the past decade. CG&E has incurred about $400 million in additional operating and maintenance costs in the same period.

"With the renewed emphasis on reliability following the August blackout last year, we need to make sure we have adequate revenues that allow us to continue to maintain the high levels of reliability,'' he said.

The higher transmission and distribution charge would take effect next year, if the Public Service Commission of Ohio approves.

The proposal made Friday is related to another CG&E request already before the commission.

CG&E in January asked for a year-early end to a rate freeze imposed under Ohio's 4-year-old electric deregulation law. In return, CG&E would cap annual increases on generation charges at up to 7 percent through 2008.

The commission's staff has proposed a lower cap, excluding fuel costs.

The Ohio Consumers' Counsel office opposed this CG&E plan, saying it allow the utility to collect an additional $100 million - or $4 to $5 a month from each residential customer - for "transition charges'' to a competitive market. Those charges were to end in 2008, but CG&E proposes extending them to 2010.

In a public hearing last month in Cincinnati, about two dozen elderly and low-income consumers urged the commission not to adopt CG&E's rate restructuring.

A spokesman for the new Consumers' Counsel, Janine Migden-Ostrander, said both proposals violate the electric deregulation law. The law calls for a rate freeze through 2005 or until 20 percent of CG&E's residential customers have switched suppliers. Only about 5 percent of CG&E residential customers have switched to date.

"This is not what Ohio consumers were promised with deregulation,'' spokesman Ryan Lippe said.

CG&E's Ficke said the utility's rate plans give consumers some protection from higher rates while allowing the utility to recover costs it can justify.

He said the CG&E proposal was less than a 15 percent rate-boost proposal that its sister company, PSI Energy, has before Indiana regulators. It's similar to double-digit rate increases sought by Louisville Gas & Electric in Kentucky and Detroit Edison in Michigan.

The PUCO plans formal hearings starting May 17 in Columbus on CG&E's rate restructuring. Hearings on the 6.5 percent transmission and distribution rate boost haven't been set.

E-mail mboyer@enquirer.com