An Ohio court has ruled that state regulators violated the law by allowing FirstEnergy Corp to raise future distribution rates to offset more than $150 million of fuel costs, the company said on Thursday. In a filing with the Securities and Exchange Commission, FirstEnergy said the Supreme Court of Ohio ruled that the Public Utilities Commission of Ohio (PUCO) violated certain provisions of the Ohio Revised Code because fuel costs are a component of generation service, not distribution service.

In January 2006, PUCO approved the recovery of some of FirstEnergy's fuel costs through a fuel rider and allowed them to recover other fuel costs over a 25-year period beginning Jan. 2009 through distribution rates.

The court also found that said it did not believe PUCO addressed whether the deferral of recovery was anticompetitive. It sent the issue back to the commission for further consideration.

FirstEnergy said it plans to contest the court's interpretation and ask it to reconsider the ruling. It also intends to file a concurrent application with the PUCO, laying out a new plan for recovery of the fuel costs.

It said it would continue deferring the fuel costs until the court hears its motion to reconsider the case.