Electric Industry

Supreme Court Cases

In 2006, the Office of the Ohio Consumers’ Counsel (OCC) appealed several cases to the Supreme Court of Ohio, arguing on behalf of residential consumers that Public Utilities Commission of Ohio (PUCO) decisions were unlawful and not in the public interest.

The OCC and other parties involved in state utility cases have a right to appeal PUCO decisions directly to the high Court. An appeal is based on legal arguments and is filed after first asking the PUCO to reconsider its decision.

The decision to appeal a case to the state’s highest court is never taken lightly and the OCC dedicates significant time and energy to each case. These advocacy efforts continue the OCC’s commitment to protect consumers’ interests.

Merger agreement

An agreement between the Office of the Ohio Consumers’ Counsel (OCC) and Duke Energy provided benefits to residential consumers and resolved the OCC’s appeal of the Public Utilities Commission of Ohio’s (PUCO’s) decision approving the merger of Duke and Cinergy. The OCC had appealed the PUCO’s decision to the Court.

The OCC negotiated for $1.25 million that Duke would pay through shareholder funding for accelerating the existing residential weatherization projects. Duke also agreed to withdraw cases at the PUCO that could have imposed extra charges related to newly built or acquired power plants. Based on this agreement, the utility also worked cooperatively with the OCC to propose a green energy program, called GoGreen Power. If the PUCO approves the program, customers could support energy produced using sources such as wind and solar.

In addition, the agreement required Duke to continue, without a charge to customers, bill payment stations in the Cincinnati area for at least one year. The OCC was concerned that these stations could be closed, leaving low-income customers who do not have credit cards or checking accounts with fewer options.

— Case 2006-0701

Electric rate plans

Based on appeals that the Office of the Ohio Consumers’ Counsel (OCC) filed in the years 2004 and 2005, the Court issued rulings regarding the Public Utilities Commission of Ohio’s (PUCO’s) approvals of rate plans for FirstEnergy, American Electric Power (AEP) and Cincinnati Gas & Electric (now known as Duke Energy). The rate plans set the electric generation rates that customers pay during the years 2006 through 2008.

The OCC challenged the PUCO’s failure to follow Ohio’s electric choice law which requires that options be available to customers at a price set by a competitive market. Those options must include a market-based standard service offer and a rate determined through a competitive bid process. The OCC argued that the PUCO’s approval of the standard service offers that customers pay for electricity was not based on the electric market and rates determined by a competitive process which the law requires. The OCC also argued that there was no basis in the law for the electric rate plans, which produced significant rate increases for many Ohioans.

FirstEnergy rate plan

In May 2006, the Court found that certain provisions of the Public Utilities Commission of Ohio’s (PUCO’s) decision involving the FirstEnergy rate plan were unlawful. The Court decided that the PUCO complied with the law for implementing a rate plan offered at a market-based rate but that the plan violated Ohio law by failing to also offer customers an electric rate at a price based on a competitive bidding process.

In the decision, the Court found that while the electric market had not yet fully developed as planned, “this does not empower the PUCO to create remedies outside the parameters of the law.”

The Court remanded the case back to the PUCO where it is still pending. While the Court’s decision on the competitive bidding portion of the law was a victory for the Office of the Ohio Consumers’ Counsel (OCC) and residential consumers, the OCC was disappointed that other rates implemented by the PUCO were upheld. For example, the OCC believed there was no basis in the law for a “Rate Stabilization Charge,” which amounts to a $15 to $20 per month charge on a typical FirstEnergy residential customer’s bill. — Case 2005-0766

American Electric Power rate plan

In July 2006, the Office of the Ohio Consumers’ Counsel (OCC) received a victory for residential consumers when the Court struck down the Public Utilities Commission of Ohio’s (PUCO’s) decision that approved the AEP rate plan. The Court sent the entire case back to the PUCO for revisions. The plan for the generation rates that customers pay was originally approved by the PUCO in January 2005. The OCC appealed the PUCO’s decision to the Court in April 2005.

In its appeal, the OCC argued that the AEP rate increases that began in January 2006 were unlawful and unreasonable. The AEP rate plan included generation increases of 7 percent per year for Ohio Power customers and 3 percent per year for Columbus Southern Power customers. The rate plan also included the potential for additional annual increases related to such areas as environmental and security expenses as well as a fee for storm damage contained within the distribution charge on customers’ bills.

Based on the Court’s directive, this case is pending at the PUCO for revisions to the plan. While the OCC hopes that a solution will be found that complies with the law, the Court stated in its decision that the OCC could appeal this case in the future based on several of its previous arguments, including those related to rate increases. — Case 2005-0767

Cincinnati Gas & Electric rate plan

The Court issued its decision on the Public Utilities Commission of Ohio’s (PUCO’s) approval of the CG&E rate plan in November 2006. The Court found that the PUCO failed to support its approval of the rate plan with adequate evidence in the record justifying some new charges proposed by CG&E after the hearing had concluded. In question was CG&E’s request to add to the charges that customers would pay under an initial rate plan which had been modified and already accepted by the PUCO.

The Court also said the PUCO should have allowed the OCC access to side agreements between CG&E and other non-residential parties before approving a modified rate plan. According to the Court, “If there were special considerations, in the form of side agreements among the signatory parties, one or more parties may have gained an unfair advantage in the bargaining process.” The OCC believes the disclosure of side agreements is vital to ensuring the integrity of the negotiation process and that residential consumers are fairly treated in the process. The Court ordered that the case be returned to the PUCO for the gathering of additional evidence and to disclose the side agreements to the OCC. — Case 2005-0518

Billing system charges

The Court decided a case involving $16 million plus interest in billing system charges that the Public Utilities Commission of Ohio (PUCO) approved for Dayton Power & Light (DP&L) in 2005. Oral arguments were held in May 2006 where the Office of the Ohio Consumers’ Counsel (OCC) maintained that imposing these charges on residential customers directly violated an agreement the agency signed with DP&L in 2000. The agreement and the billing system charges were connected with Ohio’s electric choice law and the company’s transition from regulated to competitive power rates. The OCC argued that the failure of a utility to honor an agreement and the PUCO’s approval of such actions would have a chilling effect on the settlement process.

The OCC also argued that by approving the billing charges, the PUCO unlawfully raised customers’ distribution rates. Distribution rates, which pay for the delivery of electricity into homes, were to be capped through the end of 2008 under a plan approved by the PUCO in 2003.

The Court decision upheld the PUCO’s approval of the charges, citing that the 2000 agreement between the OCC and DP&L was not filed with or approved by the PUCO.
— Case 2005-0945

Transmission charges

The Court decided appeals in November 2006 regarding Public Utilities Commission of Ohio (PUCO) decisions to permit DP&L and FirstEnergy to defer the collection of millions of dollars in transmission charges in order to increase customers’ rates at a later time, after a legislatively mandated rate cap expired. The costs at issue were incurred by the utilities during a time period when customers’ rates were capped as a consumer benefit of Ohio’s electric choice law. The PUCO permitted both companies to defer and then collect the accumulated costs, with interest, from consumers.

The Office of the Ohio Consumers’ Counsel (OCC) believed that the deferrals violated that law and argued that the increases violated the terms of agreements the OCC entered into with DP&L and FirstEnergy. The transmission charges totaled approximately $70 million for all FirstEnergy customers (residential, commercial and industrial) and about $7 million for all DP&L customers.

The Court found that the PUCO’s decision to allow the change in accounting procedures to defer these transmission charges was an exception to the rate cap. The Court, however, found that the PUCO had “abused its discretion” by refusing to allow the OCC to intervene in the cases. The Court fully supported the OCC’s ability to intervene in PUCO cases, where the OCC advocates on behalf of residential consumers. — Cases 2005-1621, 2005-1679

 

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