Constellation NewEnergy, Inc. v. Public Utilities Commission

104 Ohio St. 3d 530
CourtOhio Supreme Court
DecidedDecember 17, 2004
DocketNo. 2003-2159
StatusPublished
Cited by70 cases

This text of 104 Ohio St. 3d 530 (Constellation NewEnergy, Inc. v. Public Utilities Commission) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Constellation NewEnergy, Inc. v. Public Utilities Commission, 104 Ohio St. 3d 530 (Ohio 2004).

Opinion

Moyer, C.J.

Background

{¶ 1} This is an appeal as of right by appellant, Constellation NewEnergy, Inc. (“Constellation”), from orders of the Public Utilities Commission of Ohio (“PUCO”) in In re Continuation of Rate Freeze & Extension of Market Dev. [531]*531Period for Dayton Power & Light Co., case No. 02-2779-EL-ATA, 2003 WL 22142843 (Sept. 2, 2003) (the “MDP extension case”). Dayton Power & Light Company (“DP & L”) was the applicant and Industrial Energy Users-Ohio (“IEU”) was an intervening party in the MDP extension case. Both DP & L and IEU have intervened as appellees in this appeal, as has Cincinnati Gas & Electric Company (“CG & E”), an electric-distribution utility (“EDU”) situated similarly to DP & L.

{¶ 2} The backdrop for this appeal is Am.Sub.S.B. No. 3, 148 Ohio Laws, Part IV, 7962 (“S.B. 3”), which provided for restructuring Ohio’s electric-utility industry to achieve retail competition with respect to the generation component of electric service. S.B. 3 required each Ohio electric utility to file a transition plan with the PUCO that included a rate-unbundling plan providing for separation of the generation, transmission, and distribution components of electric service. See R.C. 4928.31. S.B. 3 provides for a transition period, termed the “market development period” (“MDP”), during which an electric utility’s rates are subject to certain regulatory requirements and the recovery of transition costs is permissible. The maximum transition period permitted by statute is five years, beginning January 1, 2001. R.C. 4928.01(A)(17) and (29) and 4928.40.

{¶ 3} On September 21, 2000, the commission issued an order approving DP & L’s transition plan. In re Application of Dayton Power & Light Co. for Approval of Its Transition Plan Pursuant to Section 1928.31, Revised Code, case No. 99-1687-EL-ETP, 2000 WL 1751554. The order provided for an MDP of three years, ending December 31, 2003, instead of the five-year maximum period, and provided for recovery of regulatory transition charges (“RTCs”) and customer transition charges (“CTCs”) during the three-year MDP.

{¶ 4} DP & L filed its application with the commission in the MDP extension case on October 28, 2002, requesting an extension of its MDP from December 31, 2003, through December 31, 2005, the latest date statutorily allowed for termination of the MDP. See R.C. 4928.40. Numerous parties intervened in the MDP extension case, including the Ohio Consumers’ Counsel (“OCC”), IEU, Constellation, Strategic Energy, L.L.C. (“Strategic”), and the Ohio Manufacturers’ Association (“OMA”). The commission consolidated the case with three other related cases. DP & L provided testimony at hearings and, on May 29, 2003, presented a stipulation it had reached with several, but not all, of the parties to the proceedings. The parties to the stipulation included, among others, the commission’s staff, IEU, and DP & L. The hearing was adjourned to allow further discovery related to the stipulation.

{¶ 5} Thereafter, Constellation and several other parties (collectively, “CRES [532]*532providers”)1 filed a motion to compel discovery from DP & L relating to alleged side agreements among DP & L and its affiliates with other signatories to the stipulation (“CRES discovery motion”). On June 17, 2003, hearings resumed, wherein a PUCO attorney examiner denied the CRES discovery motion.

{¶ 6} At the June 17, 2003 hearings, DP & L presented testimony in support of the stipulation and Constellation and another CRES provider presented evidence in opposition to the stipulation. In its September 2, 2003 order, the commission affirmed the attorney examiner’s ruling on the CRES discovery motion; approved the stipulation, with minor modifications; and provided for the extension of the MDP for two additional years, to December 31, 2005, as permitted by R.C. 4928.40(A). The order also required (1) terminating RTC and CTC riders on December 31, 2003, (2) adding the corresponding rates, previously set forth in those riders, to DP & L’s unbundled electric-generation service rates, and (3) maintaining shopping credits2 at then current levels for residential consumers and at increased levels for nonresidential consumers.

{¶ 7} After the commission approved the stipulation, with minor modifications, Constellation filed an application for rehearing, which the commission denied. Constellation timely filed its notice of appeal.

Introduction

{¶ 8} The main issue in this appeal is whether the stipulation that the commission modified slightly and adopted in its September 2, 2003 order was reasonable. The parties to this appeal agree that the commission’s review of the stipulation for reasonableness must meet three criteria: (1) it must be a product of serious bargaining among capable, knowledgeable parties; (2) it must, as a package, benefit ratepayers and the public interest; and (3) it must not violate any important regulatory principle or practice. See Consumers’ Counsel v. Pub. Util. Comm. (1992), 64 Ohio St.3d 123, 126, 592 N.E.2d 1370, and AK Steel Corp. v. Pub. Util. Comm. (2002), 95 Ohio St.3d 81, 82-83, 765 N.E.2d 862.

{¶ 9} Constellation sets forth five propositions of law defining the alleged commission errors. Three of the five challenge the reasonableness of the stipulation and two of them challenge the lawfulness of specific provisions of the stipulation.

First Claimed Error

{¶ 10} Constellation refers to a critical provision of the stipulation that states, “This Stipulation contains the entire Agreement among the Signatory Parties, [533]*533and embodies a complete settlement of all claims, defenses, issues and objections in these proceedings.” Constellation argues that the foregoing statement cannot be true if, in fact, there were side agreements between the signatory parties that were not disclosed in the stipulation. And, as Constellation observes, it was the possibility that there were side agreements that instigated the CRES discovery motion that was denied on interlocutory appeal by the commission in the order now on appeal. Constellation claims that the commission’s failure to compel the requested discovery was unreasonable and unlawful, thereby tainting the commission’s reasonableness determination of the stipulation itself.

{¶ 11} Ohio Adm.Code 4901-1-16(B) provides that “any party to a commission proceeding may obtain discovery of any matter, not privileged, which is relevant to the subject matter of the proceeding. It is not a ground for objection that the information sought would be inadmissible at the hearing, if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.”

{¶ 12} Thus, for the commission to compel discovery, the information sought must not be privileged or irrelevant. The CRES discovery motion sought the opportunity to question a DP & L employee concerning “any agreement between DP & L or its affiliates including its generation affiliate with any of the Signatory Parties to the Stipulation and Recommendation” and the production of any such agreement.

{¶ 13} Constellation argues that the commission cannot make a reasonableness determination regarding the stipulation without knowing the terms of any side agreements among its signatories.

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Bluebook (online)
104 Ohio St. 3d 530, Counsel Stack Legal Research, https://law.counselstack.com/opinion/constellation-newenergy-inc-v-public-utilities-commission-ohio-2004.