In re Review of the Alt. Energy Rider Contained in the Tariffs of Ohio Edison Co.

106 N.E.3d 1, 2018 Ohio 229, 153 Ohio St. 3d 289
CourtOhio Supreme Court
DecidedJanuary 16, 2018
DocketNo. 2013–2026
StatusPublished
Cited by13 cases

This text of 106 N.E.3d 1 (In re Review of the Alt. Energy Rider Contained in the Tariffs of Ohio Edison Co.) 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
In re Review of the Alt. Energy Rider Contained in the Tariffs of Ohio Edison Co., 106 N.E.3d 1, 2018 Ohio 229, 153 Ohio St. 3d 289 (Ohio 2018).

Opinions

O'Neill, J.

*289I. SUMMARY

{¶ 1} In the case on appeal, the Public Utilities Commission ordered an audit to review renewable-energy-credit ("REC") purchases made by the FirstEnergy companies (Ohio Edison Company, Cleveland Electric Illuminating Company, and Toledo Edison Company [ (collectively, "FirstEnergy") ] ) under FirstEnergy's first electric-security plan ("ESP"). After the audit hearing, the commission found that certain purchases had not been prudent, and it ordered FirstEnergy to refund more than $43 million to ratepayers.

{¶ 2} The commission also granted several motions for protective orders, granting trade-secret protection to certain information related to FirstEnergy's purchase of RECs.

*290{¶ 3} FirstEnergy filed an appeal in this court challenging the commission's adoption of the part of the audit findings regarding the more than $43 million disallowance. The Environmental Law and Policy Center ("ELPC") filed a cross-appeal challenging the protective orders. The Office of the Ohio Consumers' Counsel ("OCC") also cross-appealed, challenging the protective orders and the part of the commission's decision approving the remainder of FirstEnergy's renewable-energy costs.

{¶ 4} After review, we find that the parties have demonstrated two commission errors, one on appeal and one on cross-appeal. Therefore, we affirm the commission's order in part, reverse it in part, and remand the cause for further consideration.

*4II. FACTS AND PROCEDURAL BACKGROUND

{¶ 5} R.C. 4928.64 requires electric-distribution utilities to generate a portion of the electricity supplied to retail customers from renewable-energy resources, such as solar and wind power. Under an earlier version of the statute, electric utilities were required to purchase at least half of their renewable energy from in-state suppliers.1 See former R.C. 4928.64(B)(3), 2012 Am.Sub.S.B. No. 315. The law imposes annual goals or benchmarks that increase over time. R.C. 4928.64(B)(2). If an electric utility does not meet its benchmarks, the commission must impose a compliance payment on the utility. R.C. 4928.64(C)(2).

{¶ 6} Electric utilities may purchase such resources from suppliers through the procurement of RECs. See R.C. 4928.645. A REC is created for each megawatt hour of electricity generated by a renewable-energy resource. Ohio Adm.Code 4901:1-10-01(Z). Once electricity generated from a renewable-energy resource is delivered to the power grid, it becomes indistinguishable from electricity generated from traditional resources, such as coal or natural gas. A REC (an acronym also used for "renewable energy certificate") is a nontangible, tradable commodity that serves as a mechanism for utilities and regulators to track renewable-energy purchases. See United States Environmental Protection Agency, Green Power Partnership, Renewable Energy Certificates , https://www.epa.gov/greenpower/renewable-energy-certificates-recs (accessed Jan. 11, 2018).

{¶ 7} In 2009, the commission approved the first ESP for FirstEnergy. As part of that ESP, the commission approved FirstEnergy's plan to procure the necessary RECs from in-state and out-of-state suppliers for the period January 1, 2009, through May 31, 2011. The commission also approved a mechanism-an *291"Alternative Energy Resource Rider" ("Rider AER")-for FirstEnergy to recover the costs associated with the REC-procurement plan. See In re Application of Ohio Edison Co., Pub. Util. Comm. Nos. 08-935-EL-SSO, 09-21-EL-ATA, 09-22-EL-AEM, and 09-23-EL-AAM, 2009 WL 874475, 2009 Ohio PUC LEXIS 279, *17-18 (Mar. 25, 2009). FirstEnergy then proceeded to request proposals, entertain and accept bids, and contract with various suppliers for the purchase of RECs in order to comply with R.C. 4928.64.

{¶ 8} Utilities are generally entitled to recover from retail customers the costs for buying renewable energy to comply with statutory benchmarks. See R.C. 4928.64(E). In the order approving FirstEnergy's first ESP, the commission approved a stipulation whereby FirstEnergy agreed that it would be able to recover "the prudently incurred costs" of its REC purchases under Rider AER. See 2009 WL 874475, 2009 Ohio PUC LEXIS 279 at *17.

{¶ 9} The commission initiated the underlying case to review the prudence of FirstEnergy's REC purchases from 2009 through 2011. See Pub. Util. Comm. No. 11-5201-EL-RDR, 2013 WL 4523583, 2013 Ohio PUC LEXIS 159, *3, 11 (Aug. 7, 2013). The commission selected Exeter Associates, Inc. ("Exeter"), to conduct the management and performance portions of the audit. Exeter filed its final audit report on Rider AER on August 15, 2012.

{¶ 10} Following the audit hearing, the commission found that most of FirstEnergy's purchases had been prudent, but the commission found that FirstEnergy *5failed to act prudently in purchasing certain in-state, nonsolar RECs in August 2010 to meet FirstEnergy's renewable-energy benchmarks for 2011. Id. , at *61-69. As a result, the commission ordered FirstEnergy to credit customers' bills in the amount of $43,362,796.50. This amount was payable, with carrying costs, within 60 days of the commission's final order. Id. at *70, 86-87.

{¶ 11} Several parties filed applications for rehearing, and the commission ultimately issued an entry declining to rehear any aspect of its order. Commissioner Lynn Slaby dissented from that entry, stating: "Upon further consideration of this case, I would dissent from the majority. I am convinced that [ In re Application of ] Columbus S. Power Co. * * *, 128 Ohio St.3d 512, 2011-Ohio-1788 [947 N.E.2d 655], precludes us from refunding money to customers as the majority has done here." Pub. Util. Comm. No. 11-5201-EL-RDR at 39 (Dec. 18, 2013) (Slaby, Commr., dissenting).

{¶ 12} FirstEnergy filed this appeal raising a number of challenges to the commission's decision to disallow the more than $43 million in REC costs. OCC and ELPC filed cross-appeals challenging the commission's decisions to grant trade-secret status to certain information related to FirstEnergy's REC purchases.

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106 N.E.3d 1, 2018 Ohio 229, 153 Ohio St. 3d 289, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-review-of-the-alt-energy-rider-contained-in-the-tariffs-of-ohio-ohio-2018.