Ohio Consumers' Counsel v. Public Utilities Commission

109 Ohio St. 3d 328
CourtOhio Supreme Court
DecidedMay 3, 2006
DocketNos. 2004-1993, 2005-0118, and 2005-0766
StatusPublished
Cited by8 cases

This text of 109 Ohio St. 3d 328 (Ohio Consumers' Counsel 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
Ohio Consumers' Counsel v. Public Utilities Commission, 109 Ohio St. 3d 328 (Ohio 2006).

Opinions

O’Donnell, J.

[329]*329{¶ 1} Three separate appeals as of right have been consolidated for our review arising from an order of the Public Utilities Commission of Ohio (“PUCO”).1 The Ohio Consumers’ Counsel (“OCC”) and the cities of Maumee, Northwood, Oregon, Perrysburg, Sylvania, and Toledo, the village of Holland, and the Board of County Commissioners of Lucas County (collectively, the “governmental aggregators” 2) appeal the PUCO order approving, inter alia, FirstEnergy Corporation’s application for its proposed rate-stabilization plan. FirstEnergy, the Ohio Energy Group, and the Industrial Energy Users-Ohio have intervened in this appeal.

Factual and Procedural Background

{¶ 2} The history of this case dates to enactment by the General Assembly of Am.Sub.S.B. No. 3, 148 Ohio Laws, Part IV, 7962 (“SB 3”), effective October 5, 1999, which provided for restructuring of Ohio’s electric-utility industry with a goal of achieving retail competition with respect to the generation component of electric service. SB 3 provided for a transition period, termed the “market development period,” during which an electric utility’s rates would be subject to certain regulatory requirements. FirstEnergy’s market-development period ended December 31, 2005.

{¶ 3} In response to SB 3, FirstEnergy filed an initial application on July 1, 2003, seeking approval of a proposed revision to its 2004 and 2005 shopping credits3 established in the electric-transition plans earlier approved by the PUCO for each of FirstEnergy’s operating companies. In an entry dated September 23, 2003,4 the PUCO (1) denied FirstEnergy’s proposed shopping-credit revision for 2004, (2) stated that the matter of the shopping credits for 2005 would best be considered “in the context of what would best promote orderly and progressive market development in the post market development period,” (3) encouraged [330]*330FirstEnergy “to consider and develop plans for 2005 and beyond, which balance three objectives: rate certainty, financial stability for the electric distribution utilities and further competitive market development,” and (4) directed FirstEnergy to file those plans before December 31, 2003.

{¶ 4} Responding to this directive, on October 31, 2003, FirstEnergy, on behalf of its Ohio operating companies, Ohio Edison Company, the Cleveland Electric Illuminating Company, and the Toledo Edison Company, filed another application, which marks the beginning of the proceedings at issue in this appeal. In its application, FirstEnergy sought PUCO approval of, inter alia, a proposed rate-stabilization plan to take effect at the end of the market-development period, December 31, 2005.

{¶ 5} Several groups and other entities intervened and participated in the PUCO proceedings that addressed FirstEnergy’s application, including the OCC and the Northwest Ohio Aggregation Coalition on behalf of the governmental aggregators.5 In connection with the FirstEnergy application, which had been filed on October 31, 2003, the PUCO conducted local public hearings in Toledo, Cleveland, and Kent in November 2003 and evidentiary hearings in February 2004. Members of the public submitted written testimony, comments, and letters for consideration by the PUCO. FirstEnergy, the Ohio Energy Group, the Ohio Hospital Association, Ohio Partners for Affordable Energy, Cargill, Inc., and the Industrial Energy Users-Ohio signed a partial stipulation and recommendation purporting to resolve some issues in this case and submitted it to the PUCO in February 2004. The parties filed posthearing and rebuttal briefs in March 2004, and the PUCO heard oral argument in April 2004.

{¶ 6} These proceedings culminated in the PUCO’s June 9, 2004 opinion and order in this case, which, inter alia, approved a modified version of FirstEnergy’s proposed rate-stabilization plan and determined that the price under the plan should be compared periodically with the prices submitted in a competitive-bid process.6

[331]*331{¶ 7} As part of its opinion and order approving the rate-stabilization plan, the PUCO approved the following components, inter alia: (1) a rate-stabilization charge, which the PUCO stated compensates FirstEnergy for its commitment to provide “provider of last resort”7 generation service for 2006-2008 for customers in its service areas who drop out of aggregation plans or short-term contracts with competing power-generation providers; (2) shopping credits, which a shopping customer receives when he or she uses a competitive retail-electric service provider; (3) interest on shopping-credit deferrals, which the OCC and the governmental aggregators argue violates a previous stipulation by the parties; and (4) a waiver of the requirement that it divest its generation assets in order to comply with R.C. 4928.17(A) because the PUCO determined that good cause existed to extend the financial-separation waiver with regard to the divestment of FirstEnergy’s generating assets.

{¶ 8} Following the PUCO’s June 9, 2004 opinion and order, various parties or intervenors8 filed successive applications for rehearing, and in the three entries, the PUCO refined its concept of FirstEnergy’s competitive-bid process. OCC objected to FirstEnergy’s commission-approved rate-stabilization plan and, following the PUCO’s third entry on rehearing, dated November 23, 2004, brought the appeal in case No. 2004-1993. The governmental aggregators appealed from the same opinion and order in case No. 2005-0118.9

Propositions of Law

{¶ 9} The OCC and the aggregators each assert five propositions of law,10 [332]*332which may be considered as the following issues: (1) approval of the rate-stabilization plan, (2) approval of the rate-stabilization charge, (3) approval of shopping credits, (4) grant of interest on shopping credits, and (5) approval of FirstEnergy’s financial-separation plan. We affirm the PUCO with respect to propositions two, three, four, and five. Regarding the first proposition, however, the rate-stabilization plan as adopted by the PUCO failed to conform to R.C. 4928.14(B) because it did not ensure that a reasonable means for customer participation had been developed. We therefore remand the matter to the PUCO for further consideration of this aspect of its decision.

Approval of Rate-Stabilization Plan

{¶ 10} The OCC and the governmental aggregators argue that, in accordance with R.C. 4928.14(A), as of January 1, 2006, electric-distribution utilities are required to provide customers with both a market-based standard service offer and, pursuant to R.C. 4928.14(B), an option to purchase electric service at a price to be determined through a competitive-bidding process. They further maintain that the PUCO lacks authority to approve a rate-stabilization plan that does not comport with these legislative mandates. It is the OCC’s and governmental aggregators’ position that, in this case, instead of requiring FirstEnergy to offer a market-based standard service and an option to purchase electric service at a rate set by way of a competitive-bidding process, the PUCO itself rejected all bids received in the auction and instead chose the rate-stabilization plan as the only offer to be presented to customers.

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109 Ohio St. 3d 328, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ohio-consumers-counsel-v-public-utilities-commission-ohio-2006.