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Ohio Supreme Court Remands To PUCO Prior Approval Allowing Utility To Sell Nonelectric Products And Services To Customers

Court "Skeptical" PUCO Could Approve Under Statute Utility Offering Of Nonelectric Products And Services

October 31, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Ohio Supreme Court has remanded to the Public Utilities Commission of Ohio a PUCO order which had authorized Duke Energy Ohio, Inc. to amend its corporate separation plan to allow Duke to engage in a new line of business: the offering of various nonelectric products and services to its customers.

In April 2014, Duke filed an application for approval of a fourth amended corporate separation plan, which, among other things, sought commission approval to commence offering nonelectric products and services to its customers. Duke’s proposed new business included such varied services as installing and performing maintenance on customer equipment, performing assessments of outage or voltage problems, making a generator available during construction, offering whole-house surge protection, and providing energy consumption analysis reports. In June 2014, PUCO approved Duke’s application, although the Commission also imposed a series of conditions on the utility, including conditions to prevent anticompetitive subsidies from flowing between Duke’s regulated and unregulated businesses

Interstate Gas Supply had appealed PUCO's order, alleging that the order violated R.C. 4928.17, Ohio’s corporate separation plan statute, and R.C. 4903.09, a general statute requiring PUCO to file written opinions "setting forth the reasons prompting the decisions arrived at" in all contested cases

The Court found that PUCO's order violated R.C. 4903.09. "[T]he commission failed to explain a material matter -- i.e., how Duke’s fourth amended corporate separation plan complied with the specific terms of R.C. 4928.17 -- despite numerous requests from IGS asking it to do so," the Court said

"Specifically, in IGS’s initial objections to Duke’s fourth amended plan, IGS argued that if Duke intended to engage in a new unregulated business, R.C. 4928.17(A) required that it do so through a fully separated affiliate, unless the commission approved the plan under R.C. 4928.17(C). In its finding and order, the commission acknowledged IGS’s argument but did not specifically address it. The commission merely stated that there was 'no substantiated reason, at this time, to find that the proposed revisions to the plan are not in compliance with state policy or the Commission’s corporate separation rules,'" the Court said

The Court found PUCO also failed to substantively address the issue on rehearing

"Duke requested approval to engage in the unregulated, competitive business of selling nonelectric products and services, which is prohibited under R.C. 4928.17(A)(1) unless Duke offers the services through a fully separated affiliate or the commission approves an alternative functional corporate separation plan under R.C. 4928.17(C). The commission’s orders summarily concluded that Duke’s application is consistent with state policy and corporate-separation-plan rules, but the commission never explained how Duke’s fourth amended plan complied with the plain language in R.C. 4928.17(A) or (C)," the Court said

Given this finding of procedural deficiency, the Court remanded the case to PUCO, and did not reach a conclusion regarding a utility's offering of nonelectric products and services would violate R.C. 4928.17, Ohio’s corporate separation plan statute

However, the Court said that, "we are admittedly skeptical as to how the commission could approve Duke’s amended plan under R.C. 4928.17(C) or (D) based on the record before us," but ultimately the Court found remand to be appropriate since, "we are also cognizant that the General Assembly has given the commission substantial discretion in approving an alternative functional corporate separation plan or an amended corporate separation plan under those provisions."

"We reverse, and we remand this case to the commission with instructions to fully address IGS’s statutory arguments, to issue findings that thoroughly explain how --if at all -- Duke’s application complies with the specific relevant provisions in R.C. 4928.17, and to identify the evidence that the commission considered to support its decision," the Court said

Slip Opinion No. 2016-OHIO-7535

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