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On Remand, PUC Agrees Utility's Sought Offering Of Non-commodity Services Amounts To Impermissible Attempt At Rebundling

Says Utility's Offering Of Non-commodity Service Contrary To State's Goals Under Deregulation

June 15, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

On remand, the Public Utilities Commission of Ohio said that Duke Energy Ohio's 2014 application to offer nonelectric products and services amounts to, "an attempt to rebundle services and is the inverse of what the General Assembly intended with R.C. 4928.17(C)."

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 anti-competitive subsidies from flowing between Duke’s regulated and unregulated businesses

As previously reported, the Supreme Court of Ohio remanded the case to PUCO after it agreed with Interstate Gas Supply that PUCO had not properly addressed in its orders the concerns raised by IGS

Furthermore, while the Court did not rule on the substance of Duke's application, the Court said that it was "skeptical" the application could pass muster under corporate separation plan statute.

Duke Energy Ohio has since filed an updated application, as part of its latest rate case, to offer non-commodity services, tailoring its request to meet the hurdles identified by the court. Such application remains pending and was not the subject of PUCO's remand order

Turning back to the 2014 case on remand, Supreme Court Justice Sharon Kennedy, in an opinion that dissented in part and concurred in part, said that Duke's request to offer customers nonelectric products and services is not permissible under R.C. 4928.17(C), as the exception to the general prohibition on a utility a competitive electric product, or a product or service other than retail electric service, was intended to be a temporary, limited provision to assist in the phase-in of restructuring.

Justice Kennedy concluded that R.C. 4928.17(C) only permits an exception to R.C. 4928.17(A) for an interim period and any order issued pursuant to R.C. 4928.17(C) must find that the utility's plan provides for ongoing compliance with the state's policies outlined in R.C. 4928.02. Justice Kennedy averred Duke's proposal should not be permitted as it runs counter to the state's ultimate goal of deregulation. According to Justice Kennedy, Duke's request is an attempt to rebundle services and is the inverse of what the General Assembly intended with R.C. 4928.17(C)

"In retrospect, we agree," PUCO said on remand

"Initially, we note that Duke's request does not comply with 4928.17(A) as the Company admittedly is not seeking to offer nonelectric products through an affiliate," PUCO said

"In accepting Justice Kennedy's opinion, we concur that Duke's proposed plan is not compliant with R.C. 4928.17(C). In Duke's request, the Company is not seeking to transition away from nonelectric services or eventually offer the services through an affiliate. Instead, Duke is seeking authorization to offer nonelectric products and services on an indefinite, ongoing basis," PUCO said

"[T]he Company's request to provide nonelectric products goes against the state's policies outlined in R.C 4928.02, as permitting Duke to begin offering new nonelectric products and services does not advance the state's overarching goal of deregulation," PUCO said

"As discussed by Justice Kennedy, instead of separating electric and nonelectric services, the Company's proposal seeks to package services that are required to be offered through a fully separated affiliate," PUCO said

"Accordingly, after direction from the Supreme Court, the Commission finds Duke's application to amend its corporate separation plan, as proposed, is impermissible under R.C. 4928.17 and should be denied. The Company is directed to withdraw its application and file a new plan that complies with this Order," PUCO said

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