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PUC Finds Utility Violated Supplier Tariff, But Denies Restitution

Supplier Had Earlier Dropped Request For PUC Order Compelling Other Retail Suppliers To Agree To Resettlement

April 11, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Public Utilities Commission of Ohio found Duke Energy Ohio violated its certified supplier tariff by failing to provide accurate hourly load data to PJM, but denied a request from Direct Energy Business for restitution as a result of such failure

As previously reported, Direct Energy Business had filed a complaint against Duke Energy Ohio alleging that, from January 2013, to July 2013, Duke provided PJM with erroneous metering data related to Direct's customer SunCoke Energy, Inc., causing PJM to overcharge Direct. The error resulted from SunCoke's transition from default service to competitive supply, at which point Duke ceased providing a manual net calculation of SunCoke's bill, which is required because SunCoke both uses and produces energy. This resulted in an overstatement of usage

Due to the passage of time, some of the charges could not be resettled at PJM once identified. Direct alleged that the amount it was overcharged due to the error that could not be resettled was $1.6 million

In response to the complaint, Duke averred that, while the manual calculation to compute the net usage was not completed, the meters functioned properly. Further, Duke maintained that Direct had the opportunity to review all data from Duke before it was submitted to PJM, but Direct voluntarily waived that right and thus assumed the risk

In an order, PUCO found that Duke violated the supplier tariff due to its failure to provide accurate load data

PUCO stated, "The Supplier Tariff, in Section 14.1, requires Duke, as the MDMA [Metered Data Management Agent], to supply hourly load data to PJM in accordance with the OATT. It is not disputed that once SunCoke began receiving services from Direct, Duke ceased providing the necessary calculation in order to provide a true reading of usage to PJM (Duke Ex. 8 at 12-13; Direct Ex. 2 at 12). Once Direct identified that the usage calculations were likely incorrect, the parties appeared to work together to identify the cause of the miscalculation and to remedy the situation. PJM's Resettlement B process corrected the calculations from March 2013 onward. However, the initial miscalculations from January and February 2013 remain unresolved, despite Duke's attempt to initiate the Resettlement C process on Direct's behalf. (Duke Ex. 8 at 11-14; Direct Ex. 2 at 13.) While it appears Duke made a good faith effort to correct the issues, it is agreed that the meter readings Duke provided to PJM were inaccurate. As the Supplier Tariff explicitly says, Duke is to 'supply hourly load data' to PJM, it is evident that Duke failed in this regard."

"Duke's argument that its meter readings were technically accurate and its meters were properly working is unpersuasive. While the outgoing meter readings may have been accurate, Duke was aware that additional steps were necessary in order to provide a true calculation of SunCoke's usage, as the Company was completing those calculations when it was the generation provider (Duke Ex. 8 at 5). Therefore, the Commission finds Duke did not fulfill its duties as the MDMA and violated the Supplier Tariff," PUCO said

"We further find that Duke's violation of the Supplier Tariff, in this situation, constitutes noncompliance with R.C. 4905.22 and 4905.26. R.C. 4905.22, in sum, requires utilities to provide adequate service that is just and reasonable. R.C. 4905.26 similarly allows complaints for service that is in any way inadequate, unjust or unreasonable. Here, we determine that Duke's service was inadequate. As discussed, Duke's failure to provide accurate usage data violated the Supplier Tariff. A violation of the Supplier Tariff does not automatically demonstrate inadequate service, but it is indicative. In this situation, however, Duke was aware, prior to Direct's involvement, that in order to properly calculate SunCoke's usage, additional steps were necessary. While the calculation of SunCoke's usage is complex and perhaps atypical, Duke understood what was necessary and was capable of doing the calculation. Moreover, Duke was properly calculating SunCoke's usage up until Direct began providing generation. Duke Ex. 8 at 5. Although Duke was no longer the generation supplier, in its role as the MDMA for Direct, the Company maintained the obligation to properly ascertain SunCoke's usage and pass that data on to PJM. Accordingly, we determine that Duke's service was inadequate and in violation of R.C. 4905.22 and 4905.26," PUCO said

However, PUCO denied Direct's request for restitution.

"While the Commission finds Direct's complaint against Duke valid, we deny Direct's request for monetary damages. It is well established that the Commission lacks authority to award monetary damages to a complainant. Direct's request for damages pursuant to R.C. 4928.16 is misplaced. While R.C. 4928.16(B)(2) permits the Commission to award restitution in limited circumstances, they do not apply here. Under R.C. 4928.16, such a remedy is only applicable for violations of R.C. sections 4928.01 to 4928.15. Direct filed a complaint pursuant to R.C. 4905.26, and thereafter, specifically only alleged violations of R.C. 4905.22,4905.30, and 4905.32 (Direct Br, at 8). Further, our findings are limited to R.C. 4905.22 and 4905.26. Accordingly, the Commission lacks jurisdiction to award monetary relief," PUCO said

While Direct, earlier in the complaint process, had initially asked the Commission to order Duke to require all other suppliers affected by Duke’s failure to provide accurate information to PJM to consent to resettlement of the January and February 2013 invoices, Direct dropped this requested relief, and only sought restitution. This, the Commission did not opine on the issue of ordering other retail suppliers to agree to resettlement (which is an issue in at least one other pending case)

Also of note is that PUCO, consistent with prior precedent, confirmed that hold-harmless language in Duke's tariff is not enforceable, despite being a PUCO-approved tariff

PUCO previously adopted a rule stating, "No tariff of an electric utility shall incorporate exculpatory clauses that purport to limit or eliminate liability on the part of the electric utility to its customers or others as a result of its own negligence when providing a regulated service."

"In enacting this rule, the Commission stated the rule 'codifies the Commission's longstanding policy and previous Supreme Court decisions that have held that a public utility cannot, through the use of an exculpatory clause, limit its liability for damages resulting from its own negligence when providing a required service.' We went on, explaining that the rule 'furthers the practice of the Commission in determining that exculpatory clauses included in tariffs for regulated services are neither binding nor relevant in Commission proceedings.' ... Thus, the rule is explicit that such language in unenforceable, regardless of whether the Commission approved the tariff as a whole. Here, Duke is the designated MDMA and certified suppliers have no choice but to accept the accompanying services. Thus, it would be against public policy to hold Duke harmless for all actions taken while serving as the MDMA. Accordingly, we find the hold-harmless language in the Supplier Tariff does not exempt Duke from providing adequate service in its role as the MDMA," PUCO said

Case No. 14-1277-EL-CSS

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