Ohio utilities haven’t asked for an electricity rate boost in more than a decade, but that doesn’t mean customers aren’t paying more.
Instead, utilities have bypassed the comprehensive and relatively crystal clear rate-setting regulatory process since a 2008 state law made it easier for companies to collect more money from customers by charging extra fees on bills, so-called
In an extreme example reported by Energy News Network in 2019, the bill for a single streetlight maintained by a neighborhood group in Cleveland rose from about $8 a month in 2008. to almost $70 a monthmainly due to recent fees.
There is now broad and bipartisan agreement – from consumer advocates to conservative state lawmakers – that the system needs fixing, but the debate surrounding the recent legislative proposal shows there is still no consensus on what those reforms should include.
Sponsored by Republicans House Bill 260 would require utilities to file rate-setting cases with the Ohio Public Utilities Commission at least every five years.
State Rep. Bill Seitz, R-Cincinnati, one of the bill’s co-sponsors, told the House Utilities Committee earlier this year that the bill is “really about … going back to a time when there were more complete and more cost-effective cases.” “
Consumers, businesses and some environmental advocates have long wanted this type of change, but they oppose other provisions of the bill that could make it more arduous for some groups to participate as parties and delve into the facts. The legislation will also not stop the practice of adding fees to customers’ bills.
“This is another step in the wrong direction in the same spirit as House Bill 6,” said state Rep. Casey Weinstein, D-Hudson, minority member of the House Utilities Committee. HB 6 is the nuclear and coal bailout bill that is at the heart of Ohio’s current state corruption scandal.
Generally, full rate cases require utilities to document the amount of revenue needed to provide reliable service, maintain and repair equipment, and provide a reasonable rate of return on capital investment. The cases also take into account the expected operate of electricity by different classes of customers, any differential costs of providing that electricity, the need to include programs for low-income people, etc. The Ohio Public Utilities Commission then determines what the price per kilowatt hour should be.
Fees set in rate cases reflect a moment in time, said Rob Kelter, an attorney with the Environmental Law and Policy Center. Utilities have an incentive to maximize profits through technology, improved management and other mechanisms. Often, “the reason a utility doesn’t come forward with a rate is because it makes too much money.”
At the same time, Ohio utilities have added charges for costs not covered by their previous rates. A 2008 law allowed utilities to submit “electrical safety plans,” which allowed them to add partial charges. Unlike the full rate case, plans focus on specific program costs. The PUCO considers whether they are reasonable, “but does not look at any other utility revenues and expenses as it does with the rate,” Kelter said.
For example, the last FirstEnergy rate case occurred in 2007. Since then, the company has been charging dozens of riders, including some whose expenses are subject to HB 6 regulatory cases. The company plans to file for recent rates slow this year month due to a 2019 executive order revision in the wake of the HB 6 scandal. But various riders under the company’s latest plan, approved with changes 15th of May will be continued.
Less transparency and participation
Seitz said the proposed regulations would “improve the process… make it cheaper and simpler for everyone.”
HB 260 would, among other things, limit pre-hearing fact-finding and change rules for stakeholder participation. Local hearings would require only one notice and would not have to determine how much more utilities want. Companies could make their case based entirely on projected costs, rather than using historical cost data. Firms will still be able to charge customers additional fees between full rate fixing cases.
Comments from attorney Kim Boiko of the Ohio Manufacturers Association noted that the bill “eliminates the parties’ due process rights,” including limits on the number of intervenors. These are groups or individuals who can participate in the case as full parties, having the right to make factual findings and present evidence in the case.
Currently, interveners in each PUCO case must demonstrate that the outcome of the case may have an adverse impact on them. HB 260 would require that they have an “adverse and direct impact.” The additional wording calls on the PUCO to consider whether the intervener is interested “as a consumer, customer or competitor”, in particular without regard to environmental groups.
“Utilities have enormous advantages in PUCO proceedings, often to the detriment of customers in terms of costs, air quality, control over our bills and more…” said Tom Bullock, executive director of the Citizens Utility Board of Ohio. “Closing the courtroom doors to consumers and other interested parties, while limiting the ability of those in the room to discover information, perpetuates the problem.”
These restrictions would allow for no more than three rounds of written questions before and after submission of the assessment report. And PUCO personnel would not be subject to any discovery. Seitz noted that various courts limit parties’ written disclosures.
That comparison is misplaced, said Ashley Brown, a former PUCO commissioner who advised governments on energy markets and regulation. “Anything related to rates is legislative, not judicial.” So the standard should be very broad, he said.
Ohio Consumer Advisor Maureen Willis told lawmakers the limits are also unfair “because utilities hold most of the information that needs to be discovered. Instead, the focus should be on protecting non-utility entities from utility-delaying tactics and unresponsive responses.”
HB 260 would also switch to fully projected rates, without even several months of actual cost data.
“This will tip the scales very heavily in favor of utilities,” David Proaño, attorney with the Ohio Energy Leadership Council he told lawmakers. “It’s much harder to look for discoveries and question the forecast.” Utilities could simply say that the forecasts are based on their business judgment, without providing details about their models, reasons for different assessments, and so on.
Riders by any other name
Under HB 260, “lawmakers now propose to tip the scales even further in favor of utilities by limiting customer rights and further increasing costs for customers,” Boyko said. “HB 260 proposes adding higher than market rates to customer bills through new distribution rates while thwarting rate increase challenges.”
HB 260 calls four recent charges “trackers” instead of “rider,” although Ohio House Budget Analyst Michael Kerr said each term “generally has the same meaning.” The bill’s current terms do not eliminate other existing rates in addition to regular rates, although Seitz stated that “previously approved passengers will only continue to travel if their need is demonstrated for the five-year rate.”
Willis said the Ohio Office of Consumer Counsel is waiting for an amendment to clarify the issue.
Brown said allowing utilities to seek recent fees between cases shifts risk and costs to consumers as utilities can reap more benefits.
Other language in the bill states that if the Ohio Supreme Court finds that any supplement or other “rate mechanism” beyond the base rates is unlawful, refunds will only be made for the period from the Ohio Supreme Court’s order to the PUCO’s order invalidating the fee. The refund provision would not apply to funds already collected during the appeal period.
This provision would still allow utilities to retain accumulated funds while the appeal is pending. First Energy held roughly $450 million raised for “another distribution modernization,” which was later deemed illegal and is now at the heart of one of four PUCO cases tied to HB 6.
Other provisions of the bill could allow utilities to earn interest on certain operating expenses as if they were capital improvements. Still other deadlines may relax reliability requirements for utilities.
The House Public Utilities Committee will likely hold more hearings before the bill is reported to the public. “Because the bill is in its early stages, there will undoubtedly be additional issues that will arise and will be resolved through the normal process,” Seitz said. Senate Bill No. 102introduced last year would also require regular investigations, but would still involve additional fees and require less investigation.
For now, Weinstein said the rules on hearings and other changes mean some interested parties “will no longer have a seat at the table” if HB 260 passes.
“This is just another example of the Legislature doing the bidding of its Big Energy overlords,” he said.
This article appeared for the first time Energy News Network and is republished here under a Creative Commons license.
