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Supreme Court Remands CG&E Rate Plan to PUCO for New Proceedings on Two Issues
2005-0518 and 2005-0946. Ohio Consumers' Counsel v. Pub. Util. Comm., 2006-Ohio-5789.
Public Utilities Commission, Nos. 03-93-EL-ATA, 03-2079-EL-AAM, 03-2081-EL-AAM, and 03-2080-EL-ATA. Orders affirmed in part and reversed in part, and cause remanded.
Moyer, C.J., Resnick, Pfeifer, Lundberg Stratton, O'Connor, O'Donnell and Lanzinger, JJ., concur.
Opinion: http://www.supremecourtofohio.gov/rod/newpdf/0/2006/2006-Ohio-5789.pdf
(Nov. 22, 2006) In a multi-part decision announced today, the Supreme Court of Ohio partially affirmed and partially reversed orders of the Public Utilities Commission of Ohio (PUCO) in which the commission approved a negotiated “rate stabilization plan” that was agreed to by Cincinnati Gas and Electric Co. (CG&E) and groups representing some, but not all, of the utility's customers.
The case involved multiple legal challenges advanced by the state Office of Consumers' Counsel (OCC) in an effort to force a rollback of the PUCO-approved plan that set 2006-2008 billing rates for CG&E customers. CG&E provides electric utility service to much of southwest Ohio.
OCC, the state agency charged with protecting the interests of residential energy consumers, asked the Supreme Court to void the CG&E rate plan as modified by a stipulated agreement between the utility company, PUCO staff, and a group representing industrial power consumers. The OCC suit alleged that, in approving the modified CG&E plan, the commission exceeded its statutory authority and violated state statutes including R.C. Chapter 4928 – legislation adopted by the General Assembly in 1999 that set terms and conditions for a staged transition of Ohio's electric power generating industry from a regulated monopoly environment to market competition.
In today's 7-0 decision, authored by Justice Paul E. Pfeifer, the Court overruled five of seven propositions of law advanced by the OCC as grounds to invalidate the rate plan approved by the PUCO. The Court affirmed OCC's objections that: (1) The commission erred in allowing CG&E to incorporate supplemental charges into a previously approved rate plan without making on-the-record findings of fact or citing evidence that supported its decision, and (2) The commission abused its discretion when it denied motions by the OCC to compel discovery of undisclosed side-agreements between CG&E and non-residential customer groups that were entered into before those parties agreed to the stipulated terms of the rate stabilization plan.
With regard to the absence of a factual record supporting supplemental charges approved by the PUCO, Justice Pfeifer wrote: “In this matter, the commission made several modifications on rehearing without any reference to record evidence and without thoroughly explaining its reasons. The commission approved the infrastructure-maintenance-fund charge without evidentiary support or justification. The commission approved other modifications without citing evidence in the record and with very little explanation. The commission cannot justify the modifications made on rehearing merely by stating that those changes benefit consumers and the utility and promote competitive markets. The commission's reasoning and the factual basis supporting the modifications on rehearing must be discernible from its orders.”
“For these reasons,” wrote Justice Pfeifer, “we hold that the commission failed to comply with the requirements of R.C. 4903.09 when it modified its September 29 order on rehearing. Accordingly, we remand this matter to the commission for further clarification of all modifications made in the first rehearing entry to the order approving the stipulation. On remand, the commission is required to thoroughly explain its conclusion that the modifications on rehearing are reasonable and identify the evidence it considered to support its findings.”
In holding that OCC was entitled to discover the content of undisclosed side agreements between CG&E and other parties who later stipulated (agreed) to the modified rate plan, Justice Pfeifer wrote: “The commission found that ‘serious bargaining did occur, among capable, knowledgeable parties' and that ‘[m]ultiple bargaining sessions, open to all parties, took place before the commencement of the hearings.' … The commission cannot rely merely on the terms of the stipulation but, rather, must determine whether there exists sufficient evidence that the stipulation was the product of serious bargaining. Any … concessions or inducements apart from the terms agreed to in the stipulation might be relevant to deciding whether negotiations were fairly conducted. The existence of concessions or inducements would seem particularly relevant in the context of open settlement discussions involving multiple parties, such as those that purportedly occurred here. If there were special considerations, in the form of side agreements among the signatory parties, one or more parties may have gained an unfair advantage in the bargaining process. Therefore, we hold that the commission erred in denying discovery of this information based on lack of relevancy.”
“Accordingly,” Justice Pfeifer wrote, “we hold that the commission abused its discretion in barring discovery of side agreements in this matter … We remand this matter to the commission and order that it compel disclosure of the requested information. Upon disclosure, the commission may, if necessary, decide any issues pertaining to admissibility of that information.”
Contacts
Jeffrey L. Small, 614.466.8574, for the
Office of Consumers' Counsel.
Thomas W. McNamee, 614.466.4397, for the Public Utilities Commission of Ohio.
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