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Daily Court Reporter - News Supreme Court of Ohio rejects as moot a challenge to power company’s prior rate plan

 

Supreme Court of Ohio rejects as moot a challenge to power company’s prior rate plan

Dan Trevas, Supreme Court of Ohio

The Ohio Supreme Court recently ended a legal challenge to Dayton Power & Light’s (DP&L) prior electricity rate plan because a new rate plan is now in effect. Challengers to the rate plan claimed the Public Utilities Commission of Ohio (PUCO) allowed the company to retain $285 million in payments that the Supreme Court ordered to be returned.

In the Court’s lead opinion, Chief Justice Maureen O’Connor wrote that the appeal is moot because DP&L’s challenged electric security plan (ESP) no longer is in effect because a new ESP has been adopted.

In a dissenting opinion, Justice Terrence O’Donnell wrote the PUCO “plainly ignored” instructions from the Court to adjust future DP&L rates to offset the overcompensation the company received. He stated the commission failed to do so and the legal challenge brought by consumer and business ratepayers should continue.

Justices Patrick F. Fischer and R. Patrick DeWine joined Chief Justice O’Connor’s lead opinion.

Justice Judith L. French and Eighth District Court of Appeals Judge Anita Laster Mays joined Justice O’Donnell’s dissent. Judge Laster Mays was sitting for former Justice William M. O’Neill, who resigned.

Justice Sharon L. Kennedy concurred in judgment only, agreeing that the case about the old rate plan is moot, which prevented the case from proceeding.

Ratepayers Successfully Challenge Service Stability Rider

In a prior appeal, the Ohio Consumers’ Counsel, the Kroger Company, and the Ohio Manufacturers’ Association Energy Group challenged the PUCO’s approval of ESP II, particularly because of a charge known as the Service Stability Rider. State law had allowed existing power companies to charge customers for “transition costs” during the early years of the move to a competitive market, but put a deadline on when those charges had to cease. The consumer and business groups claimed DP&L’s stability rider was an unlawful transition charge that was being collected by the company after the deadline for when transition charges could be collected.

In 2016, the Supreme Court had rejected a rider similar to DP&L’s because it allowed AEP Ohio to receive transition revenues beyond the state law’s deadline (See Court Approves AEP’s 2012 Rate Plan and Charge for Ensuring Reliability of Electricity in Competitive Marketplace). Shortly after, the Supreme Court issued a one-sentence decision rejecting DP&L’s ESP II based on the authority of the AEP Ohio case, and remanding to the PUCO for further proceedings.

In July 2016, citing R.C. 4928.143(C)(2)(a), DP&L asked the PUCO to withdraw ESP II. The commission approved the withdrawal and allowed the company to operate under ESP I until it could replace it. In October 2017, the commission approved DP&L’s third plan (ESP III), which took effect in November 2017 and it is scheduled to remain until October 2023.

In this appeal, the Court ordered the parties challenging the withdrawal of ESP II to argue why the case was not moot because ESP II no longer was in effect and was replaced by ESP III. The challengers maintained the one-sentence decision in 2016 implied that the PUCO was to make an adjustment to the company’s rate plan to offset future rates to compensate for the rates it illegally collected under the stability rider. But rather than adjust the rates, the PUCO allowed DP&L to withdraw ESP II.

Court Finds Challenge Moot

In the lead opinion, the chief justice wrote that the Court held in a 2009 case (Ohio Consumers Counsel v. Pub. Util Comm.) that the expiration of a utility’s rate plan was grounds for dismissing as moot challenges to the rates under that plan.

“Because the rate structure under appeal was no longer in effect, we determined that we could not remand the case to the commission to implement lower prospective rates under the rate-stabilization plan,” the opinion stated.

In addition, the lead opinion challenged the assertion by the dissent that the Court had ordered the PUCO to adjust DP&L’s rate when it rejected ESP II. It stated the Court “gave no instructions to the commission” and the Court’s role is only to ensure the rates approved by the PUCO are not unlawful or unreasonable.

“In the end, the event that renders this appeal moot is not the court’s resolution of In re DP&L. The appeal is moot because of events that occurred since that time; namely the approval of ESP III, in a separate case, which caused the rates at issue in In re DP&L to expire and new rates to be put in effect,” the lead opinion concluded.

Concurrence Points to Differences from Prior Case and Addresses Dissent

In her concurrence, Justice Kennedy wrote that the case is not “on all fours” with the 2009 Ohio Consumers’ Counsel case. Justice Kennedy pointed out that in Ohio Consumers’ Counsel, the Court had provided clear directions to the PUCO about how to address certain disputes among the parties in that case. In this case, however, the Court did not include “any specific instruction for the commission to eliminate overcompensation obtained through an unlawful transition charge.” Further, she wrote that the issues mooted in Ohio Consumers’ Counsel were esoteric, whereas the unresolved issue in this case—“whether utility companies can avoid any negative effects of our orders by withdrawing their rate plans after we issue our orders”—is far-reaching.

Addressing the dissent, Justice Kennedy wrote, “I agree that the result in this case is not ideal.”

The concurrence stated the “the less-than-ideal outcome is the upshot of this court’s vague entry in DP&L I”, which merely stated the commission’s decision was reversed based on the AEP Ohio case. She also blamed the “long slog of protracted litigation” for preventing a resolution on the issues surrounding ESP II before “the clock [had] run out.”

The opinion also noted that “[e]ven if the court had issued an explicit order to the commission, the amount that could have been offset against future revenue would have been limited.” As the appeal proceeded, DP&L collected the rider in 32 months of the 36 months it was in effect, collecting nearly $294 million. Although the Court cannot order a refund, the opinion indicated the PUCO has the authority under R.C. 4905.32 to include refund orders when approving rate plans. However, ESP II did not have a refund requirement in it.

Dissent Objects to PUCO Actions

In his dissent, Justice O’Donnell noted that after the Court issued the one-page rejection of the DP&L rate plan the PUCO removed the disallowed rate stability rider and ruled its action constituted a “modification” of the company’s ESP and that it allowed ESP II to be withdrawn. Justice O’Donnell’s dissent pointed out that the PUCO was not exercising its discretion to permit a modification, but rather the commission acted pursuant to an order of the Ohio Supreme Court that directed the PUCO to account for the $285 million windfall collected by DP&L. The PUCO allowed DP&L to replace the withdrawn plan but never accounted for the $285 million.

“By issuing its dismissal based on mootness, the majority permits the utility to keep the estimated $285 million it improperly collected and establishes a road map for future similar occurrences,” the dissent stated.

The dissent warned that the decision could make future Supreme Court review of utility overcharges meaningless because based on this precedent, utilities could withdraw their rejected plans, keep the overcharge, and file new plans without ever addressing the basis of the court’s disallowance.

2017-0241. In re Application of Dayton Power & Light Co., Slip Opinion No. 2018-Ohio-4009.

The opinion can be found online at: http://www.courtnewsohio.gov/cases/2018/SCO/1004/170241.asp#.W7yesPZReUk

Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion, but only for noteworthy cases. Opinion summaries are not to be considered as official headnotes or syllabi of court opinions. The full text of this and other court opinions are available online.

About the Supreme Court of Ohio

The Supreme Court is established by Article IV, Section 1 of the Ohio Constitution. Article IV, Section 2 of the Constitution sets the size of the Court and outlines its jurisdiction. Article IV, Section 5 of the Constitution grants rule making and other authority to the Court.

The Supreme Court is the court of last resort in Ohio. Most of its cases are appeals from the 12 district courts of appeals. The Court may grant leave to appeal felony cases from the courts of appeals and may direct a court of appeals to certify its record in any civil or misdemeanor case that the Court finds to be "of public or great general interest."

The Supreme Court also has appellate jurisdiction in cases involving questions arising under the Ohio or United States Constitutions, cases originating in the courts of appeals, and cases in which there have been conflicting opinions on the same question from two or more courts of appeals. The Supreme Court hears all cases in which the death penalty has been imposed. These cases currently include both appeals from courts of appeals affirming imposition of the death penalty by a trial court and, for capital crimes committed on or after Jan. 1, 1995, appeals taken directly from the trial courts. Finally, the Supreme Court's appellate jurisdiction extends to review of the actions of certain administrative agencies, including the Public Utilities Commission.

The Supreme Court has original jurisdiction to issue extraordinary writs. These include writs of habeas corpus (inquiring into the cause of an allegedly unlawful imprisonment or deprivation of custody), writs of mandamus (ordering a public official to perform a required act), writs of procedendo (compelling a lower court to proceed to judgment in a case), writs of prohibition (ordering a lower court to stop abusing or usurping judicial functions), and writs of quo warranto (issued against a person or corporation for usurpation, misuse, or abuse of public office or corporate office or franchise).

The Constitution grants the Supreme Court exclusive authority to regulate admission to the practice of law, the discipline of attorneys admitted to practice, and all other matters relating to the practice of law. In connection with this grant of authority, the Supreme Court has promulgated the Supreme Court Rules for the Government of the Bar of Ohio. These rules address, among other things, admission to practice, attorney discipline, attorney registration, continuing legal education, and unauthorized practice of law.

The Constitution also gives the Supreme Court authority to prescribe rules governing practice and procedure in all courts of the state and to exercise general superintendence over all state courts. Procedural rules promulgated by the Supreme Court become effective unless both houses of the General Assembly adopt a concurrent resolution of disapproval. Rules of superintendence over state courts set minimum standards for court administration. Unlike procedural rules, rules of superintendence do not have to be submitted to the General Assembly to become effective.

In connection with all of the rules for which it has responsibility, the Supreme Court generally solicits public comment before adopting new rules or amendments in final form. The Court first publishes its rules and amendments in proposed form. These proposals appear in both the Ohio State Bar Association Reports and the Ohio Official Advance Sheets and indicate the period open for comment and the staff member to whom comments should be directed. The Court reviews all comments submitted before it decides whether to adopt or amend a rule.

Pursuant to the Constitution, the Chief Justice or a Justice designated by the Chief Justice is responsible for ruling on the disqualification of appellate and common pleas court judges. The procedure for obtaining review of a claim of disqualification against an appellate or common pleas judge is commenced by the filing of an affidavit of disqualification with the Clerk of the Supreme Court. The Revised Code contains specific requirements governing the filing of affidavits of disqualification.

Article IV, Section 2 of the Constitution sets the size of the Court at seven -- a Chief Justice and six Justices, who are elected to six-year terms on a nonpartisan ballot. Two Justices are chosen at the general election in even-numbered years. In the year when the Chief Justice runs, voters pick three members of the Court.

A person must be an attorney with at least six years experience in the practice of law to be elected or appointed to the Supreme Court. Appointments are made by the Governor for vacancies that may occur between elections.

Date Published: October 22, 2018

 

Supreme Court of Ohio

 

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