[Cite as In re Application of Columbus S. Power Co., 129 Ohio St.3d 568, 2011-Ohio-4129.]
IN RE APPLICATION OF COLUMBUS SOUTHERN POWER COMPANY ET AL. TO
ADJUST THEIR ECONOMIC DEVELOPMENT COST RECOVERY RIDER;
INDUSTRIAL ENERGY USERS–OHIO, APPELLANT; PUBLIC UTILITIES
COMMISSION ET AL., APPELLEES.
[Cite as In re Application of Columbus S. Power Co.,
129 Ohio St.3d 568, 2011-Ohio-4129.]
Public utilities—Electricity rates—Recovery of losses from discounts—Carrying
charges.
(No. 2010-1073—Submitted June 8, 2011—Decided August 24, 2011.)
APPEAL from the from the Public Utilities Commission, No. 10-154-EL-RDR.
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MCGEE BROWN, J.
{¶ 1} In the case below, the Public Utilities Commission allowed the
American Electric Power operating companies (“AEP”) to recover certain costs
arising from a pair of discounted-rate arrangements. Industrial Energy Users–
Ohio (“IEU”) opposed AEP’s application and now appeals. IEU fails to
demonstrate reversible error, however, and we affirm.
I. Factual and Procedural Background
{¶ 2} As previously ordered by the commission, AEP had been
providing service to a pair of manufacturing customers at discounted rates.1
“[T]he difference between what AEP would have collected from [these
customers] under its tariffs and what it actually collected, given the discount,” is
called “delta revenue.” In re Application of Columbus S. Power Co., 129 Ohio
St.3d 271, 2011-Ohio-2638, 951 N.E.2d 751, ¶ 3. AEP had been keeping track of
1. We reviewed the commission’s approval of these arrangements in In re Application of Ormet
Primary Aluminum Corp., 129 Ohio St.3d 9, 2011-Ohio-2377, 949 N.E.2d 991.
SUPREME COURT OF OHIO
this delta revenue and intending to collect it through a rate mechanism called “the
economic development cost recovery rider.” We will simply call it “the rider.”
{¶ 3} In the case below, AEP filed an application seeking permission to
collect its delta revenue through the rider. This was actually the second time that
AEP had filed such an application; its first request had been granted only a month
earlier. These quickly successive applications reflected the requirement that AEP
“update[ ] and reconcile[ ]” the rider every six months. Ohio Adm.Code 4901:1-
38-08(A)(5).
{¶ 4} IEU opposed both requests, raising the same objections each time.
In the first proceeding, the commission rejected IEU’s arguments. IEU appealed
that decision to this court, and the case was briefed; we never ruled on the dispute,
however, because IEU dismissed its appeal before oral argument.
{¶ 5} In the second proceeding (which is the case now on review), the
commission again rejected IEU’s arguments, this time on the basis that it had
already ruled against IEU in the first proceeding. IEU again appealed. It did not
dismiss this appeal, but did choose to submit the case on the briefs, without oral
argument. AEP has intervened as an appellee.
II. Discussion
{¶ 6} IEU initially raised four propositions of law but has since
dismissed the first two. For reasons discussed below, the remaining propositions
lack merit.
A. IEU Has Not Shown that the Commission Erred in
Modifying the Phase-in of AEP’s Rates
{¶ 7} In its third proposition of law, IEU argues that the order unlawfully
exempted the rider from the maximum increases permitted in AEP’s electric-
security-plan case. IEU is referring to the commission’s decision in an earlier
case to limit how much AEP could annually increase its customers’ bills; the
commission acted under R.C. 4928.144, which permits the commission to
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January Term, 2011
“authorize any just and reasonable phase-in” of certain electric rates. IEU attacks
the decision to exempt the rider from the rate-increase limits on two grounds:
procedurally, it asserts that the commission departed from precedent;
substantively, it argues that the commission unreasonably increased rates. Neither
argument is persuasive.
{¶ 8} As to the procedural argument, the order below did not violate the
earlier, electric-security-plan order. It is true, as IEU argues, that the earlier order
did not exempt the rider from the rate-increase limits. But the commission did not
rule out further exemptions, and as a general rule, the commission has discretion
to revisit earlier regulatory decisions and modify them prospectively. See, e.g.,
Utility Serv. Partners, Inc. v. Pub. Util. Comm., 124 Ohio St.3d 284, 2009-Ohio-
6764, 921 N.E.2d 1038, ¶ 18 (“Modifying a regulatory scheme is not problematic
in itself. Agencies undoubtedly may change course, provided that the new
regulatory course is permissible”); In re Application of Columbus S. Power Co.,
128 Ohio St.3d 512, 2011-Ohio-1788, 947 N.E.2d 655, ¶ 52. IEU does not
explain why the general rule should not apply here. We fail to see any procedural
error.
{¶ 9} That leads to IEU’s substantive argument, namely, that the
commission erred by allowing current rates to become too high. This argument
also lacks merit.
{¶ 10} The decision that IEU attacks is a discretionary one. As noted, the
commission’s power to limit annual rate increases, and thus phase-in AEP’s rates,
comes from R.C. 4928.144. That law allows the commission to “authorize any
just and reasonable phase-in” of electric-security-plan rates “as the commission
considers necessary to ensure rate or price stability for consumers.” (Emphasis
added.) While the end product must be “just and reasonable,” the emphasized
language entrusts the details of any phase-in—how much should be collected
now, how much later—to the commission’s discretion.
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{¶ 11} Discretionary decisions receive deferential review, Ohio
Consumers’ Counsel v. Pub. Util. Comm., 117 Ohio St.3d 289, 2008-Ohio-860,
883 N.E.2d 1025, ¶ 10, and IEU has not shown an abuse of discretion. Its
complaint concerns a pure matter of timing—should customers pay the rider now
or later? If later, the law requires that carrying charges (a kind of financing
charge) be added to the deferred rates. R.C. 4928.144. IEU points to no
legislative command that addresses the specifics of such a timing question, and
the absence of statutory criteria leaves us ill-equipped to second-guess the
commission’s discretionary determinations. IEU’s sense that current rates are
high enough and its preference to pay the rider (plus carrying charges) later are
not enough to upset the order.
{¶ 12} For the foregoing reasons, we reject IEU’s third proposition of law.
B. IEU Has Not Shown that the Commission Erred in
Calculating AEP’s Carrying Charges
{¶ 13} In its fourth proposition of law, IEU argues that the commission
erred in allowing AEP to use a long-term debt rate (as opposed to a short-term
rate) to calculate certain carrying charges. Again, however, IEU has not
demonstrated reversible error.
{¶ 14} IEU has preserved for appeal only a single argument concerning
the calculation of AEP’s carrying charges. In its application for rehearing, IEU
alleged that the commission had “repeated[ly] fail[ed] to at least inquire as to
whether a lower carrying cost rate could be utilized.” (Emphasis added.)
“Customers,” IEU asserted, “deserve at least some analysis or other review” of
the carrying-cost issue. IEU raised no other argument.
{¶ 15} So far as IEU’s rehearing application explained, the commission
would have fully satisfied IEU’s concerns if it had “inquired” or provided “some
analysis or other review” of the carrying-cost issue. But the commission did
“inquire” and provide “some analysis” of that issue: it had reviewed that issue in
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January Term, 2011
the preceding rider case.2 And in the order below, the commission explained that
very fact in response to IEU’s objection. IEU did not reply with any additional
challenges. In short, IEU argued only that the commission needed to make an
inquiry, and the commission pointed out where it had made that inquiry. The
commission fully answered IEU’s concern.
{¶ 16} IEU’s remaining argument—that the commission failed to explain
the reasons for its decision—is forfeited. We have jurisdiction only over
arguments raised on rehearing. Ohio Consumers’ Counsel v. Pub. Util. Comm.,
114 Ohio St.3d 340, 2007-Ohio-4276, 872 N.E.2d 269, ¶ 40. IEU did not argue
on rehearing that the commission had failed to explain itself, so we cannot
consider the alleged error.
{¶ 17} IEU’s fourth proposition of law is rejected.
III. Conclusion
{¶ 18} For the foregoing reasons, we affirm.
Order affirmed.
O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL,
LANZINGER, and CUPP, JJ., concur.
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McNees, Wallace & Nurick, L.L.C., Samuel C. Randazzo, and Joseph E.
Oliker, for appellant.
Michael DeWine, Attorney General, and William L. Wright, Thomas W.
McNamee, Thomas G. Lindgren, and Werner L. Margard III, Assistant Attorneys
General, for appellee, Public Utilities Commission of Ohio.
Steven T. Nourse and Matthew J. Satterwhite, for intervening appellees,
Columbus Southern Power Company and Ohio Power Company.
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2. That order is not before us, and we offer no opinion on its merits.
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