The latest consumers’ counsel’s challenge to the Ohio Power plan contested two new riders, including the Smart City Rider and the Renewable Generation Rider.

The latest consumers’ counsel’s challenge to the Ohio Power plan contested two new riders, including the Smart City Rider and the Renewable Generation Rider.

The Ohio Supreme Court has again denied a challenge to an Ohio Power Company’s plan to charge customers more or give discounts for its use of power plants constructed in the 1950s to supply electricity to federal uranium enrichment facilities near Portsmouth.

A Supreme Court majority held that the Ohio Consumers’ Counsel failed to take the appropriate steps to contest the Public Utilities Commission of Ohio’s (PUCO) approval of the electric security plan of the Ohio Power Company, an AEP Ohio subsidiary.

Writing for the Court majority, Justice Sharon L. Kennedy stated that the consumers’ counsel wrongly assumed that only the federal government, and not the PUCO, can authorize purchasing power from the plants. However, the consumers’ counsel did not raise the issue before the PUCO in a “rehearing.” Because it did not, the Supreme Court had no jurisdiction to consider the consumer counsel’s appeal on that issue, Justice Kennedy wrote.

Justices Judith L. French, Patrick F. Fischer, R. Patrick DeWine, Michael P. Donnelly, and Melody J. Stewart joined the majority opinion. Chief Justice Maureen O’Connor concurred in judgment only.

State Approves Rate Plan Extension with Potentially New Charges
In 2016, Ohio Power requested that the PUCO extend its current rate plan until 2024. The plan contained the extension and implementation of three riders, which are potentially additional charges to customers. The Power Purchase Agreement Rider (PPA) allowed the company to recover costs associated with power generated by the Ohio Valley Electric Corporation (OVEC). OVEC was constructed to supply power to the federal Piketon uranium enrichment facilities. When those facilities closed, the power from the OVEC plants became available to Ohio Power, which is a partial owner of OVEC.

The PPA was part of Ohio Power’s existing rate plan and already was subjected to a challenge by the consumers’ counsel and others. In November 2018, the Supreme Court affirmed the PUCO’s order to implement the PPA. (See Court Approves Ohio Power Company Rate Plan.)

The latest consumers’ counsel’s challenge to the Ohio Power plan also contested two other new riders — the Smart City Rider and the Renewable Generation Rider.

The Smart City Rider imposes a maximum of $2.1 million over four years to assist the city of Columbus with two technology-demonstration projects. The projects include a rebate plan to encourage the construction of electric-vehicle charging stations and the development of “microgrids,” which are small-scale power grids that can operate independently when there is an outage in AEP’s overall electric grid.

The Renewable Generation Rider was implemented on a “placeholder basis” to allow the company to charge for costs from future renewable-generation projects that might be approved by the PUCO at a later time. Ohio Power was not granted any increased rates for this rider, and would have to receive PUCO approval for projects that it would then charge customers to pay for them.

Consumer Advocate Challenges Plan
The PUCO approved the latest Ohio Power electric security plan in 2018, and the consumers’ counsel requested a rehearing, raising eight challenges to the commission’s decision. Absent from those challenges was the consumers’ counsel argument that the PUCO lacked jurisdiction to approve the PPA because it related to the wholesale rate of electricity in the interstate market for power. The consumers’ counsel claims that only the Federal Energy Regulatory Commission (FERC) can regulate the rates for the sale of power from the OVEC plants.

The PUCO rejected the consumers’ counsel arguments, and the consumers’ counsel appealed to the Supreme Court, which is required to hear the case.

The PUCO argued that the Court did not have the right to consider the consumers’ counsel’s challenge to the PPA because the advocate did not raise it as part of the rehearing. The consumers’ counsel maintained the law requiring it to raise issues through a rehearing did not apply to this challenge. The consumers’ counsel also maintained it was not challenging the PUCO’s approval of the PPA, but rather the PUCO’s authority — its jurisdiction — to approve a rate for power from the OVEC plants. The consumers’ counsel argued the Supreme Court could review its claim that only the FERC could set the rates.

Court Considers Authority to Address Issue
Both the PUCO and the consumers’ counsel pointed to U.S. Supreme Court cases regarding a state’s right to address matters that generally fall under federal law. The PUCO maintained the Federal Power Act allows for a role in both the federal government and state government to regulate aspects of the interstate electricity market. The consumers’ counsel argued that the federal law grants exclusive authority to the FERC to address the wholesale sale of power and that the states can participate only in the oversight of retail electricity sales.

The majority opinion stated that the Federal Power Act did not divest the PUCO with the authority to consider a challenge to its right to approve the PPA. The consumers’ counsel could have raised the issue with the PUCO, and the commission could have agreed with the argument by the consumers’ counsel. But because it was not raised with the PUCO, the consumers’ counsel cannot now raise the issue with the Ohio Supreme Court, the opinion stated. Because the consumers’ counsel did not follow the PUCO process, the Court stated that it does not have jurisdiction to consider the challenge and dismissed the claim.

Other Charges Permitted
The PUCO found that under R.C. 4928.143(B)(2)(h), it was authorized to approve the Smart City Rider. The law allows charges by power companies to provide incentives for distribution-infrastructure and modernization. The consumers’ counsel maintained that the 1.4 million ratepayers in the Ohio Power service territory could be charged for projects within Columbus that a vast majority will not participate in or benefit from.

The Court stated that the consumers’ counsel bears the burden of proving the PUCO’s decision violated the law and that the advocate did not cite any evidence that the electric-charging-station program or the microgrid program was not related to modernization of Ohio Power’s electric distribution service.

In addition, the Court found that the consumers’ counsel had to prove customers were harmed by the authorization of the Renewable Generation Rider. Because the company has no authority to collect any additional funds through the rider at this time, the consumers’ counsel failed to prove the PUCO’s order harmed customers.

2018-1396. In re Application of Ohio Power Co., Slip Opinion No. 2020-Ohio-143.

View oral argument video of this case.

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