Because Duke Energy was not acting as a “public utility” when managing the meter of an electric supplier to a large southwestern Ohio industrial customer, state regulators lacked jurisdiction to find Duke provided inadequate service when meter data was miscalculated, the Ohio Supreme Court ruled today.

In a unanimous decision, the Supreme Court ruled the Public Utilities Commission of Ohio (PUCO) lacked jurisdiction to hear the complaint by Direct Energy that Duke’s meter-reading mistake caused the company to pay $2 million more for electricity than was actually delivered to a customer.

Writing for the Court, Chief Justice Maureen O’Connor stated that an electric-distribution utility, such as Duke, can be cited by the PUCO for failure to provide adequate service when in the business of supplying power to a customer. But Direct was not Duke’s customer, and meter reading is not part of the business of supplying power under state law. For these reasons, the PUCO lacked jurisdiction to consider the matter, the Court concluded.

Electric Usage Discrepancy Detected
Under Ohio’s deregulated electricity-supply market, customers in Duke’s service territory can purchase power from Duke or a PUCO-certified provider, such as Direct. Duke functions as the distributor of the electricity to the customer that purchases from a competitor.

In January 2013, SunCoke Energy, located in Middletown, switched from purchasing its electricity from Duke to Direct. As a result, SunCoke began to receive two bills -- one from Direct for generation service and one from Duke for distribution service.

Direct purchased electricity to resell to SunCoke from the wholesale-electricity market that is managed in 13 states, including Ohio, by PJM Interconnection. As a distribution company, Duke acts as a “meter-data-management” agent for Direct. Duke submits daily estimates of the amount of electricity it believes Direct is supplying to its customers, and PJM generates a weekly invoice for Direct based on the estimate. After Duke reads the meter, the initial invoices are adjusted.

In May 2013, Direct noticed the charges imposed by PJM were significantly higher than in previous months and traced the issue to the day in January when SunCoke became its customer.

Direct and Duke were able to rectify the billing irregularities for March to July 2013, but were not able to resolve their dispute regarding January to February of that year. In July 2014, Direct filed a complaint against Duke with the PUCO, alleging Duke’s meter-management failure caused Direct to overpay PJM by $2 million.

Direct requested that the PUCO order Duke to coordinate a repayment from PJM or pay $2 million in restitution. The PUCO declined to order the payment, but found Duke failed to furnish adequate service as required by R.C. 4905.22.

Duke appealed the decision to the Supreme Court, which was required to hear the case.

Meter-Management Service Analyzed
Duke asserted that its duty to provide adequate service does not apply because it was not acting as a public utility when it rendered meter-data-management services to Direct. Chief Justice O’Connor wrote that the law makes clear that only a public utility is required to furnish adequate service, and if Duke was not acting as a public utility, then the PUCO had no jurisdiction to consider the dispute between Direct and Duke in this matter.

Under R.C. Chapter 4905, Duke is a public utility when it is “engaged in the business of supplying electricity for light, heat, or power purposes to consumers within the state, including supplying electric transmission service for electricity delivered to the consumers in this state,” the opinion stated.

Direct argued that Duke was acting as a public utility by facilitating the delivery of electricity by Direct to SunCoke. The Court noted the dispute involved the relationship between Duke and Direct, not Duke and SunCoke. The Court found no evidence that Direct was a “consumer” of electricity supplied by Duke, and that Direct did not pay for or receive electric power from Duke.

The Court also found Direct did not purchase the meter-data-management services from Duke. The opinion also noted that Direct had the option of checking the “load data,” which is the amount of power used by Direct customers, before Duke reported the estimates to PJM. Direct waived the right to check the data prior to billing.

Because Duke was not acting as a public utility, the Court remanded the matter to the PUCO with instructions to dismiss Direct’s complaint for lack of jurisdiction to consider the matter.

2019-1058. In re Complaint of Direct Energy Business LLC v. Duke Energy, Slip Opinion No. 2020-Ohio-4429.

View oral argument video of this case.

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