Case Title: Columbus S. Power Co. v. Pub. Util. Comm.

Citation: 2002-Ohio-1487

Docket Number: 20002260

State: ohio

Court: Ohio Supreme Court

Date: 2002-04-03T00:00:00Z

Document:
[Cite as Columbus S. Power Co. v. Pub. Util. Comm., 95 Ohio St.3d 8, 2002-Ohio-1487.] 
 
 
COLUMBUS SOUTHERN POWER COMPANY ET AL., APPELLANTS, v. PUBLIC 
UTILITIES COMMISSION OF OHIO ET AL., APPELLEES. 
[Cite as Columbus S. Power Co. v. Pub. Util. Comm. (2002), 95 Ohio St.3d 8.] 
Public Utilities Commission — Electric utilities — Taxation — Public Utilities 
Commission’s decision of effective date of excise tax credit rider 
affirmed when supported by sufficient probative evidence. 
(No. 00-2260 — Submitted November 27, 2001 — Decided April 3, 2002.) 
APPEAL from the Public Utilities Commission of Ohio, Nos. 99-1729-EL-ETP 
and 99-1730-EL-ETP. 
__________________ 
 
LUNDBERG STRATTON, J.  This appeal deals with the provisions of 1999 
Am. Sub.S.B. No. 3, which, for the most part, became effective on October 5, 
1999.  S.B. 3 is a comprehensive statutory scheme to facilitate and encourage the 
development of competition in the retail electric market, which added R.C. 
Chapter 4928, and amended and enacted various associated Revised Code 
Sections.  This appeal involves the application of one of those modifications, the 
exemption of Ohio’s investor-owned electric utilities from the excise tax imposed 
on public utilities by R.C. 5727.30, effective May 1, 2001.1 
 
R.C. 4928.31 required electric utilities to file with the Public Utilities 
Commission of Ohio proposed transition plans to implement the tax exemption 
and to comply with other requirements of S.B. 3.  R.C. 4928.31(A)(1) and 
4928.34(A)(6). The transition plans filed by appellants, Columbus Southern 
                                                          
 
1. 
Section 4 of S.B. 3 stated that the amendment to R.C. 5727.30 creating the exemption 
“shall first apply to the excise tax assessed by the Tax Commissioner for tax year 2002.”  See, 
also, Section 11.  The tax year for electric companies is May 1 to April 30.  R.C. 5727.33(A).  As 
later amended by 2000 Am.Sub.H.B. No. 640, R.C. 5727.30(B) specified, “An electric company’s 
SUPREME COURT OF OHIO 
2 
Power Company and Ohio Power Company, included a tariff provision, called an 
excise tax credit rider, that provided for a credit to customers’ electric service 
rates equal to the excise tax expense from which the appellants would be relieved. 
 
The commission decided that the effective date of the appellants’ credit 
riders would be April 30, 2001.  The appellants contend that the effective date 
should be April 30, 2002. 
 
The tax that is the subject of this appeal is an annual tax imposed upon a 
public utility “for the privilege of owning property in this state or doing business 
in this state during the twelve-month period next succeeding the period upon 
which the tax is based.”  R.C. 5727.30.  The later twelve-month period is 
commonly referred to as the “privilege year” and the earlier period the 
“measurement year.”  Sometimes improperly called a gross receipts tax, this tax is 
an excise tax payable during the privilege year, determined by the gross receipts, 
including rates paid by customers, of the public utility during the measurement 
year.  R.C. 5727.38; See E. Ohio Gas Co. v. Limbach (1986), 26 Ohio St.3d 63, 
66-67, 26 OBR 54, 498 N.E.2d 453. 
 
The appellants will become exempt from the public utility excise tax after 
the end of the privilege year, which will end April 30, 2002.  Because they will be 
liable for the tax (an operating expense allowable and recoverable for ratemaking 
purposes) through the privilege year ending April 30, 2002, the appellants argue 
that the excise tax credit rider should not be effective until after that date. 
 
The commission decided that the excise tax credit rider should be effective 
one year earlier, after April 30, 2001, the end of the measurement year for the last 
privilege year before the effective date of the excise tax exemption, because a 
utility’s rates are determined on the principle that customers prepay in rates 
amounts equivalent to the utility’s future excise tax expense, a fact recognized by 
                                                                                                                                                              
 
or a rural electric company’s gross receipts received after April 30, 2001, are not subject to the 
annual excise tax imposed by this section.” 
January Term, 2002 
3 
this court in Consumers’ Counsel v. Pub. Util. Comm. (1987), 32 Ohio St.3d 263, 
270, 513 N.E.2d 243.  By the end of the measurement year, April 30, 2001, their 
customers will have paid to appellants amounts equivalent to appellants’ excise 
tax expense payable to the state during the succeeding (and last) privilege year.  
Postponing the effective date of the excise tax credit rider to after the last 
privilege year, ending April 30, 2002, would result in appellants’ overrecovery of 
their annual excise tax expense, possibly by double or more. 
 
The appellants argue that an effective date of the excise tax credit rider 
after the privilege year ending April 30, 2002, is supported by the commission’s 
decisions in In re FirstEnergy Corp. (July 19, 2000), PUCO Nos. 99-1212-EL-
ETP et seq., and In re Cincinnati Gas & Elec. Co. (Aug. 31, 2000), PUCO Nos. 
99-1658-EL-ETP et seq. 
 
However, the commission’s actions and approvals in those proceedings 
are distinguishable from the commission’s actions and approvals in the 
proceedings below.  The FirstEnergy and Cincinnati Gas transition plan 
proceedings each involved the commission’s approval of comprehensive 
stipulated settlements among the parties, in which the recovery of the utility’s 
annual excise tax expense was not separately or specifically addressed.  If 
recovery of that expense was provided for, it was merely by approval of cash 
flows, which necessarily include customers’ rate payments.  There simply is no 
way to tell from the stipulated settlement agreements whether the utilities will 
recover all or any of their public utility excise tax expenses. 
 
While the commission proceedings in this case involved a stipulated 
settlement, that settlement did not address recovery of the appellants’ annual 
public utility excise tax expense.  Rather, that issue was carved out and litigated 
for decision by the commission.  Because of the differences between the 
proceedings in this case and the proceedings in FirstEnergy and Cincinnati Gas, 
SUPREME COURT OF OHIO 
4 
we do not consider the decisions in those two cases to be relevant precedents for 
either the commission or this court as to the appellants’ excise tax issue. 
 
Under the “unlawful or unreasonable” standard specified in R.C. 4903.13, 
this court will not reverse or modify a commission decision as to questions of fact 
where the record contains sufficient probative evidence to show that the 
commission’s determination is not against the manifest weight of the evidence 
and is not so clearly unsupported by the record as to show misapprehension, 
mistake, or willful disregard of duty.  MCI Telecommunications Corp. v. Pub. 
Util. Comm. (1987), 32 Ohio St.3d 306, 310, 513 N.E.2d 337.  We find that the 
commission’s decision as to the effective date of the excise tax credit rider is 
supported by sufficient probative evidence of record below.  Under such 
circumstances, we will not substitute our judgment for that of the commission.  
Cremean v. Pub. Util. Comm. (1976), 48 Ohio St.2d 163, 2 O.O.3d 342, 357 
N.E.2d 1073, paragraph one of the syllabus. 
 
We therefore affirm the commission’s decision. 
Order affirmed. 
 
MOYER, C.J., RESNICK, F.E. SWEENEY and PFEIFER, JJ., concur. 
 
DOUGLAS and COOK, JJ., concur in judgment. 
__________________ 
 
Marvin I. Resnik and Edward J. Brady; Porter, Wright, Morris & Arthur 
and Daniel R. Conway, for appellants. 
 
Betty D. Montgomery, Attorney General, Duane W. Luckey and Thomas 
W. McNamee, Assistant Attorneys General, for appellee Public Utilities 
Commission of Ohio. 
 
Robert S. Tongren, Ohio Consumers’ Counsel, and Colleen L. Mooney, 
Assistant Consumers’ Counsel, for intervening appellee Ohio Consumers’ 
Counsel. 
January Term, 2002 
5 
 
McNees, Wallace & Nurick, Samuel C. Randazzo, Kimberly Wile Bojko 
and Gretchen J. Hummel, urging affirmance for amicus curiae Industrial Energy 
Users-Ohio. 
__________________