Case Title: In re Complaint of Direct Energy Business, LLC v. Duke Energy Ohio, Inc.

Citation: 2020-Ohio-4429

Docket Number: 2019-1058

State: ohio

Court: Ohio Supreme Court

Date: 2020-09-17T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as In 
re Complaint of Direct Energy Business, L.L.C. v. Duke Energy Ohio, Inc., Slip Opinion No. 
2020-Ohio-4429.] 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in an 
advance sheet of the Ohio Official Reports.  Readers are requested to 
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65 
South Front Street, Columbus, Ohio 43215, of any typographical or other 
formal errors in the opinion, in order that corrections may be made before 
the opinion is published. 
 
 
SLIP OPINION NO. 2020-OHIO-4429 
IN RE COMPLAINT OF DIRECT ENERGY BUSINESS, L.L.C., INTERVENING 
APPELLEE, v. DUKE ENERGY OHIO, INC., APPELLANT; PUBLIC UTILITIES 
COMMISSION, APPELLEE. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as In re Complaint of Direct Energy Business, L.L.C. v. Duke 
Energy Ohio, Inc., Slip Opinion No. 2020-Ohio-4429.] 
Public utilities—Jurisdiction—General Assembly has confined Public Utilities 
Commission’s jurisdiction to the supervision of public utilities—Public 
Utilities Commission lacked jurisdiction under Ohio law to decide 
complaint against company because company did not act as a public utility 
when it merely provided meter-data-management service—Order reversed. 
(No. 2019-1058—Submitted June 2, 2020—Decided September 17, 2020.) 
APPEAL from the Public Utilities Commission, No. 14-1277-EL-CSS. 
_________________ 
O’CONNOR, C.J. 
{¶ 1} In this appeal from a decision of the Public Utilities Commission of 
Ohio (the “PUCO”), we determine whether the PUCO had jurisdiction over a 
SUPREME COURT OF OHIO 
 
2
complaint filed against appellant, Duke Energy Ohio, Inc. (“Duke Energy”), 
regarding Duke Energy’s role as a meter-data-management agent.  Intervening 
appellee, Direct Energy Business, L.L.C. (“Direct”), purchases electric-generation 
services from the operator of a wholesale-power market and resells them to end-
use customers through Duke Energy’s distribution system.  In this case, Duke 
Energy acted as a meter-data-management agent for Direct, providing electric-
usage data about Direct’s customers to the wholesale-market operator.  The market 
operator then used the data to invoice Direct for its purchases. 
{¶ 2} In 2013, Duke Energy failed to calculate usage data for a monetarily-
large customer of Direct, which resulted in Direct being overbilled.  Seeking 
redress, Direct filed a complaint against Duke Energy with appellee, the PUCO.  
The PUCO ruled in favor of Direct, determining that Direct had established by a 
preponderance of the evidence that Duke Energy’s failure to provide accurate 
readings of the customer’s generation usage constituted “inadequate service.”  
Duke Energy has appealed to this court.  Because we conclude that Duke Energy 
was not acting as a public utility when serving as Direct’s meter-data-management 
agent, we reverse the PUCO’s order and remand to the PUCO with instructions for 
it to dismiss Direct’s complaint for lack of jurisdiction. 
I.  RELEVANT BACKGROUND 
{¶ 3} The facts in this case are not disputed by the parties. 
{¶ 4} Under Ohio law, a consumer served by an electric-distribution utility 
such as Duke Energy may choose to receive generation service through Duke 
Energy’s standard service offer, see R.C. 4928.141, or through a contract with a 
PUCO-certified provider such as Direct, see R.C. 4928.08.  See also Ohio 
Adm.Code 4901:1-21-01 et seq.  Duke Energy must deal with providers such as 
Direct in accordance with its PUCO-approved Certified Supplier Tariff.  In this 
case, Section 14.1 of that tariff provides that Duke Energy, as the meter-data-
management agent for Direct, “will supply hourly load data” to the market operator 
January Term, 2020 
 
3
on Direct’s behalf “in accordance” with a federal tariff, namely, the Open Access 
Transmission Tariff. 
{¶ 5} The market operator referred to above is PJM Interconnection, L.L.C. 
(“PJM”), “a multiutility regional transmission organization designated by the 
Federal Energy Regulatory Commission [‘FERC’] to coordinate the movement of 
wholesale electricity in all or part of 13 states—including Ohio—and the District 
of Columbia.”  In re Application of Ohio Power Co., 155 Ohio St.3d 326, 2018-
Ohio-4698, 121 N.E.3d 320, ¶ 4, fn. 1.  In PJM’s parlance, an entity such as Direct 
is a load-serving entity, meaning that it serves retail consumers within PJM’s 
footprint under the authority of state law.  PJM, PJM Glossary, 
www.pjm.com/Glossary.aspx#index_L 
(accessed 
Sept. 
10, 
2020) 
[https://perma.cc/X766-L972].  “Load is the overall usage or consumption of 
electricity on a power supply.”  Id.  When load-serving entities such as Direct 
acquire energy from the PJM-wholesale market for resale to retail consumers, they 
pay PJM for that energy.  See PPL Energyplus, L.L.C. v. Nazarian, 974 F.Supp.2d 
790, 804 (D.Md.2013). 
{¶ 6} Duke Energy submits daily estimates of load data associated with 
each load-serving entity in its territory; relying on those estimates, PJM then 
generates weekly invoices for each load-serving entity in Duke Energy’s territory.  
Duke Energy thereafter submits actual meter data to PJM that can be used to adjust 
the initial invoices.  When Direct set up its account with PJM, it granted Duke 
Energy the right to be its meter-data-management agent and declined the right to 
review the load data before Duke Energy submitted that data to PJM. 
{¶ 7} The dispute in this case arose when Duke Energy failed to calculate 
usage data for a large customer of Direct—SunCoke Energy (“SunCoke”).  
SunCoke operates a facility in Middletown, Ohio.  In January 2013, SunCoke 
switched to Direct for its electric-generation service.  As a result, it began receiving 
two bills—one from Direct for generation service and another from Duke Energy 
SUPREME COURT OF OHIO 
 
4
for distribution service.  After the switch, Duke Energy ceased providing the 
manual calculation of SunCoke’s net-energy consumption. 
{¶ 8} In May 2013, Direct began reconciling its forecasted load and actual 
load within Duke Energy’s territory for January 2013.  During the reconciliation 
process, Direct noticed that the charges imposed by PJM were significantly higher 
than they had been in previous months.  Direct traced the problem to the day in 
January 2013 on which SunCoke had become its customer. 
{¶ 9} After reviewing the January 2013 invoice that SunCoke had received 
from Duke Energy for its distribution service, Direct determined that the usage 
figure on the invoice did not match the usage figure that Duke Energy had reported 
to PJM.  Direct deduced that the usage figure on the invoice sent by Duke Energy 
to SunCoke was correct because it was consistent with SunCoke’s historical usage.  
Direct and Duke Energy eventually rectified their billing dispute for the months of 
March to July 2013; however, they were unable to do so for the months of January 
to February. 
{¶ 10} In July 2014, Direct filed a complaint against Duke Energy with the 
PUCO alleging that Duke Energy’s actions or inactions had caused Direct to 
overpay PJM by $2 million for the months of January to February 2013.  Direct 
requested the PUCO to order Duke Energy to either initiate resettlement with PJM 
or to pay $2 million dollars in restitution to Direct.  The PUCO declined to award 
such relief, determining instead that Duke Energy had failed to furnish “adequate 
service” as required by R.C. 4905.22 and was barred from enforcing a hold-
harmless clause in its PUCO-filed tariff.  Duke Energy later sought rehearing by 
the PUCO, which the PUCO denied.  Duke Energy then filed this appeal. 
II.  ANALYSIS 
{¶ 11} Duke Energy argues that the duty of “adequate service” does not 
apply to it here because it was not acting as a public utility when it rendered meter-
data-management services to Direct.  We agree. 
January Term, 2020 
 
5
{¶ 12} Under Ohio law, “[e]very public utility shall furnish necessary and 
adequate service and facilities.”  R.C. 4905.22.  To that end, “any person” may file 
a written complaint with the PUCO against “any public utility” alleging that “any 
service” furnished by the utility “is, or will be inadequate.”  R.C. 4905.26. 
{¶ 13} As these statutes make clear, only a public utility is required to 
furnish adequate service and only a public utility may be held in violation of the 
statutes for failing to furnish such service.  Thus, any inquiry into the adequacy of 
a particular service under the statutes depends on the existence of a “public utility.”  
And if Duke Energy did not act as a public utility under the facts of this case, then 
the PUCO has no jurisdiction to hold Duke Energy liable for failing to furnish 
adequate service. 
{¶ 14} For the purpose of R.C. Chapter 4905, an entity like Duke Energy is 
deemed a “public utility” when it is “engaged in the business of supplying 
electricity for light, heat, or power purposes to consumers within this state, 
including supplying electric transmission service for electricity delivered to 
consumers in this state.”  R.C. 4905.03(C) (defining an “electric light company”); 
see also R.C. 4905.02; S.G. Foods, Inc. v. FirstEnergy Corp., Pub. Util. Comm. 
Nos. 04-28-EL-CSS et al., 2006 WL 769488 (Mar. 7, 2006) (a company is a public 
utility only when it is supplying electricity or transmission services to consumers 
within the state of Ohio).1  We have observed that “the term ‘consumer,’ used in 
reference to an Ohio public utility supplying electric energy, includes an Ohio 
resident receiving and paying for the electric energy furnished him by such public 
utility.”  Shopping Ctrs. Assn. v. Pub. Util. Comm., 3 Ohio St.2d 1, 208 N.E.2d 923 
(1965), paragraph two of the syllabus (interpreting a prior version of R.C. 4905.03). 
{¶ 15} Applying this language, we conclude that Duke Energy does not fit 
the definition of an “electric light company” in R.C. 4905.03(C) in this case because 
                                                          
 
1. We do not address the language in R.C. 4905.03(C) referring to “electric-transmission service” 
because no party’s brief claims that it is relevant to our analysis here. 
SUPREME COURT OF OHIO 
 
6
the parties have provided no evidence to support a claim that Duke Energy was 
“engaged in the business of supplying electricity for light, heat, or power purposes” 
to Direct. 
{¶ 16} At oral argument, the PUCO and Direct unconvincingly attempted 
to explain how Duke Energy’s actions could be construed as satisfying the language 
of R.C. 4905.03(C).  The PUCO stated that Duke Energy’s distribution facilities 
facilitated the delivery of electricity to SunCoke.  Direct echoed this point, arguing 
that Duke Energy had supplied electricity to SunCoke by way of its distribution 
system.  But those arguments miss the point.  Our concern here is the relationship 
between Duke Energy and Direct, not Duke Energy and SunCoke.  The PUCO also 
argued that metering is an integral part of supplying electricity.  But the definition 
of “electric light company” in R.C. 4905.03(C) makes no mention of metering. 
{¶ 17} We likewise see no evidence that Direct was a “consumer” of 
electricity supplied by Duke Energy, as the record does not establish that Direct 
paid for and received electric energy furnished by Duke Energy.  R.C. 4905.03(C); 
Shopping Ctrs. Assn., 3 Ohio St.2d 1, 208 N.E.2d 923, at paragraph two of the 
syllabus.  Tellingly, Direct does not argue otherwise. 
{¶ 18} The PUCO stresses Direct’s purported status as a “captive customer” 
of Duke Energy, arguing that Direct had no choice but to accept Duke Energy as 
its meter-data-management agent.  We find the term “captive customer” to be a 
poor fit under the facts of this case. 
{¶ 19} First and most fundamentally, that term lacks any basis in the 
statutory definition of a public utility.  R.C. 4905.03(C) speaks in terms of 
“consumers” of electricity.  It follows that the PUCO cannot circumvent the 
statutory definition by creating a status label that the General Assembly itself did 
not prescribe.  See Discount Cellular, Inc. v. Pub. Util. Comm., 112 Ohio St.3d 360, 
2007-Ohio-53, 859 N.E.2d 957, ¶ 51 (“The PUCO, as a creature of statute, has no 
authority to act beyond its statutory powers”). 
January Term, 2020 
 
7
{¶ 20} Second, contrary to what the term “captive customer” suggests, 
Direct was not powerless to protect itself against the circumstances that arose here.  
As Duke Energy points out, Direct waived the right to check the load data before 
Duke Energy submitted the data to PJM. 
{¶ 21} Last, nothing in the record establishes that Direct bought or 
purchased meter-data-management services from Duke Energy—indeed, Direct 
concedes that Duke Energy does not even list such services as a line item on its 
invoices.  We find that this undermines Direct’s purported status as a “captive 
customer” because, in the commercial sense, a “customer” is generally one who 
buys or purchases goods or services.  See Black’s Law Dictionary 468 (10th 
Ed.2014); Merriam-Webster’s Collegiate Dictionary 308 (11th Ed.2007). 
{¶ 22} We are also unpersuaded by Direct’s and the PUCO’s citations to 
our decision in Kazmaier Supermarket, Inc. v. Toledo Edison Co., in which we 
observed that “[e]very public utility in Ohio is required to file, for commission 
review and approval, tariff schedules that detail rates, charges and classifications 
for every service offered.”  61 Ohio St.3d 147, 150, 573 N.E.2d 655 (1991).  But 
Kazmaier has little applicability here because, unlike Direct, the complainant in 
that case was a consumer who had paid the company for electricity service.  Id. at 
147-150.  Thus, the company’s status as a public utility in Kazmaier was never in 
doubt. 
{¶ 23} For similar reasons, we reject Direct’s reliance on R.C. 4905.04 
(vesting the PUCO with powers to oversee public utilities), R.C. 4905.30(A) 
(requiring public utilities to file printed schedules of their services), and 4905.32 
(forbidding public utilities from departing from the terms of their printed schedules) 
because those statutes all tie the PUCO’s regulatory authority to the existence of a 
“public utility.”  As we have determined above, Duke Energy did not act as a public 
utility under the facts of this case. 
SUPREME COURT OF OHIO 
 
8
{¶ 24} Finally, we reject Direct’s reliance on our decision in In re 
Application of Duke Energy Ohio, Inc., for Approval of its Fourth Amended 
Corporate Separation Plan, 148 Ohio St.3d 510, 2016-Ohio-7535, 71 N.E.3d 997, 
in which we addressed Duke Energy’s corporate-separation plan under R.C. 
4928.17.  Contrary to what Direct seems to suggest, we did not announce in that 
case a principle that would bring Duke Energy’s meter-data-management services 
within the scope of the PUCO’s regulatory authority as it relates to R.C. Chapter 
4905.  Indeed, that decision never addressed, let alone cited, a single statute within 
R.C. Chapter 4905. 
{¶ 25} The foregoing analysis compels the conclusion that the PUCO 
lacked jurisdiction under Ohio law for it to decide Direct’s complaint because the 
General Assembly has confined the PUCO’s “jurisdiction” to the supervision of 
“public utilities.”  R.C. 4905.04; R.C. 4905.05.  Duke Energy did not act as a public 
utility under the facts of this case. 
III.  CONCLUSION 
{¶ 26} We reverse the PUCO’s order and remand to the PUCO with 
instructions for it to dismiss Direct’s complaint for lack of jurisdiction.  Because 
we conclude that the PUCO lacked jurisdiction under Ohio law to decide Direct’s 
complaint, we decline to address Duke Energy’s remaining state and federal claims. 
Order reversed 
and cause remanded. 
KENNEDY, FRENCH, FISCHER, DEWINE, DONNELLY, and STEWART, JJ., 
concur. 
_________________ 
Whitt Sturtevant, L.L.P., and Mark A. Whitt and Lucas A. Fykes, for 
intervening appellee. 
Rocco O. D’Ascenzo, Jeanne W. Kingery, and Larisa M. Vaysman, for 
appellant. 
January Term, 2020 
 
9
 
Taft Stettinius & Hollister, L.L.P., and Aaron M. Herzig and Elizabeth M. 
Brama, for appellant. 
 
Dave Yost, Attorney General, and John H. Jones and Jodi J. Bair, Assistant 
Attorneys General, for appellee. 
_________________