Case Title: FirstEnergy Corp. v. Pub. Util. Comm.

Citation: 2002-Ohio-4847

Docket Number: 20010923

State: ohio

Court: Ohio Supreme Court

Date: 2002-10-02T00:00:00Z

Document:
[Cite as FirstEnergy Corp. v. Pub. Util. Comm., 96 Ohio St.3d 371, 2002-Ohio-4847.] 
 
 
FIRSTENERGY CORPORATION ET AL., APPELLANTS, v. PUBLIC UTILITIES 
COMMISSION OF OHIO, APPELLEE. 
[Cite as FirstEnergy Corp. v. Pub. Util. Comm., 96 Ohio St.3d 371, 2002-Ohio-
4847.] 
Public utilities — Electric companies — Public Utilities Commission’s order 
eliminating restrictions on electricity resale and distribution by 
landlords to their tenants affirmed. 
(No. 2001-0923 — Submitted April 23, 2002 — Decided October 2, 2002.) 
APPEAL from the Public Utilities Commission of Ohio, Nos. 99-1212-EL-ETP, 
99-1213-EL-ATA, and 99-1214-EL-AAM. 
__________________ 
 
PFEIFER, J. 
{¶1} In 1999 Am.Sub.S.B. No. 3 (“S.B. 3”), the General Assembly 
adopted a comprehensive statutory scheme to facilitate and encourage competition 
in Ohio’s retail electric market.  The provisions of S.B. 3 relevant to this decision 
are contained in newly enacted R.C. Chapter 4928.  R.C. 4928.31 requires each 
electric utility that supplies retail electric service to file with the appellee, Public 
Utilities Commission of Ohio (“PUCO” or “commission”), a transition plan for 
providing competitive electric service in Ohio. 
{¶2} In December 1999, appellant FirstEnergy Corporation, on behalf of 
its Ohio operating companies (appellants Ohio Edison Company, Cleveland 
Electric Illuminating Company, and Toledo Edison Company), filed its proposed 
transition plan with the commission.  Stipulated settlement agreements were 
entered into between a majority of the parties to the commission proceedings, and 
evidentiary hearings and local public hearings were held.  These proceedings 
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resulted in an opinion and order, dated July 19, 2000, in which the commission 
approved the settlement agreements and FirstEnergy’s transition plan, as modified 
by the settlement agreements, subject to final approval of FirstEnergy’s 
compliance tariffs to be filed pursuant to the order. 
{¶3} In its entry dated November 21, 2000, the commission found that 
FirstEnergy had submitted proposed compliance tariffs as the commission had 
directed in its July 19, 2000 order and the commission approved those 
submissions, with certain exceptions.  One exception related to restrictions on 
electricity resale and redistribution by landlords to their tenants.  The 
commission’s staff recommended that the proposed tariffs be modified to 
eliminate the restrictions on resale so that the tariffs would be consistent with the 
commission’s decision in Brooks v. Toledo Edison Co., commission case No. 94-
1987-EL-CSS, 1996 WL 331201, decided May 8, 1996.  The commission 
acknowledged that it had indicated in an earlier entry that the resale and 
redistribution issue would be addressed in the context of FirstEnergy’s application 
for approval of its proposed compliance tariffs.  The commission adopted its 
staff’s recommendation for tariff modification on an interim basis, pending further 
review of the issue.  In furtherance of such review, the commission solicited 
comments from interested parties regarding electricity resale and the effect of S.B. 
3 on the Brooks decision. 
{¶4} The commission received numerous comments, some favoring the 
commission’s policy as set forth in Brooks, and others urging change.  After 
considering the comments, the commission reaffirmed the Brooks decision, which 
it described in its January 18, 2001 entry as follows: 
{¶5} “The Brooks decision held that [the electric utility] could not restrict 
the resale or redistribution of electric service by a landlord to a tenant if the resale 
January Term, 2002 
3 
or redistribution takes place only upon property owned by the landlord, and if the 
landlord was not operating as a public utility.” 
{¶6} Given this affirmation of Brooks, the commission ordered that 
FirstEnergy’s resale tariff provisions would remain in effect, as modified by its 
earlier entry.  The commission’s refusal to approve the unmodified tariff 
provisions as tendered by FirstEnergy forms the gravamen of FirstEnergy’s 
complaint in this appeal. 
{¶7} The cause is now before this court upon an appeal as of right. 
I 
{¶8} FirstEnergy argues that the commission erred in holding Brooks to 
be controlling because S.B. 3 was enacted after the Brooks decision.  FirstEnergy 
also argues that S.B. 3 entitles consumers of retail electric service to choose their 
suppliers. 
{¶9} FirstEnergy asserts that tenants of apartment houses, office 
buildings, and shopping centers are the ultimate consumers and fall within the 
purview of S.B. 3.  However, this court has held that office buildings, apartment 
houses, and shopping centers are “consumers” of electricity even though these 
consumers may resell, redistribute, or submeter part of the electric energy to their 
tenants.  Jonas v. Swetland Co. (1928), 119 Ohio St. 12, 162 N.E. 45; Shopping 
Centers Assn. v. Pub. Util. Comm. (1965), 3 Ohio St.2d 1, 32 O.O.2d 1, 208 
N.E.2d 923.  S.B. 3 did not change the law governing the resale or redistribution 
of electric service by a landlord to its tenants, and nothing in S.B. 3 overrules 
Jonas, Shopping Centers Assn., or the commission’s decision in Brooks (which 
relied on Shopping Centers Assn.). 
{¶10} FirstEnergy further argues that S.B. 3 entitles tenants to choose 
their own service supplier and that the commission’s decision enables landlords to 
prevent tenants from doing so.  To the contrary, the commission’s decision simply 
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affirmed the right of landlords and tenants to enter into lease agreements that 
appoint the landlord to secure, resell, and redistribute electric service to its 
tenants.  Under such leases, agreed to by tenants, the tenants exercise choice by 
appointing their landlord to make decisions and arrangements concerning electric 
utility service. 
{¶11} For the foregoing reasons, we find that FirstEnergy’s S.B. 3 
arguments are without merit. 
II 
{¶12} FirstEnergy argues that the commission’s approval of the stipulated 
settlement agreements, in its July 19, 2000 opinion and order, was tantamount to 
approval of the compliance tariff provisions submitted by FirstEnergy. 
{¶13} FirstEnergy asserts that (1) it filed, as part of its proposed transition 
plan, tariffs that contained resale restrictions of the sort contained in its proposed 
compliance tariffs, (2) the settlement agreements concerning the proposed 
transition plan did not address the restrictive tariff provisions, and (3) the parties’ 
failure to expressly address the issue of the restrictive tariff provisions in the 
settlement agreements meant that they were implicitly approved.  Relying on these 
assertions, FirstEnergy concludes that the commission’s approval of the 
settlement agreements in its July 19, 2000 order constituted binding prior approval 
of tariff provisions containing resale restrictions. 
{¶14} FirstEnergy’s argument is flawed.  If, as FirstEnergy claims, the 
settlement agreements were in fact silent as to the questioned tariff provisions, 
that silence may signify little more than the parties’ lack of concern with tariff 
issues at the stage of proceedings involving approval of the settlement 
agreements.  The commission’s July 19, 2000 order makes it clear that both the 
parties and the commission would consider the content and the compliance of the 
tariffs in further proceedings involving an application for tariff approval not yet 
January Term, 2002 
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filed.  Further, the commission’s statement that the settlement agreements were 
approved “subject to final approval of FirstEnergy’s compliance tariffs” 
demonstrates that it did not accept the proposed restrictive tariff provisions in the 
settlement agreements.  Moreover, in a later entry, the commission stated, “In our 
September 13, 2000 entry on rehearing in this proceeding, we indicated that this 
resale/redistribution issue * * * would be addressed in the context of 
FirstEnergy’s compliance tariff application.” 
{¶15} FirstEnergy has failed to convince us that the commission’s 
conditional approval of the parties’ stipulated settlement agreements in its July 19, 
2000 order constrained the commission to approve without modification 
FirstEnergy’s tariff provisions containing restrictions on electric resale and 
redistribution. 
III 
{¶16} Decisions of the commission “shall be reversed, vacated, or 
modified by the supreme court on appeal, if, upon consideration of the record, 
such court is of the opinion that such order was unlawful or unreasonable.”  R.C. 
4903.13.  “Under the ‘unlawful or unreasonable’ standard specified in R.C. 
4903.13, this court will not reverse or modify a PUCO decision as to questions of 
fact where the record contains sufficient probative evidence to show the PUCO’s 
determination is not manifestly against the 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. (1988), 
38 Ohio St.3d 266, 268, 527 N.E.2d 777.  See AT&T Communications of Ohio, 
Inc. v. Pub. Util. Comm. (2000), 88 Ohio St.3d 549, 555, 728 N.E.2d 371. 
{¶17} To the extent that this appeal turns on questions of fact, we find 
that sufficient probative evidence was adduced before the commission to show 
that its determinations were just and reasonable and not manifestly against the 
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weight of the evidence.  Nor were they so clearly unsupported by the record as to 
show misapprehension, mistake, or willful disregard of duty. 
{¶18} To the extent that this appeal turns on questions of law, as it largely 
does, we find that the commission correctly determined and applied the relevant 
law to the facts before it. 
{¶19} We therefore affirm the commission’s order. 
Order affirmed. 
 
MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, DEGENARO and 
LUNDBERG STRATTON, JJ., concur. 
 
MARY DEGENARO, J., of the Seventh Appellate District, sitting for COOK, 
J. 
__________________ 
 
Arthur E. Korkosz; Jones, Day, Reavis & Pogue, Paul T. Ruxin and Helen 
L. Liebman, for appellants. 
 
Betty D. Montgomery, Attorney General, Duane W. Luckey, William L. 
Wright and Thomas G. Lindgren, Assistant Attorneys General, for appellee. 
 
Vorys, Sater, Seymour & Pease, L.L.P., M. Howard Petricoff and Jason J. 
Kelroy, urging affirmance for amicus curiae Enron Energy Services, Inc. 
 
Vorys, Sater, Seymour & Pease, L.L.P., and Jason J. Kelroy, urging 
affirmance for amicus curiae Ohio Building Owners and Managers Association. 
 
Bell, Royer & Sanders Co., L.P.A., and Barth E. Royer, urging affirmance 
for amicus curiae Simon Property Group, Inc. 
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