Case Title: In re Application of Duke Energy Ohio, Inc., for Approval of its Fourth Amended Corporate Separation Plan

Citation: 2016-Ohio-7535

Docket Number: 2014-1651

State: ohio

Court: Ohio Supreme Court

Date: 2016-11-01T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as In 
re Application of Duke Energy Ohio, Inc., for Approval of its Fourth Amended Corporate 
Separation Plan, Slip Opinion No. 2016-Ohio-7535.] 
 
 
 
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. 2016-OHIO-7535 
IN RE APPLICATION OF DUKE ENERGY OHIO, INC., FOR APPROVAL OF ITS 
FOURTH AMENDED CORPORATE SEPARATION PLAN UNDER R.C. 4928.17 AND 
OHIO ADM.CODE 4901:11-37; INTERSTATE GAS SUPPLY, INC., APPELLANT; 
PUBLIC UTILITIES COMMISSION ET AL., APPELLEES. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as In re Application of Duke Energy Ohio, Inc., for Approval of 
its Fourth Amended Corporate Separation Plan, Slip Opinion No.  
2016-Ohio-7535.] 
Public utilities—R.C. 4928.17—Application to amend corporate separation 
plan—Public Utilities Commission violated R.C. 4903.09 by failing to 
sufficiently explain basis for its decision approving application—
Commission’s orders reversed and cause remanded. 
(No. 2014-1651—Submitted August 16, 2016—Decided November 1, 2016.) 
APPEAL from the Public Utilities Commission, Nos. 14-689-EL-UNC 
and 14-690-EL-ATA. 
_______________________ 
SUPREME COURT OF OHIO 
 
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O’NEILL, J. 
{¶ 1} Interstate Gas Supply, Inc. (“IGS”), a provider of competitive retail 
electric service, appeals as of right from orders of the Public Utilities Commission 
of Ohio authorizing Duke Energy Ohio, Inc. (“Duke”), to amend its corporate 
separation plan, thereby allowing Duke to engage in a new line of business: the 
offering of various nonelectric products and services to its customers.  IGS claims 
that the commission’s orders violate R.C. 4928.17, Ohio’s corporate-separation-
plan statute, and R.C. 4903.09, a general statute requiring the commission to file 
written opinions “setting forth the reasons prompting the decisions arrived at” in 
all contested cases. 
{¶ 2} We agree with IGS that the commission violated R.C. 4903.09 by 
failing to sufficiently explain the basis for its decision.  Accordingly, we reverse 
the commission’s orders and remand this case to the commission for further 
proceedings consistent with this opinion. 
I.  FACTUAL BACKGROUND AND PROCEDURAL HISTORY 
A.  History of deregulation and corporate separation 
{¶ 3} In 1999, the General Assembly restructured Ohio’s electric-utility 
industry to foster retail competition in the generation component of electric 
service.  Am.Sub.S.B. No. 3, 148 Ohio Laws, Part IV, 7962.  As we have 
repeatedly recognized, the legislature “altered the traditional rate-based regulation 
of electric utilities by requiring the three components of electric service—
generation, transmission, and distribution—to be separated.”  Indus. Energy 
Users–Ohio v. Pub. Util. Comm., 117 Ohio St.3d 486, 2008-Ohio-990, 885 
N.E.2d 195, ¶ 5; see, e.g., Elyria Foundry Co. v. Pub. Util. Comm., 114 Ohio 
St.3d 305, 2007-Ohio-4164, 871 N.E.2d 1176, ¶ 52.  Electric generation became 
an unregulated, competitive retail electric service, while electric distribution 
remained a regulated, noncompetitive service.  Indus. Energy Users–Ohio at ¶ 6.  
January Term, 2016 
 
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Electric utilities were required to unbundle the three components so that 
customers could evaluate offers from competitive generators. 
 
Unbundling of the service components also ensured that an 
electric utility would not subsidize the competitive generation 
portion of its business by allocating generation expenses to the 
regulated distribution service provided by the utility.  Conversely, 
it ensured that distribution service would not subsidize the 
generation portion of the business.  In short, each service 
component was required to stand on its own. 
 
Migden–Ostrander v. Pub. Util. Comm., 102 Ohio St.3d 451, 2004-Ohio-3924, 
812 N.E.2d 955, ¶ 4. 
{¶ 4} To that end, the General Assembly also prohibited electric utility 
companies from engaging in the businesses of supplying both noncompetitive and 
competitive retail electric service (e.g., distribution and generation)—or from 
engaging in the businesses of supplying noncompetitive retail electric service 
(e.g., distribution) and offering a nonelectric product or service—unless the utility 
implemented and operated under a commission-approved “corporate separation 
plan.”  R.C. 4928.17(A).  A utility’s corporate separation plan must provide, at a 
minimum, that the utility offer any competitive retail electric service or any 
nonelectric product or service “through a fully separated affiliate of the utility,” 
R.C. 4928.17(A)(1), unless the commission approves an alternative “functional” 
corporate separation plan under R.C. 4928.17(C), as explained more fully below. 
B.  The commission’s approval of Duke’s fourth amended corporate 
separation plan  
{¶ 5} The commission first approved a corporate separation plan for 
Cincinnati Gas & Electric Company, now known as Duke Energy Ohio, Inc., in 
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August 2000.  Over the next 11 years, the commission approved a series of 
amendments to the plan, mostly involving Duke’s initial requests to maintain—
and its eventual transfer of—its competitive generation assets. 
{¶ 6} In April 2014, Duke filed an application for approval of a fourth 
amended corporate separation plan, which, among other things, sought 
commission approval to commence offering nonelectric products and services to 
its customers.1  Duke’s proposed new business included such varied services as 
installing and performing maintenance on customer equipment, performing 
assessments of outage or voltage problems, making a generator available during 
construction, offering whole-house surge protection, and providing energy-
consumption-analysis reports. 
{¶ 7} IGS objected to Duke’s application, arguing that Ohio’s corporate-
separation-plan statute required Duke to offer competitive services through a fully 
separated affiliate.  Therefore, IGS argued that Duke—a regulated distribution 
utility—should not be permitted to offer products or services that were otherwise 
available in the marketplace from competitive suppliers. 
{¶ 8} In June 2014, the commission approved Duke’s application, 
although the commission also imposed a series of conditions on the utility, 
including conditions to prevent anticompetitive subsidies from flowing between 
Duke’s regulated and unregulated businesses.  After the commission denied IGS’s 
application for rehearing, IGS appealed to this court, and we granted Duke’s 
motion for leave to intervene as an appellee. 
II.  STANDARD OF REVIEW 
{¶ 9} “R.C. 4903.13 provides that a [commission] order shall be reversed, 
vacated, or modified by this court only when, upon consideration of the record, 
                                                 
1 The parties use a number of additional terms to describe these new offerings, including “special 
customer services,” “electric-related products or services,” “products or services other than retail 
electric service,” and “unregulated noncommodity services.”  For the sake of consistency, we refer 
to Duke’s proposed new business as the offering of “nonelectric products and services.” 
January Term, 2016 
 
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the court finds the order to be unlawful or unreasonable.”  Constellation 
NewEnergy, Inc. v. Pub. Util. Comm., 104 Ohio St.3d 530, 2004-Ohio-6767, 820 
N.E.2d 885, ¶ 50.  The court will not reverse or modify a commission decision as 
to questions of fact when the record contains sufficient probative evidence to 
show that the commission’s decision was not manifestly against the weight of the 
evidence and was not so clearly unsupported by the record as to show 
misapprehension, mistake, or willful disregard of duty.  Monongahela Power Co. 
v. Pub. Util. Comm., 104 Ohio St.3d 571, 2004-Ohio-6896, 820 N.E.2d 921, ¶ 29.  
The court, however, has “ ‘complete and independent power of review as to all 
questions of law’ in appeals from the commission.”  Ohio Consumers’ Counsel v. 
Pub. Util. Comm., 121 Ohio St.3d 362, 2009-Ohio-604, 904 N.E.2d 853, ¶ 13, 
quoting Ohio Edison Co. v. Pub. Util. Comm., 78 Ohio St.3d 466, 469, 678 
N.E.2d 922 (1997). 
III.  LAW AND ANALYSIS 
A.  The relevant statutory framework 
{¶ 10} Two statutes are relevant to this case:  R.C. 4928.17 and 4903.09. 
1.  R.C. 4928.17: the corporate-separation-plan statute 
{¶ 11} The parties disagree about how to interpret R.C. 4928.17(A), (C), 
and (D), and they also dispute which of those divisions of R.C. 4928.17—if any—
the commission relied on in reaching its decision.  R.C. 4928.17(A) sets forth the 
general rules for corporate separation plans and requires that beginning January 1, 
2001, 
 
no electric utility shall engage in this state, either directly or 
through an affiliate, in the businesses of supplying a 
noncompetitive retail electric service and supplying a competitive 
retail electric service, or in the businesses of supplying a 
noncompetitive retail electric service and supplying a product or 
SUPREME COURT OF OHIO 
 
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service other than retail electric service, unless the utility 
implements and operates under a corporate separation plan that is 
approved by the public utilities commission under this section, is 
consistent with the policy specified in section 4928.02 of the 
Revised Code, and achieves all of the following:  
(1) The plan provides, at minimum, for the provision of the 
competitive retail electric service or the nonelectric product or 
service through a fully separated affiliate of the utility * * *. 
 
{¶ 12} Thus, R.C. 4928.17(A) prohibits an electric utility from engaging 
in the businesses of supplying noncompetitive retail electric service and either 
supplying competitive retail electric service or offering nonelectric products and 
services unless the utility operates under a commission-approved corporate 
separation plan.  Further, that plan must require, at a minimum, that the utility 
provide any competitive retail electric service or nonelectric products and services 
through a fully separated affiliate. 
{¶ 13} R.C. 4928.17(C), however, provides an exception: 
 
[F]or good cause shown, the commission may issue an order 
approving or modifying and approving a corporate separation plan 
under this section that does not comply with division (A)(1) of this 
section but complies with such functional separation requirements 
as the commission authorizes to apply for an interim period 
prescribed in the order, upon a finding that such alternative plan 
will provide for ongoing compliance with the policy specified in 
section 4928.02 of the Revised Code. 
 
January Term, 2016 
 
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{¶ 14} R.C. 4928.17(C) authorizes the commission to approve an interim, 
alternative “functional” corporate separation plan—even if the plan does not 
otherwise provide for the separation of the utility’s competitive and 
noncompetitive businesses—as long as the commission makes certain findings, 
including “good cause.” 
{¶ 15} Finally, R.C. 4928.17(D) addresses requests to amend a corporate 
separation plan: 
 
Any party may seek an amendment to a corporate 
separation plan approved under this section, and the commission, 
pursuant to a request from any party or on its own initiative, may 
order as it considers necessary the filing of an amended corporate 
separation plan to reflect changed circumstances. 
 
2.  R.C. 4903.09: the reasoning-statement-requirement statute 
{¶ 16} R.C. 4903.09 applies to all contested commission cases and 
requires the commission to file “findings of fact and written opinions setting forth 
the reasons prompting the decisions arrived at, based upon said findings of fact.”  
As we have previously explained, “[t]he purpose of R.C. 4903.09 is to provide the 
court with sufficient details to enable it to determine how the commission reached 
its decision.”  Allnet Communications Servs., Inc. v. Pub. Util. Comm., 70 Ohio 
St.3d 202, 209, 638 N.E.2d 516 (1994). 
B.  Summary of the parties’ arguments 
{¶ 17} IGS primarily argues that the commission’s orders violate R.C. 
4928.17(A) because the commission authorized Duke—rather than one of its 
affiliates—to engage in the unregulated, competitive business of selling 
nonelectric products or services without otherwise approving Duke’s plan as an 
SUPREME COURT OF OHIO 
 
8
alternative functional corporate separation plan under R.C. 4928.17(C).2  Further, 
IGS asserts that even if the commission had approved Duke’s application under 
R.C. 4928.17(C), the record did not establish that Duke met the statutory 
conditions for a functional corporate separation plan.  Finally, IGS argues that the 
commission’s orders also violate R.C. 4903.09, because the commission failed to 
sufficiently explain how Duke’s amended plan complied with the corporate-
separation-plan requirements in R.C. 4928.17(A) or (C). 
{¶ 18} In response, the commission and Duke primarily argue that the 
commission approved Duke’s application under R.C. 4928.17(D), which concerns 
amendments to previously approved corporate separation plans.  Alternatively, the 
commission and Duke assert that Duke’s plan also satisfied the statutory 
conditions for approval as a functional corporate separation plan under R.C. 
4928.17(C). 
C.  The commission’s orders violated R.C. 4903.09 
{¶ 19} We conclude that IGS has established a violation of R.C. 4903.09.  
For an appellant to prevail under that statute, the party must show at least three 
things:  “first, that the commission initially failed to explain a material matter; 
second, that [the appellant] brought that failure to the commission’s attention 
through an application for rehearing; and third, that the commission still failed to 
explain itself.”  In re Application of Columbus S. Power Co., 128 Ohio St.3d 512, 
2011-Ohio-1788, 947 N.E.2d 655, ¶ 71.  Here, the commission failed to explain a 
material matter—i.e., how Duke’s fourth amended corporate separation plan 
complied with the specific terms of R.C. 4928.17—despite numerous requests 
from IGS asking it to do so. 
                                                 
2 Throughout its merit brief, IGS characterizes the authorization of an alternative functional 
corporate separation plan under R.C. 4928.17(C) as the granting of a “waiver” by the commission.  
The word “waiver,” however, does not appear in R.C. 4928.17. 
January Term, 2016 
 
9
{¶ 20} Specifically, in IGS’s initial objections to Duke’s fourth amended 
plan, IGS argued that if Duke intended to engage in a new unregulated business, 
R.C. 4928.17(A) required that it do so through a fully separated affiliate, unless 
the commission approved the plan under R.C. 4928.17(C).  In its finding and 
order, the commission acknowledged IGS’s argument but did not specifically 
address it.  The commission merely stated that there was “no substantiated reason, 
at this time, to find that the proposed revisions to the plan are not in compliance 
with state policy or the Commission’s corporate separation rules.” 
{¶ 21} IGS repeated the argument in its application for rehearing.  But in 
its rehearing entry, the commission again failed to explain how Duke’s fourth 
amended plan actually complied with the relevant provisions in R.C. 4928.17.  
Instead, the commission stated: 
 
Contrary to the assertions of IGS * * *, our decision fully adheres 
with all statutory requirements.  * * * We are cognizant of the 
requirements set forth in the statute regarding corporate separation 
and our approval of the application in these cases affords Duke the 
requisite authority needed to implement its revised corporate 
separation plan, subject to the requirements set forth in the Order. 
 
{¶ 22} Without more explanation, the commission’s reasoning is not 
discernible.  Duke requested approval to engage in the unregulated, competitive 
business of selling nonelectric products and services, which is prohibited under 
R.C. 4928.17(A)(1) unless Duke offers the services through a fully separated 
affiliate or the commission approves an alternative functional corporate separation 
plan under R.C. 4928.17(C).  The commission’s orders summarily concluded that 
Duke’s application is consistent with state policy and corporate-separation-plan 
SUPREME COURT OF OHIO 
 
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rules, but the commission never explained how Duke’s fourth amended plan 
complied with the plain language in R.C. 4928.17(A) or (C). 
{¶ 23} This court has long held that when “the commission has not set 
forth in its order its reasons in sufficient detail to enable the Supreme Court, upon 
appeal, to determine how the commission reached its decision, the order will be 
set aside.”  Gen. Tel. Co. v. Pub. Util. Comm., 30 Ohio St.2d 271, 277, 285 
N.E.2d 34 (1972); see also Ohio Consumers’ Counsel v. Pub. Util. Comm., 111 
Ohio St.3d 300, 2006-Ohio-5789, 856 N.E.2d 213, ¶ 35 (“The commission’s 
reasoning and the factual basis supporting the modifications on rehearing must be 
discernible from its orders”).  Given the different avenues toward compliance in 
R.C. 4928.17, the commission’s conclusory statement that Duke’s plan was “in 
compliance with state policy [and] the Commission’s corporate separation rules” 
was insufficient to enable us to determine how it reached its decision. 
{¶ 24} Further, we cannot accept appellate counsel’s post hoc 
rationalizations purporting to explain why Duke’s amended plan complied with 
R.C. 4928.17(C) or (D).  In their filings in this court, counsel for the commission 
and for Duke primarily argue that the commission approved Duke’s application 
under R.C. 4928.17(D), which they argue gives the commission broad latitude to 
approve any amendment to a previously approved corporate separation plan.  But 
the commission’s underlying orders failed to cite R.C. 4928.17(D)—let alone to 
identify that provision as authority for its decision.  Waiting until appellate 
briefing to explain the basis or authority for a commission decision does not 
satisfy R.C. 4903.09.  Indeed, the United States Supreme Court has noted that it 
typically “will not uphold a discretionary agency decision where the agency has 
offered a justification in court different from what it provided in its opinion.”  
Morgan Stanley Capital Group Inc. v. Pub. Util. Dist. No. 1 of Snohomish Cty., 
Washington, 554 U.S. 527, 544, 128 S.Ct. 2733, 171 L.Ed.2d 607 (2008).  If the 
commission approved Duke’s application under R.C. 4928.17(D), it should have 
January Term, 2016 
 
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said so in its orders and should have explained how that specific provision 
authorized Duke’s amended plan. 
{¶ 25} Similarly, the commission’s orders do not indicate that it made the 
necessary findings for approval of Duke’s application as an alternative functional 
corporate separation plan under R.C. 4928.17(C).  For example, the commission 
argues on appeal that “good cause” existed to approve Duke’s amended plan 
under R.C. 4928.17(C) because the commission imposed conditions that defined 
the parameters by which Duke could offer the new nonelectric products and 
services.  But nowhere in the commission’s orders does it identify those 
conditions as the “good cause” for approving a “functional” corporate separation 
plan. 
{¶ 26} Additionally, the commission argues in its brief that Duke’s plan 
was approved on an “interim” basis and that it is not permanent because it “is 
subject to termination by the Commission, at any time, for any misstep.”  The 
word “interim” is defined as “a time intervening,” “a provisional decision or 
arrangement,” or “in the meantime.”  Webster’s Third New International 
Dictionary 1179 (1993).  The commission’s orders essentially authorize Duke to 
sell nonelectric products and services indefinitely, as long as Duke complies with 
the conditions imposed in the commission’s orders.  Under any definition, that is 
not an “interim” corporate separation plan.  We do not accept the commission’s 
counsel’s attempt to recast the commission’s decision to be something that it is 
not.  If the commission approved Duke’s amended plan under R.C. 4928.17(C), 
the commission should have made the necessary findings required by that 
provision. 
D.  The appropriate remedy 
{¶ 27} As a remedy, IGS requests that we instruct the commission to order 
Duke to amend its corporate separation plan to require that it provide any 
nonelectric products or services through a fully separated affiliate.  Although we 
SUPREME COURT OF OHIO 
 
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are admittedly skeptical as to how the commission could approve Duke’s 
amended plan under R.C. 4928.17(C) or (D) based on the record before us, we are 
also cognizant that the General Assembly has given the commission substantial 
discretion in approving an alternative functional corporate separation plan or an 
amended corporate separation plan under those provisions.  See, e.g., Ohio 
Consumers’ Counsel, 111 Ohio St.3d 300, 2006-Ohio-5789, 856 N.E.2d 213, at 
¶ 72, quoting R.C. 4928.17(C) (“The commission has discretion to approve an 
alternative functional corporate separation plan for an interim period upon a 
determination of ‘good cause’ ”); id. at ¶ 74 (“Under R.C. 4928.17(C), the 
commission’s discretion is limited only by the ‘good cause’ standard and the 
requirement that the commission find that ‘such alternative plan will provide for 
ongoing compliance with the policy specified in’ R.C. 4928.02”). 
{¶ 28} Given that discretion, we are reluctant to resolve the meaning of 
disputed language in R.C. 4928.17(C) or (D) or to make findings under those 
provisions when the provisions were not first addressed by the commission in the 
proceedings below—especially considering our history of relying on the agency’s 
administrative construction of its own statutes.  Accordingly, remanding this case 
to the commission with instructions to fully explain the basis for its decisions 
under the relevant provisions of R.C. 4928.17 is the appropriate remedy. 
IV.  CONCLUSION 
{¶ 29} For the reasons explained above, the commission violated R.C. 
4903.09.  We reverse, and we remand this case to the commission with 
instructions to fully address IGS’s statutory arguments, to issue findings that 
thoroughly explain how—if at all—Duke’s application complies with the specific 
relevant provisions in R.C. 4928.17, and to identify the evidence that the 
commission considered to support its decision. 
Orders reversed 
and cause remanded. 
January Term, 2016 
 
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O’CONNOR, C.J., and LANZINGER and FRENCH, JJ., concur. 
O’DONNELL, J., concurs in part and dissents in part, with an opinion. 
KENNEDY, J., concurs in part and dissents in part, with an opinion joined 
by PFEIFER, J. 
_________________ 
O’DONNELL, J., concurring in part and dissenting in part. 
{¶ 30} Although I concur in the majority’s determination that the Public 
Utilities Commission of Ohio violated R.C. 4903.09 by failing to sufficiently 
explain the basis for its decision, I dissent from the decision to remand this case to 
the commission.  I would adhere to the Public Utilities Commission’s obligation 
to set forth the reasons for its decisions and to comply with the corporate 
separation plan statute by permitting Duke Energy Ohio, Inc. (“Duke”) to offer 
nonelectric products or services to its customers only through a fully separated 
affiliate. 
{¶ 31} R.C. 4928.17(A) states in pertinent part: 
 
[N]o electric utility shall engage in this state, either directly or 
through an affiliate, * * * in the businesses of supplying a 
noncompetitive retail electric service and supplying a product or 
service other than retail electric service, unless the utility 
implements and operates under a corporate separation plan that is 
approved by the public utilities commission under this section  
* * * and achieves all of the following: 
(1) The plan provides, at minimum, for the provision of 
* * * the nonelectric product or service through a fully separated 
affiliate of the utility * * *. 
 
SUPREME COURT OF OHIO 
 
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{¶ 32} In accordance with the statute, I would issue an order directing 
Duke to amend its corporate separation plan to require that it provide nonelectric 
products or services to its customers through a fully separated affiliate of the 
utility. 
_________________ 
 
KENNEDY, J., concurring in part and dissenting in part. 
{¶ 33} The orders of the Public Utilities Commission of Ohio 
(“commission”) authorizing Duke Energy Ohio, Inc. (“Duke”), to amend its 
corporate separation plan to permit Duke to engage in a new line of business—the 
offering of various nonelectric products and services to its customers—violate 
R.C. 4928.17, Ohio’s corporate-separation-plan statute, and the public policy 
announced by the General Assembly in R.C. 4928.02.  Although I agree with the 
majority that the commission’s orders cannot be affirmed, I disagree with the 
majority’s reasoning and with the terms of the majority’s remand to the 
commission.  Therefore, I respectfully dissent in part. 
{¶ 34} The wording of R.C. 4928.17(C) makes clear that the intention of 
the General Assembly, as codified in the statutes at issue in this case, was to aid 
an incumbent electric utility in phasing in the requirements of electricity 
deregulation by providing a process for unbundling competitive and 
noncompetitive retail electric services over a period of time.  It was not the 
intention of the General Assembly to permit a business that supplies 
noncompetitive retail electric services to, in effect, “rebundle” in order to provide 
new nonelectric products and services that are required to be offered through a 
fully separate affiliate.  Accordingly, I would reverse the commission’s orders and 
remand the case to the commission with instructions to proceed in a manner 
consistent with the reasoning stated in this opinion. 
{¶ 35} In 2011, the commission allowed Duke to amend its “functional” 
corporate separation plan so that it could have until the end of 2014 to transfer its 
January Term, 2016 
 
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generating assets.  The commission noted in that order that when Duke finally 
transferred its generating assets, it would achieve “full legal corporate 
separation.”  In re Application of Duke Energy Ohio, Inc., for Auth. to Establish a 
Standard Serv. Offer Pursuant to Section 4928.143, Revised Code, in the Form of 
an Elec. Sec. Plan, Accounting Modifications, & Tariffs for Generation Serv., 
Pub. Util. Comm. Nos. 11-3549-EL-SSO, 11-3550-EL-ATA, and 11-3551-EL-
UNC, at 45 (Nov. 22, 2011).  Nevertheless, in April 2014, Duke filed an 
application for approval of a fourth amended corporate separation plan, seeking 
to, among other things, engage in a potential new line of business:  the provision 
of nonelectric products and services.  At issue in this case is whether the 
commission is authorized, pursuant to R.C. 4928.02 and 4928.17, to issue an 
order approving Duke’s amendment to its corporate separation plan to allow Duke 
to begin rebundling services by offering various nonelectric products and services 
to its customers. 
{¶ 36} “The ultimate inquiry in the interpretation of statutes is to ascertain 
the legislative intent.”  Caldwell v. State, 115 Ohio St. 458, 466, 154 N.E. 792 
(1926).  One of the cardinal rules of statutory construction is that we must first 
examine the language of the statute itself.  Provident Bank v. Wood, 36 Ohio St.2d 
101, 105, 304 N.E.2d 378 (1973).  “ ‘[I]f the words [are] free from ambiguity and 
doubt, and express plainly, clearly, and distinctly the sense of the lawmaking 
body, there is no occasion to resort to other means of interpretation.’ ”  Risner v. 
Ohio Dept. of Natural Resources, Ohio Div. of Wildlife, 144 Ohio St.3d 278, 
2015-Ohio-3731, 42 N.E.3d 718, ¶ 12, quoting Slingluff v. Weaver, 66 Ohio St. 
621, 64 N.E. 574 (1902), paragraph two of the syllabus.  The court must give 
effect to the words used, making neither additions nor deletions from words 
chosen by the General Assembly.  Columbia Gas Transm. Corp. v. Levin, 117 
Ohio St.3d 122, 2008-Ohio-511, 882 N.E.2d 400, ¶ 19, citing Cline v. Ohio Bur. 
of Motor Vehicles, 61 Ohio St.3d 93, 97, 573 N.E.2d 77 (1991). 
SUPREME COURT OF OHIO 
 
16 
{¶ 37} “ ‘[T]he General Assembly is not presumed to do a vain or useless 
thing, and * * * when language is inserted in a statute it is inserted to accomplish 
some definite purpose.’ ”  State v. Wilson, 77 Ohio St.3d 334, 336, 673 N.E.2d 
1347 (1997), quoting State ex rel. Cleveland Elec. Illum. Co. v. Euclid, 169 Ohio 
St. 476, 479, 159 N.E.2d 756 (1959).  When reviewing a statute, we cannot  
“ ‘pick out one sentence and disassociate it from the context,’ ” but we instead 
must look at “ ‘the four corners of the enactment’ ” to determine the intent of the 
legislature.  MacDonald v. Bernard, 1 Ohio St.3d 85, 89, 438 N.E.2d 410 (1982), 
quoting Black-Clawson Co. v. Evatt, 139 Ohio St. 100, 104, 38 N.E.2d 403 
(1941). 
{¶ 38} R.C. 4928.02 and 4928.17 were enacted by the General Assembly 
in 1999 in Am.Sub.S.B. No. 3 (“S.B. 3”), 148 Ohio Laws, Part IV, 7962; id. at 
7998-7999, 8018-8020.  S.B. 3 “restructured Ohio’s electric-utility industry to 
foster retail competition in the generation component of electric service.”  Indus. 
Energy Users–Ohio v. Pub. Util. Comm., 117 Ohio St.3d 486, 2008-Ohio-990, 
885 N.E.2d 195, ¶ 5.  It also “altered the traditional rate-based regulation of 
electric utilities by requiring the three components of electric service—generation, 
transmission, and distribution—to be separated.”  Id., citing Migden–Ostrander v. 
Pub. Util. Comm., 102 Ohio St.3d 451, 2004-Ohio-3924, 812 N.E.2d 955, ¶ 3-4. 
{¶ 39} R.C. 4928.17(A) mandates that unless an electric utility operates 
under a corporate separation plan (“plan”) approved by the commission, the utility 
is prohibited from engaging in the business of supplying noncompetitive electric 
service and supplying either competitive retail electric service or a product or 
service other than electric service.  R.C. 4928.17(A) states that the plan must be 
“consistent with the policy specified in” R.C. 4928.02.  The plan also must 
“provide[], at minimum, for the provision of the competitive retail electric service 
or the nonelectric product or service through a fully separated affiliate of the 
utility * * *.”  R.C. 4928.17(A)(1).  Accordingly, the General Assembly 
January Term, 2016 
 
17 
expressed the intent that a noncompetitive electric utility was to be solely in the 
business of supplying regulated distribution service. 
{¶ 40} R.C. 4928.17(C) provides that the commission is able to approve 
(or to modify and approve) a plan upon finding both “that the plan reasonably 
complies with the requirements of division (A) of this section and will provide for 
ongoing compliance with the policy specified in” R.C. 4928.02.  However, when 
a plan does not comply with R.C. 4928.17(A)(1), for good cause shown, the 
commission may issue an order approving (or modifying and approving) the plan 
if the plan 
 
complies with such functional separation requirements as the 
commission authorizes to apply for an interim period prescribed in 
the order, upon a finding that such alternative plan will provide for 
ongoing compliance with the policy specified in section 4928.02 of 
the Revised Code. 
 
R.C. 4928.17(C). 
{¶ 41} The majority states that R.C. 4928.17(C) sets forth an “exception” 
to R.C. 4928.17(A), majority opinion at ¶ 13, but the majority’s approach does 
not adequately appreciate the substantial limitations that are inherent in R.C. 
4928.17(C).  In enacting R.C. 4928.17(C), the General Assembly recognized that 
the process of unbundling the three components of electric service and achieving 
compliance with R.C. 4928.17(A) would take time.  Accordingly, the statutory 
language used by the General Assembly reveals that R.C. 4928.17(C) provides for 
temporary noncompliance with R.C. 4928.17(A) only while the utility works 
toward full compliance with R.C. 4928.17(A).  This is not a broad exception to 
R.C. 4928.17(A); it is a narrow authorization to deviate in a very limited way 
from the requirements of that provision. 
SUPREME COURT OF OHIO 
 
18 
{¶ 42} In R.C. 4928.17(A), the General Assembly set forth the exceptions 
to the requirements of that statute.  Specifically, R.C. 4928.17(A) begins, “Except 
as otherwise provided in sections 4928.142 or 4928.143 or 4928.31 to 4928.40 of 
the Revised Code * * *.”  This language signals that R.C. 4928.17(A) is not 
absolute; it yields to those specifically listed statutes when appropriate.  See State 
v. Evans, 102 Ohio St.3d 240, 2004-Ohio-2659, 809 N.E.2d 11, ¶ 15.  Moreover, 
the use of the “[e]xcept as otherwise provided in” language in R.C. 4928.17(A) 
indicates that the General Assembly has deliberately chosen to qualify the 
application of that statute in certain situations. 
{¶ 43} Absent from the General Assembly’s explicit statement of statutes 
that are not subject to the requirements of R.C. 4928.17(A) is R.C. 4928.17(C).  
R.C. 4928.17(A) contains no express wording stating “except as otherwise 
provided in division (C) of this section.”  The absence of language of this type 
cannot be discounted.  By failing to include R.C. 4928.17(C) among the stated 
exceptions, the General Assembly has chosen to provide that the requirements of 
R.C. 4928.17(A) should take precedence over the provisions of R.C. 4928.17(C), 
except in very limited circumstances.  Because the General Assembly could have 
included R.C. 4928.17(C) in the “[e]xcept as otherwise provided in” language but 
did not, “we will not add” those words “by judicial fiat.”  Hulsmeyer v. Hospice of 
Southwest Ohio, Inc., 142 Ohio St.3d 236, 2014-Ohio-5511, 29 N.E.3d 903, ¶ 26, 
citing In re Application of Columbus S. Power Co., 138 Ohio St.3d 448, 2014-
Ohio-462, 8 N.E.3d 863, ¶ 26 (“The court must give effect to the words used, 
making neither additions nor deletions from words chosen by the General 
Assembly.  * * *  Certainly, had the General Assembly intended to require that 
electric-distribution utilities prove that carrying costs were ‘necessary’ before 
they could be recovered, it would have chosen words to that effect”). 
{¶ 44} The language used by the General Assembly in R.C. 4928.17(C) 
reinforces this conclusion.  The authority granted to the commission in R.C. 
January Term, 2016 
 
19 
4928.17(C) to issue an order approving a plan that does not comply with R.C. 
4928.17(A)(1) is qualified and extremely narrow.  As relevant here, the plan must 
comply with such functional separation requirements as the commission 
authorizes to apply for an interim period only, and the plan must provide for 
ongoing compliance with the policy specified in R.C. 4928.02. 
{¶ 45} The General Assembly’s insertion of “interim” in R.C. 4928.17(C) 
was purposeful and must be given effect.  See Wilson, 77 Ohio St.3d at 336, 673 
N.E.2d 1347.  “Interim” is defined as “a provisional decision or arrangement.”  
Webster’s Third New International Dictionary 1179 (1993).  By using “interim,” 
the General Assembly expressed its intent that an order issued pursuant to R.C. 
4928.17(C) must be of a temporary, limited nature, to exist only during the period 
when the incumbent electric utility is working through the process of unbundling 
noncompetitive and competitive retail electric services in order to achieve full 
compliance with R.C. 4928.17(A). 
{¶ 46} Accordingly, R.C. 4928.17(C) does not permit a utility supplying a 
noncompetitive retail electric service to modify an approved plan in order to 
provide new nonelectric products and services with no intention of supplying the 
products and services through a fully separated affiliate of the utility.  To find 
otherwise fails to give effect to the General Assembly’s choice of the word 
“interim” in R.C. 4928.17(C) and allows the temporary reprieve permitting 
noncompliance to become so large that it swallows the rule set forth in R.C. 
4928.17(A). 
{¶ 47} Further, the requirement in R.C. 4928.17(C) that an “alternative 
plan * * * provide for ongoing compliance with the policy” stated in R.C. 4928.02 
supports the interpretation that R.C. 4928.17(C) merely allows for temporary 
noncompliance with R.C. 4928.17(A) to assist the utility during the phase-in 
period of deregulation.  R.C. 4928.02 provides in relevant part: 
 
SUPREME COURT OF OHIO 
 
20 
It is the policy of this state to do the following throughout 
this state: 
* * *  
(B) Ensure the availability of unbundled and comparable 
retail electric service that provides consumers with the supplier, 
price, terms, conditions, and quality options they elect to meet their 
respective needs; 
* * *  
(H) Ensure effective competition in the provision of retail 
electric service by avoiding anticompetitive subsidies flowing from 
a noncompetitive retail electric service to a competitive retail 
electric service or to a product or service other than retail electric 
service, and vice versa, including by prohibiting the recovery of 
any generation-related costs through distribution or transmission 
rates[.] 
 
{¶ 48} Therefore, any order issued pursuant to R.C. 4928.17(C) must be in 
harmony with these policies, working toward the ultimate goal of deregulation.  
To conclude that R.C. 4928.17(C) authorizes the commission to approve an order 
that permits Duke, a noncompetitive utility, to begin providing new nonelectric 
products and services is antithetical to the policies of deregulation espoused in 
R.C. 4928.02. 
{¶ 49} The intent of the General Assembly in enacting S.B. 3 was to 
deregulate the electric-utility market.  However, the General Assembly knew that 
it would take a period of time to accomplish this goal.  To that end, the General 
Assembly provided a vehicle by which the commission could temporarily approve 
a plan that did not require a noncompetitive electric utility to provide a 
competitive retail electric service through a fully separated affiliate of the utility 
January Term, 2016 
 
21 
while the phase-in period of deregulation was progressing.  The language of R.C. 
4928.02 and 4928.17 expresses this intent. 
{¶ 50} R.C. 4928.17(C) makes clear that the intention of the General 
Assembly was to aid an incumbent electric utility through the deregulation phase-
in period by providing a process for unbundling competitive and noncompetitive 
retail electric services over a limited amount of time.  It was not the intention of 
the General Assembly to permit a business that supplies noncompetitive retail 
electric services the opportunity to rebundle in order to provide new nonelectric 
products and services that are required to be offered through a fully separate 
affiliate.  Therefore, I would reverse the orders of the commission and remand 
this case to the commission with instructions to proceed in a manner consistent 
with this opinion. 
{¶ 51} Accordingly, I dissent in part. 
 
PFEIFER, J., concurs in the foregoing opinion. 
_________________ 
Joseph Oliker and Matthew White, for appellant. 
Michael DeWine, Attorney General, William L. Wright, Section Chief, 
and Thomas W. McNamee and Steven L. Beeler, Assistant Attorneys General, for 
appellee, Public Utilities Commission of Ohio. 
Amy B. Spiller and Jeanne W. Kingery, for intervening appellee, Duke 
Energy Ohio, Inc. 
_________________