Case Title: In re Application of Columbus S. Power Co.

Citation: 2011-Ohio-4129

Docket Number: 20101073

State: ohio

Court: Ohio Supreme Court

Date: 2011-08-24T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as In 
re Application of Columbus S. Power Co., Slip Opinion No. 2011-Ohio-4129.] 
 
 
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. 2011-Ohio-4129 
IN RE APPLICATION OF COLUMBUS SOUTHERN POWER COMPANY ET AL. TO 
ADJUST THEIR ECONOMIC DEVELOPMENT COST RECOVERY RIDER; 
INDUSTRIAL ENERGY USERS–OHIO, 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 Columbus S. Power Co.,  
Slip Opinion No. 2011-Ohio-4129.] 
Public utilities — Electricity rates — Recovery of losses from discounts — 
Carrying charges. 
(No. 2010-1073 — Submitted June 8, 2011 — Decided August 24, 2011.) 
APPEAL from the from the Public Utilities Commission, No. 10-154-EL-RDR. 
__________________ 
MCGEE BROWN, J. 
{¶ 1} In the case below, the Public Utilities Commission allowed the 
American Electric Power operating companies (“AEP”) to recover certain costs 
arising from a pair of discounted-rate arrangements.  Industrial Energy Users–
SUPREME COURT OF OHIO 
2 
 
Ohio (“IEU”) opposed AEP’s application and now appeals.  IEU fails to 
demonstrate reversible error, however, and we affirm. 
I. Factual and Procedural Background 
{¶ 2} As previously ordered by the commission, AEP had been 
providing service to a pair of manufacturing customers at discounted rates.1  
“[T]he difference between what AEP would have collected from [these 
customers] under its tariffs and what it actually collected, given the discount,” is 
called “delta revenue.”  In re Application of Columbus S. Power Co., ___ Ohio 
St.3d ___, 2011-Ohio-2638, ___ N.E.2d ___, ¶ 3.  AEP had been keeping track of 
this delta revenue and intending to collect it through a rate mechanism called “the 
economic development cost recovery rider.”  We will simply call it “the rider.” 
{¶ 3} In the case below, AEP filed an application seeking permission to 
collect its delta revenue through the rider.  This was actually the second time that 
AEP had filed such an application; its first request had been granted only a month 
earlier.  These quickly successive applications reflected the requirement that AEP 
“update[] and reconcile[]” the rider every six months.  Ohio Admin.Code 4901:1-
38-08(A)(5). 
{¶ 4} IEU opposed both requests, raising the same objections each time.  
In the first proceeding, the commission rejected IEU’s arguments.  IEU appealed 
that decision to this court, and the case was briefed; we never ruled on the dispute, 
however, because IEU dismissed its appeal before oral argument. 
{¶ 5} In the second proceeding (which is the case now on review), the 
commission again rejected IEU’s arguments, this time on the basis that it had 
already ruled against IEU in the first proceeding.  IEU again appealed.  It did not 
dismiss this appeal, but did choose to submit the case on the briefs, without oral 
argument.  AEP has intervened as an appellee. 
                                                 
1 We reviewed the commission’s approval of these arrangements in In re Application of Ormet 
Primary Aluminum Corp., 129 Ohio St.3d 9, 2011-Ohio-2377, 949 N.E.2d 991. 
January Term, 2011 
3 
 
II. Discussion 
{¶ 6} IEU initially raised four propositions of law but has since 
dismissed the first two.  For reasons discussed below, the remaining propositions 
lack merit. 
A. IEU Has Not Shown that the Commission Erred in 
Modifying the Phase-in of AEP’s Rates. 
{¶ 7} In its third proposition of law, IEU argues that the order unlawfully 
exempted the rider from the maximum increases permitted in AEP’s electric-
security-plan case.  IEU is referring to the commission’s decision in an earlier 
case to limit how much AEP could annually increase its customers’ bills; the 
commission acted under R.C. 4928.144, which permits the commission to 
“authorize any just and reasonable phase-in” of certain electric rates.  IEU attacks 
the decision to exempt the rider from the rate-increase limits on two grounds: 
procedurally, it asserts that the commission departed from precedent; 
substantively, it argues that the commission unreasonably increased rates.  Neither 
argument is persuasive. 
{¶ 8} As to the procedural argument, the order below did not violate the 
earlier, electric-security-plan order.  It is true, as IEU argues, that the earlier order 
did not exempt the rider from the rate-increase limits.  But the commission did not 
rule out further exemptions, and as a general rule, the commission has discretion 
to revisit earlier regulatory decisions and modify them prospectively.  See, e.g., 
Utility Serv. Partners, Inc. v. Pub. Util. Comm., 124 Ohio St.3d 284, 2009-Ohio-
6764, 921 N.E.2d 1038, ¶ 18 (“Modifying a regulatory scheme is not problematic 
in itself.  Agencies undoubtedly may change course, provided that the new 
regulatory course is permissible”); In re Application of Columbus S. Power Co., 
128 Ohio St.3d 512, 2011-Ohio-1788, 947 N.E.2d 655, ¶ 52.  IEU does not 
explain why the general rule should not apply here.  We fail to see any procedural 
error. 
SUPREME COURT OF OHIO 
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{¶ 9} That leads to IEU’s substantive argument, namely, that the 
commission erred by allowing current rates to become too high.  This argument 
also lacks merit. 
{¶ 10} The decision that IEU attacks is a discretionary one.  As noted, the 
commission’s power to limit annual rate increases, and thus phase in AEP’s rates, 
comes from R.C. 4928.144.  That law allows the commission to “authorize any 
just and reasonable phase-in” of electric-security-plan rates “as the commission 
considers necessary to ensure rate or price stability for consumers.”  (Emphasis 
added.)  While the end product must be “just and reasonable,” the emphasized 
language entrusts the details of any phase-in — how much should be collected 
now, how much later — to the commission’s discretion. 
{¶ 11} Discretionary 
decisions 
receive 
deferential 
review, 
Ohio 
Consumers’ Counsel v. Pub. Util. Comm., 117 Ohio St.3d 289, 2008-Ohio-860, 
883 N.E.2d 1025, ¶ 10, and IEU has not shown an abuse of discretion.  Its 
complaint concerns a pure matter of timing — should customers pay the rider 
now or later?  If later, the law requires that carrying charges (a kind of financing 
charge) be added to the deferred rates.  R.C. 4928.144.  IEU points to no 
legislative command that addresses the specifics of such a timing question, and 
the absence of statutory criteria leaves us ill-equipped to second-guess the 
commission’s discretionary determinations.  IEU’s sense that current rates are 
high enough and its preference to pay the rider (plus carrying charges) later are 
not enough to upset the order. 
{¶ 12} For the foregoing reasons, we reject IEU’s third proposition of law. 
B. IEU Has Not Shown that the Commission Erred in 
Calculating AEP’s Carrying Charges. 
{¶ 13} In its fourth proposition of law, IEU argues that the commission 
erred in allowing AEP to use a long-term debt rate (as opposed to a short-term 
January Term, 2011 
5 
 
rate) to calculate certain carrying charges.  Again, however, IEU has not 
demonstrated reversible error. 
{¶ 14} IEU has preserved for appeal only a single argument concerning 
the calculation of AEP’s carrying charges.  In its application for rehearing, IEU 
alleged that the commission had “repeated[ly] fail[ed] to at least inquire as to 
whether a lower carrying cost rate could be utilized.”  (Emphasis added.)  
“Customers,” IEU asserted, “deserve at least some analysis or other review” of 
the carrying-cost issue.  IEU raised no other argument. 
{¶ 15} So far as IEU’s rehearing application explained, the commission 
would have fully satisfied IEU’s concerns if it “inquired” or provided “some 
analysis or other review” of the carrying-cost issue.  But the commission did 
“inquire” and provide “some analysis” of that issue: it had reviewed that issue in 
the preceding rider case.2  And in the order below, the commission explained that 
very fact in response to IEU’s objection.  IEU did not reply with any additional 
challenges.  In short, IEU argued only that the commission needed to make an 
inquiry, and the commission pointed out where it had made that inquiry.  The 
commission fully answered IEU’s concern. 
{¶ 16} IEU’s remaining argument — that the commission failed to 
explain the reasons for its decision — is forfeited.  We have jurisdiction only over 
arguments raised on rehearing.  Ohio Consumers’ Counsel v. Pub. Util. Comm., 
114 Ohio St.3d 340, 2007-Ohio-4276, 872 N.E.2d 269, ¶ 40.  IEU did not argue 
on rehearing that the commission had failed to explain itself, so we cannot 
consider the alleged error. 
{¶ 17} IEU’s fourth proposition of law is rejected. 
III. Conclusion 
{¶ 18} For the foregoing reasons, we affirm. 
                                                 
2 That order is not before us, and we offer no opinion on its merits. 
SUPREME COURT OF OHIO 
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Order affirmed. 
O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL, 
LANZINGER, and CUPP, JJ., concur. 
__________________ 
McNees, Wallace & Nurick, L.L.C., Samuel C. Randazzo, and Joseph E. 
Oliker, for appellant. 
Michael DeWine, Attorney General, and William L. Wright, Thomas W. 
McNamee, Thomas G. Lindgren, and Werner L. Margard III, Assistant Attorneys 
General, for appellee, Public Utilities Commission of Ohio. 
Steven T. Nourse and Matthew J. Satterwhite, for intervening appellees, 
Columbus Southern Power Company and Ohio Power Company. 
______________________