Title: In re Review of Alternative Energy Rider Contained in Tariffs of Ohio Edison Co.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as In 
re Rev. of Alternative Energy Rider Contained in Tariffs of Ohio Edison Co., Slip Opinion No. 
2018-Ohio-229.] 
 
 
 
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. 2018-OHIO-229 
IN RE REVIEW OF THE ALTERNATIVE ENERGY RIDER CONTAINED IN THE 
TARIFFS OF OHIO EDISON COMPANY, CLEVELAND ELECTRIC ILLUMINATING 
COMPANY, AND TOLEDO EDISON COMPANY; OHIO EDISON COMPANY ET AL., 
APPELLANTS AND CROSS-APPELLEES; OFFICE OF OHIO CONSUMERS’ 
COUNSEL, APPELLEE AND CROSS-APPELLANT; ENVIRONMENTAL LAW AND 
POLICY CENTER, CROSS-APPELLANT; PUBLIC UTILITIES COMMISSION, 
APPELLEE AND CROSS-APPELLEE. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as In re Rev. of Alternative Energy Rider Contained in Tariffs of 
Ohio Edison Co., Slip Opinion No. 2018-Ohio-229.] 
Public utilities—R.C. 4928.64—Recovery by utility of costs to procure renewable-
energy resources—R.C. 4905.32—Rule against retroactive ratemaking— 
Public Utilities Commission’s disallowance of utility’s recovery of certain 
renewable-energy costs reversed—R.C. 1333.61(D)—Trade secrets—
Public Utilities Commission violated R.C. 4903.09 by failing to sufficiently 
explain basis for its finding that information regarding utility’s purchase 
SUPREME COURT OF OHIO 
 
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of renewable-energy resources derived independent economic value from 
not being generally known—Public Utilities Commission’s order affirmed 
in part and reversed in part and cause remanded. 
(No. 2013-2026—Submitted June 21, 2017—Decided January 16, 2018.) 
APPEAL and CROSS-APPEALS from the Public Utilities Commission, No. 
11-5201-EL-RDR. 
____________ 
 
O’NEILL, J. 
I.  SUMMARY 
{¶ 1} In the case below, the Public Utilities Commission ordered an audit 
to review renewable-energy-credit (“REC”) purchases made by the FirstEnergy 
companies (Ohio Edison Company, Cleveland Electric Illuminating Company, 
and Toledo Edison Company (collectively, “FirstEnergy”)) under FirstEnergy’s 
first electric-security plan (“ESP”).  After the audit hearing, the commission 
found that certain purchases were not prudent, and it ordered FirstEnergy to 
refund more than $43 million to ratepayers. 
{¶ 2} The commission also granted several motions for protective orders, 
granting trade-secret protection to certain information related to FirstEnergy’s 
purchase of RECs. 
{¶ 3} FirstEnergy filed an appeal in this court challenging the 
commission’s adoption of the part of the audit findings regarding the more than 
$43 million disallowance.  The Environmental Law and Policy Center (“ELPC”) 
filed a cross-appeal challenging the protective orders.  The Office of the Ohio 
Consumers’ Counsel (“OCC”) also cross-appealed, challenging the protective 
orders and the part of the commission’s decision approving the remainder of 
FirstEnergy’s renewable-energy costs. 
{¶ 4} After review, we find that the parties have demonstrated two 
commission errors, one on appeal and one on cross-appeal.  Therefore, we affirm 
January Term, 2018 
 
3
the commission’s order in part, reverse it in part, and remand the cause for further 
consideration. 
II.  FACTS AND PROCEDURAL BACKGROUND 
{¶ 5} R.C. 4928.64 requires electric-distribution utilities to generate a 
portion of the electricity supplied to retail customers from renewable-energy 
resources, such as solar and wind power.  Under an earlier version of the statute, 
electric utilities were required to purchase at least half of their renewable energy 
from in-state suppliers.1  See former R.C. 4928.64(B)(3), 2012 Am.Sub.S.B. No. 
315.  The law imposes annual goals or benchmarks that increase over time.  R.C. 
4928.64(B)(2).  If an electric utility does not meet its benchmarks, the 
commission must impose a compliance payment on the utility.  R.C. 
4928.64(C)(2). 
{¶ 6} Electric utilities may purchase such resources from suppliers 
through the procurement of RECs.  See R.C. 4928.645.  A REC is created for each 
megawatt hour of electricity generated by a renewable-energy resource.  Ohio 
Adm.Code 4901:1-10-01(Z).  Once electricity generated from a renewable-energy 
resource is delivered to the power grid, it becomes indistinguishable from 
electricity generated from traditional resources, such as coal or natural gas.  A 
REC (an acronym also used for “renewable energy certificate”) is a nontangible, 
tradable commodity that serves as a mechanism for utilities and regulators to track 
renewable-energy purchases.  See United States Environmental Protection 
Agency, 
Green 
Power 
Partnership, 
Renewable 
Energy 
Certificates, 
https://www.epa.gov/greenpower/renewable-energy-certificates-recs 
(accessed 
Jan. 11, 2018). 
{¶ 7} In 2009, the commission approved the first ESP for FirstEnergy.  As 
part of that ESP, the commission approved FirstEnergy’s plan to procure the 
                                                 
1 This requirement was eliminated in 2014 Am.Sub.S.B. No. 310, effective Sept. 12, 2014. 
SUPREME COURT OF OHIO 
 
4
necessary RECs from in-state and out-of-state suppliers for the period January 1, 
2009, through May 31, 2011.  The commission also approved a mechanism—an 
“Alternative Energy Resource Rider” (“Rider AER”)—for FirstEnergy to recover 
the costs associated with the REC-procurement plan.  See In re Application of 
Ohio Edison Co., Pub. Util. Comm. Nos. 08-935-EL-SSO, 09-21-EL-ATA, 09-
22-EL-AEM, and 09-23-EL-AAM, 2009 Ohio PUC LEXIS 279, *17-18 (Mar. 25, 
2009).  FirstEnergy then proceeded to request proposals, entertain and accept 
bids, and contract with various suppliers for the purchase of RECs in order to 
comply with R.C. 4928.64. 
{¶ 8} Utilities are generally entitled to recover from retail customers the 
costs for buying renewable energy to comply with statutory benchmarks.  See 
R.C. 4928.64(E).  In the order approving FirstEnergy’s first ESP, the commission 
approved a stipulation whereby FirstEnergy agreed that it would be able to 
recover “the prudently incurred costs” of its REC purchases under Rider AER.  
See 2009 Ohio PUC LEXIS 279 at *17. 
{¶ 9} The commission initiated the underlying case to review the prudence 
of FirstEnergy’s REC purchases from 2009 through 2011.  See Pub. Util. Comm. 
No. 11-5201-EL-RDR, 2013 Ohio PUC LEXIS 159, *3, *11 (Aug. 7, 2013).  The 
commission selected Exeter Associates, Inc. (“Exeter”), to conduct the 
management and performance portions of the audit.  Exeter filed its final audit 
report on Rider AER on August 15, 2012. 
{¶ 10} Following the audit hearing, the commission found that most of 
FirstEnergy’s purchases were prudent, but the commission found that FirstEnergy 
failed to act prudently in purchasing certain in-state, nonsolar RECs in August 
2010 to meet FirstEnergy’s renewable-energy benchmarks for 2011.  Id. at *61-
69.  As a result, the commission ordered FirstEnergy to credit customers’ bills in 
the amount of $43,362,796.50.  This amount was payable, with carrying costs, 
within 60 days of the commission’s final order.  Id. at *70, *86-87. 
January Term, 2018 
 
5
{¶ 11} Several parties filed applications for rehearing, and the commission 
ultimately issued an entry declining to rehear any aspect of its order.  
Commissioner Lynn Slaby dissented from that entry, stating: “Upon further 
consideration of this case, I would dissent from the majority.  I am convinced that 
[In re Application of] Columbus S. Power Co. * * *, 128 Ohio St.3d 512, 2011-
Ohio-1788 [947 N.E.2d 655], precludes us from refunding money to customers as 
the majority has done here.”  Pub. Util. Comm. No. 11-5201-EL-RDR at 39 (Dec. 
18, 2013). 
{¶ 12} FirstEnergy filed this appeal raising a number of challenges to the 
commission’s decision to disallow the more than $43 million in REC costs.  OCC 
and ELPC filed cross-appeals challenging the commission’s decisions to grant 
trade-secret status to certain information related to FirstEnergy’s REC purchases.  
OCC also challenges the commission’s finding that the majority of FirstEnergy’s 
purchases were prudent. 
{¶ 13} On February 10, 2014, we granted FirstEnergy’s motion to stay the 
commission’s refund order.  138 Ohio St.3d 1405, 2014-Ohio-429, 3 N.E.3d 207. 
III.  STANDARD OF REVIEW 
{¶ 14} Under R.C. 4903.13, this court will reverse, vacate, or modify an 
order of the commission only when, upon consideration of the record, 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.  
This court has “complete and independent power of review as to all questions of 
law” in appeals from the commission.  Ohio Edison Co. v. Pub. Util. Comm., 78 
Ohio St.3d 466, 469, 678 N.E.2d 922 (1997).  We will not reverse or modify a 
commission decision as to questions of fact when the record contains sufficient 
probative evidence to show that the decision 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.  Monongahela Power Co. 
SUPREME COURT OF OHIO 
 
6
v. Pub. Util. Comm., 104 Ohio St.3d 571, 2004-Ohio-6869, 820 N.E.2d 921, ¶ 29.  
The appellant bears the burden of demonstrating that the commission’s decision is 
against the manifest weight of the evidence or is clearly unsupported by the 
record.  Id. 
IV.  DISCUSSION 
A.  FirstEnergy’s Appeal 
1.  FirstEnergy’s Proposition of Law No. 1: Whether the commission engaged 
in unlawful retroactive ratemaking 
{¶ 15} FirstEnergy argues under its first proposition of law that the 
commission engaged in unlawful retroactive ratemaking when it ordered 
FirstEnergy to refund more than $43 million in REC costs.  FirstEnergy’s 
argument centers on the filed-rate doctrine, which provides that a utility may 
charge only the rates fixed by its current, commission-approved tariff, see R.C. 
4905.32; Keco Industries, Inc. v. Cincinnati & Suburban Bell Tel. Co., 166 Ohio 
St. 254, 257, 141 N.E.2d 465 (1957).  And though the commission has the power 
to invalidate a rate schedule and fix new rates, it may exercise this power 
prospectively only.  See Ohio Util. Co. v. Pub. Util. Comm., 58 Ohio St.2d 153, 
157-158, 389 N.E.2d 483 (1979).  The rule against retroactive ratemaking thus 
bars the commission from ordering a refund or otherwise adjusting current rates to 
make up for overcharges under previously recovered rates.  See In re Application 
of Columbus S. Power Co., 128 Ohio St.3d 512, 2011-Ohio-1788, 947 N.E.2d 
655, at ¶ 15-16.  Put most simply, “[t]he rule against retroactive rates * * * also 
prohibits refunds.”  Id. at ¶ 15. 
{¶ 16} The commission determined that under this court’s decision in 
River Gas Co. v. Pub. Util. Comm., 69 Ohio St.2d 509, 433 N.E.2d 568 (1982), 
disallowing REC costs under Rider AER does not constitute retroactive 
ratemaking.  2013 Ohio PUC LEXIS 159 at *69-70.  In disputing that conclusion, 
FirstEnergy maintains that because the commission had approved the rates 
January Term, 2018 
 
7
charged under FirstEnergy’s Rider AER tariff, this case is distinguishable from 
River Gas and the rule against retroactive ratemaking bars any refund or 
disallowance of REC costs already collected under these commission-approved 
rates. 
{¶ 17} River Gas involved the commission’s audit of a utility’s charges 
under a Uniform Purchased Gas Adjustment Clause (“UPGA”), which was 
adopted under R.C. 4905.302.  The UPGA contained a provision requiring that 
supplier refunds be taken into account in determining gas rates charged to 
customers.  After an audit, the commission ordered the utility to refund to 
ratepayers a supplier refund that related to rates charged before the UPGA went 
into effect but that the utility did not receive until after the UPGA became 
effective.  Id. at 509-511.  This court affirmed, concluding that the commission’s 
order did not violate the rule against retroactive ratemaking.  Id. at 512-514.  We 
held that because the variable rates charged under the UPGA were authorized by a 
“ ‘statutory plan which authorizes a utility to pass variable fuel costs directly to 
consumers,’ ” id. at 513, quoting Consumers’ Counsel v. Pub. Util. Comm., 57 
Ohio St.2d 78, 82-83, 386 N.E.2d 1343 (1979), the commission’s approval of the 
refund occurred pursuant to a process that did not constitute “ratemaking in its 
usual and customary sense,” id.  We agree with FirstEnergy that River Gas does 
not support the commission’s determination in this case. 
{¶ 18} In this case, the tariff language of Rider AER required FirstEnergy 
to request quarterly approval from the commission of the charges collected 
through the rider.  As indicated by the tariff sheets here, the requested rates were 
to go into effect one month after the stated filing dates “unless otherwise ordered 
by” the commission.  The record reflects that during the time period under review, 
FirstEnergy made these quarterly filings on behalf of its operating companies 
without objection from the commission and charged consumers pursuant to the 
filed tariff sheets.  Under R.C. 4905.32, a public utility must charge its consumers 
SUPREME COURT OF OHIO 
 
8
consistently with the rate set forth in the schedule “filed with the public utilities 
commission which is in effect at the time.”  (Emphasis added.)  Because 
FirstEnergy recovered REC costs under a “filed” rate schedule, the commission 
was prohibited from later ordering a disallowance or refund of those costs.  R.C. 
4905.32; Keco Industries, 166 Ohio St. at 257, 141 N.E.2d 465.  Notwithstanding 
that FirstEnergy was entitled to recover only “prudently incurred costs,” there can 
be no remedy in this case because the costs were already recovered.  We have 
recognized that application of the no-refund rule has been perceived as unfair and 
has even sometimes resulted in a windfall for a utility company.  See In re 
Application of Columbus S. Power Co., 128 Ohio St.3d 512, 2011-Ohio-1788, 
947 N.E.2d 655, at ¶ 15-17; In re Application of Columbus Southern Power Co., 
138 Ohio St.3d 448, 2014-Ohio-462, 8 N.E.3d 863, ¶ 56.  But we have also 
recognized that it is the statutory scheme that requires this result, and therefore, it 
is a matter for the General Assembly to remedy, not this court.  In re Application 
of Columbus Southern Power Co., 128 Ohio St.3d 512, 2011-Ohio-1788, 947 
N.E.2d 655, at ¶ 17. 
{¶ 19} FirstEnergy also asserts that the plain language of R.C. 4905.32 
bars any refund in this case because Rider AER did not specify a refund process.  
We agree.  R.C. 4905.32 provides that “[n]o public utility shall refund or remit 
directly or indirectly, any rate * * * or charge * * * except such as are specified in 
[its filed] schedule * * *.” 
{¶ 20} For the foregoing reasons, we find that the commission engaged in 
unlawful retroactive ratemaking when it ordered FirstEnergy to refund more than 
$43 million in previously recovered REC costs to ratepayers. 
2.  FirstEnergy’s Proposition of Law No. 2: Whether the commission’s order 
is against the manifest weight of the evidence 
{¶ 21} Under its second proposition of law, FirstEnergy challenges the 
commission’s finding that FirstEnergy’s management acted imprudently when it 
January Term, 2018 
 
9
decided to purchase certain of the 2011 RECs under the August 2010 request for 
proposals (“RFP”), as opposed to reserving some RECs to be purchased in 2011.  
FirstEnergy alternatively argues that even if the commission’s finding of 
imprudence is upheld, the amount of the disallowance—more than $43 million—
is unreasonable. 
{¶ 22} Our decision sustaining FirstEnergy’s retroactive-ratemaking 
arguments makes it unnecessary to decide these arguments.  Accordingly, we 
dismiss FirstEnergy’s second proposition of law as moot.  See In re Application of 
Columbus S. Power Co., 138 Ohio St.3d 448, 2014-Ohio-462, 8 N.E.3d 863, at 
¶ 39 (this court does not issue advisory opinions). 
3.  FirstEnergy’s Proposition of Law No. 3: Whether the commission 
unlawfully interpreted Ohio law 
{¶ 23} FirstEnergy argues under its third proposition of law that the 
commission incorrectly construed the 3 percent cost-cap provision in R.C. 
4928.64(C)(3) as mandatory.  FirstEnergy maintains that the plain language of the 
statute gives electric utilities discretion whether to invoke the cap.  But contrary to 
FirstEnergy’s argument, the commission made no such holding.  This proposition 
of law is therefore without merit. 
B.  The Cross-Appeals of OCC and ELPC 
1.  OCC’s Proposition of Law No. 1; ELPC’s Proposition of Law Nos. 1 and 2: 
Whether the commission erred in granting the motions for protective orders 
{¶ 24} On cross-appeal, OCC and ELPC both challenge the commission’s 
decision to grant trade-secret status to certain information related to FirstEnergy’s 
in-state REC purchases.  The information protected included REC-supplier 
information originally submitted during the competitive-bid auctions and the 
outcomes of those auctions, which was later included in Exeter’s audit report.  As 
will be discussed below, we find that the commission’s trade-secret determination 
lacks record support. 
SUPREME COURT OF OHIO 
 
10 
a.  Background on the commission’s trade-secret rulings 
{¶ 25} On August 15, 2012, the commission staff filed under seal a 
confidential version of Exeter’s audit report.  FirstEnergy had entered into 
confidentiality agreements with REC suppliers to prevent the disclosure of certain 
supplier and pricing information submitted during the competitive-bid REC 
auctions.  The confidential version of the audit report protected this information 
from public disclosure.  A public version that redacted this information was filed 
the same day. 
{¶ 26} Seven weeks later, on October 3, 2012, FirstEnergy filed its first 
motion for protective order.  In this motion, FirstEnergy sought an order to 
continue to protect from public disclosure the information designated as 
confidential during the competitive-bid process, specifically the identity of REC 
suppliers that participated in the auctions and their specific bid prices.  
FirstEnergy argued that this REC-procurement data was trade-secret information 
that, if disclosed, would harm FirstEnergy’s ability to conduct future auctions and 
compromise its ability to obtain competitive pricing in the REC market. 
{¶ 27} During a November 20, 2012 prehearing conference, an attorney 
examiner granted FirstEnergy’s motion, finding that the information sought to be 
protected qualified as trade secrets.  Specifically, the attorney examiner exempted 
from public disclosure (1) the identity of renewable-energy suppliers that bid 
during the REC auctions, (2) the number of RECs bid, and (3) each supplier’s bid 
prices.  The attorney examiner, however, did not issue a follow-up entry 
memorializing the decision made during the prehearing conference. 
{¶ 28} On December 31, 2012, FirstEnergy filed a second motion for 
protective order.  In this motion, FirstEnergy sought to protect from public 
disclosure certain “Confidential Draft Documents,” which consisted of 
FirstEnergy’s “unpublicized and confidential” comments to the prefiled draft of 
Exeter’s report.  According to FirstEnergy, these documents contained the same 
January Term, 2018 
 
11 
trade secrets as the unredacted, confidential version of Exeter’s report filed on 
August 15, 2012. 
{¶ 29} On February 14, 2013, a different attorney examiner issued an 
entry granting the second motion for protective order.  The attorney examiner 
found that the information was the same trade-secret information that was 
protected at the November 20, 2012 prehearing conference. 
{¶ 30} The commission affirmed the rulings of the attorney examiners on 
the motions with one exception.2  2013 Ohio PUC LEXIS 159 at *26-27.  The 
commission found that the attorney examiners’ rulings wrongly protected the 
identity of FirstEnergy Solutions Corporation—an affiliate of FirstEnergy—as a 
successful bidder in the competitive auctions.  According to the commission, the 
public version of Exeter’s report disclosed the fact that FirstEnergy Solutions had 
bid to sell RECs to FirstEnergy and this information had been widely 
disseminated to the public.  The commission also noted that its policy is to 
disclose the identities of winning bidders in competitive auctions within a 
reasonable time after auction results are announced to the public.  Id. at *27.  The 
commission, however, refused to disclose any specific information related to the 
bids of FirstEnergy Solutions, such as the quantity and price of its REC bids and 
whether specific bids were accepted by FirstEnergy.  Id. at *28. 
b.  Whether the commission’s trade-secret findings are supported by the record 
{¶ 31} OCC and ELPC argue that the commission erred when it found that 
certain REC-procurement information was entitled to trade-secret protection.  
R.C. 1333.61(D) defines “trade secret” as information that satisfies both of the 
following: 
                                                 
2 The commission also granted several other pending motions for protective orders.  These 
motions sought to protect the same supplier information that was already protected, and the 
commission granted these motions solely on the authority of its prior determination that the 
information qualified as trade secrets.  2013 Ohio PUC LEXIS 159 at *28-32.  Review of these 
rulings is not necessary to resolve the issues on appeal. 
SUPREME COURT OF OHIO 
 
12 
 
(1) It derives independent economic value, actual or 
potential, from not being generally known to, and not being readily 
ascertainable by proper means by, other persons who can obtain 
economic value from its disclosure or use. 
(2) It is the subject of efforts that are reasonable under the 
circumstances to maintain its secrecy. 
 
{¶ 32} Applying the trade-secret test set forth in R.C. 1333.61(D), the 
commission found “that the REC procurement data contains trade secret 
information.”  2013 Ohio PUC LEXIS 159 at *26. 
{¶ 33} In their first propositions of law, OCC and ELPC both contend that 
the record does not support the commission’s finding on the first prong of the test.  
OCC also challenges the commission’s finding on the second prong as against the 
manifest weight of the evidence.  For the reasons that follow, we find merit to 
cross-appellants’ 
challenge 
regarding 
the 
economic-value 
prong, 
R.C. 
1333.61(D)(1).  However, we reject OCC’s challenge regarding the reasonable-
efforts prong, R.C. 1333.61(D)(2). 
i.  The commission cited no evidence and offered no explanation to support its 
finding that the information derived independent economic value from not being 
generally known 
{¶ 34} OCC and ELPC both argue that the commission failed to cite 
evidence or offer an explanation in its order regarding how the sealed 
information—given its age and the changes in market conditions that have 
occurred over time—has retained its economic value in today’s market. 
{¶ 35} Whether information constitutes a trade secret is a question of fact.  
See State ex rel. Besser v. Ohio State Univ., 89 Ohio St.3d 396, 401, 732 N.E.2d 
373 (2000).  FirstEnergy had claimed that the REC-procurement data had 
January Term, 2018 
 
13 
independent economic value because its release would cause competitive harm to 
FirstEnergy and REC suppliers by revealing bidding strategies and valuations, 
thereby discouraging bidders from participating in future auctions.  Yet notably 
absent from the commission’s order is mention of any evidence supporting that 
FirstEnergy or the REC suppliers would be competitively harmed by the release 
of this information.  The attorney examiners’ rulings granting trade-secret 
protection are likewise devoid of any mention of this type of evidence. 
{¶ 36} Further, even if the order had mentioned supporting evidence, the 
commission (and the attorney examiners) failed to explain how this supplier 
information, if disclosed, would have impacted future REC auctions.  The 
commission’s order reflected that market conditions had undergone significant 
changes and development since the REC-procurement data was submitted during 
the competitive auctions.  Yet the commission never explained how this specific 
information retained independent economic value—particularly in relation to 
future auctions—in light of those changes in market conditions.  See Besser at 
401. 
{¶ 37} The commission added little to its analysis in its entry denying the 
parties’ applications for rehearing.  In relevant part, the commission stated that “if 
this trade secret information was public, it could discourage REC suppliers’ 
confidence in the market and impede the function of the REC market.”  Pub. Util. 
Comm. No. 11-5201-EL-RDR at 5 (Dec. 18, 2013).  But once again, the 
commission cited no evidence to support its finding. 
{¶ 38} The commission’s failure to cite evidence and offer a reasoned 
explanation for its findings violated R.C. 4903.09, which 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.”  Cross-appellants did 
all they needed to do to compel the commission to comply with this statute.  They 
argued that the attorney examiners’ protective orders lacked any mention of 
SUPREME COURT OF OHIO 
 
14 
supporting evidence and explanation of economic value, particularly in light of 
the age of the information being protected.  See 2013 Ohio PUC LEXIS 159 at 
*16-19.  And after the commission had summarily responded to those arguments 
in its initial order, OCC and ELPC complained in their applications for rehearing 
about the lack of any discussion of supporting evidence and the lack of an 
explanation of economic value.  The commission essentially repeated what it had 
said in its initial order and again offered no evidence in support or explanation of 
its trade-secret finding. 
{¶ 39} In sum, the commission’s violation of R.C. 4903.09 is clear.  While 
trade secrets may continue to be protected if the information retains some measure 
of value, the commission failed to show that to be the case here.  Therefore, we 
reverse the commission’s decision to grant trade-secret protection.  On remand, 
the commission must either cite evidence and explain its order or publicly 
disclose the information that has been protected. 
ii.  The commission did not err in finding that FirstEnergy took reasonable efforts 
to maintain the secrecy of the REC-procurement data 
{¶ 40} OCC also argues that the commission erred when it found that 
FirstEnergy took sufficient safeguards to protect the secrecy of REC-supplier 
identities and bid information.  We find that FirstEnergy took reasonable steps to 
maintain the secrecy of the REC-procurement data, as required by R.C. 
1333.61(D)(2). 
{¶ 41} Before the commission issued its initial opinion and order deciding 
the merits of this case, FirstEnergy filed eight different motions for protective 
orders.  FirstEnergy also had entered into protective agreements with REC 
suppliers and parties to the case.  And the publicly filed documents subject to 
protective orders were, with one exception, redacted to remove confidential 
information.  The exception was that the public version of Exeter’s audit report 
failed to redact FirstEnergy Solutions—an affiliate of FirstEnergy—as one of the 
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15 
suppliers that submitted bids.  As a result, the commission found that the identity 
of FirstEnergy Solutions as a winning bidder was no longer entitled to trade-secret 
protection.  See 2013 Ohio PUC LEXIS 159 at *27-28. 
{¶ 42} OCC argues that FirstEnergy’s inaction following the naming of 
FirstEnergy Solutions in Exeter’s report and the resulting dissemination of the 
identity of FirstEnergy Solutions to the public proves that FirstEnergy did not 
carry its burden under R.C. 1333.61(D)(2).  Information is entitled to trade-secret 
status “only if the information is not generally known or readily ascertainable to 
the public.”  State ex rel. Plain Dealer v. Ohio Dept. of Ins., 80 Ohio St.3d 513, 
529, 687 N.E.2d 661 (1997).  According to OCC, the fact that this information 
remained public for 49 days before FirstEnergy filed a motion for protective order 
undercuts any finding that FirstEnergy adequately guarded the secrecy of the 
REC-procurement data.  We disagree. 
{¶ 43} A partial disclosure of confidential information does not foreclose 
the possibility of a trade secret.  State ex rel. Perrea v. Cincinnati Pub. Schools, 
123 Ohio St.3d 410, 2009-Ohio-4762, 916 N.E.2d 1049, ¶ 29; State ex rel. Lucas 
Cty. Bd. of Commrs. v. Ohio Environmental Protection Agency, 88 Ohio St.3d 
166, 174, 724 N.E.2d 411 (2000).  There is nothing before us to suggest that the 
release of the identity of FirstEnergy Solutions opened the door to access other 
protected REC-procurement data.  Knowing that FirstEnergy Solutions was a 
winning bidder provided no insight into the identity of other bidders, their bid 
prices, or whether their bids were accepted by FirstEnergy.  Nor did the disclosure 
reveal other protected bid information specific to FirstEnergy Solutions, such as 
the price and quantity of REC bids and whether any were accepted.  In short, 
despite FirstEnergy’s delay in moving to protect certain information in the filed 
report, the commission did not err in finding that FirstEnergy complied with R.C. 
1333.61(D)(2).  Therefore, contrary to OCC’s assertion, we find that 
SUPREME COURT OF OHIO 
 
16 
FirstEnergy’s delay in seeking to protect the identity of a single REC bidder does 
not prove that FirstEnergy failed to safeguard its claimed trade secrets. 
iii.  OCC’s remaining attacks on the commission’s “reasonable efforts” finding 
lack merit 
{¶ 44} OCC points to two other instances in which FirstEnergy 
purportedly failed to protect trade-secret information as further evidence that 
FirstEnergy did not comply with R.C. 1333.61(D)(2).  According to OCC, the 
first instance involves FirstEnergy’s failure to protect from public disclosure 
unredacted information in Exeter’s audit report stating that FirstEnergy had 
purchased some RECs at prices that were “more than 15 times the price of the 
applicable forty-five dollar Alternative Compliance Payment.”  The second 
instance concerns certain information contained in the prefiled, draft version of 
Exeter’s audit report.  According to OCC, the commission had sealed a 
recommendation contained in the auditor’s draft report regarding the amount of 
REC costs that should be disallowed.  OCC maintains that FirstEnergy stood idle 
while the protected disallowed amount was publicly disclosed during the 
commission proceedings. 
{¶ 45} Contrary to OCC’s assertion, the record does not reflect that the 
commission granted trade-secret protection to either piece of information.  It 
follows that FirstEnergy cannot be faulted for failing to protect information that 
was never protected to begin with. 
{¶ 46} In the end, the commission correctly found that FirstEnergy had 
consistently sought confidential treatment of the REC-procurement data.  
Therefore, we reject OCC’s challenge under R.C. 1333.61(D)(2).  See 
Consumers’ Counsel v. Pub. Util. Comm., 121 Ohio St.3d 362, 2009-Ohio-604, 
904 N.E.2d 853, ¶ 29. 
January Term, 2018 
 
17 
c.  Whether the commission gave proper consideration to policies of open 
government 
{¶ 47} In its second proposition of law, ELPC argues that the commission 
failed to give proper consideration to R.C. 149.43, Ohio’s Public Records Act.  
According to ELPC, the public’s interest in knowing how FirstEnergy made REC 
purchases “far outweighs any speculative interest in keeping that information 
secret.”  Given our decision to reverse the commission’s determination regarding 
the trade-secret issue and to remand this case to the commission for further 
consideration of that issue, we find it unnecessary to determine whether the 
commission gave proper consideration to R.C. 149.43. 
2.  OCC’s Proposition of Law Nos. 2 and 3: Whether the commission erred 
when it presumed that FirstEnergy’s expenses were prudent and whether the 
commission misapplied the burden of proof 
{¶ 48} Our decision sustaining FirstEnergy’s retroactive-ratemaking 
arguments makes it unnecessary to consider OCC’s second and third propositions 
of law.  See In re Application of Columbus S. Power Co., 138 Ohio St.3d 448, 
2014-Ohio-462, 8 N.E.3d 863, at ¶ 39 (this court does not issue advisory 
opinions). 
V.  CONCLUSION 
{¶ 49} For the foregoing reasons, the commission’s order is affirmed in 
part and reversed in part and this cause is remanded for further consideration. 
Order affirmed in part 
and reversed in part, 
and cause remanded. 
O’CONNOR, C.J., and FISCHER, J., concur. 
KENNEDY, J., concurs, with an opinion joined by O’DONNELL and 
DEWINE, JJ. 
FRENCH, J., concurs in part and dissents in part, with an opinion. 
SUPREME COURT OF OHIO 
 
18 
_________________ 
 
KENNEDY, J., concurring. 
{¶ 50} I agree with the lead opinion’s resolution of the trade-secret issues 
and concur in reversing the order of the Public Utilities Commission and 
remanding the cause for further proceedings, consistent with the lead opinion, 
regarding those issues.  I also agree with the lead opinion that the commission 
engaged in unlawful retroactive ratemaking when it ordered the FirstEnergy 
companies (Ohio Edison Company, Cleveland Electric Illuminating Company, 
and Toledo Edison Company (collectively, “FirstEnergy”)) to refund previously 
recovered renewable-energy-credit (“REC”) costs to ratepayers and that the 
commission’s order should be reversed on that issue.  I write separately, however, 
because we need look no further than the language of the relevant statutes to 
determine that the commission engaged in unlawful retroactive ratemaking. 
{¶ 51} This case originates from the first electric security plan (“ESP”) 
FirstEnergy filed with the commission after the General Assembly enacted 2008 
Am.Sub.S.B. No. 221 (“S.B. 221”).3  In addition to establishing the framework 
for FirstEnergy’s ESP, S.B. 221 also required FirstEnergy to provide “a portion of 
the electricity supply required for its standard service offer” from “renewable 
energy resources.”  R.C. 4928.64(B)(1).  Among other measures, in order to 
comply with the renewable-energy provisions, an electric-distribution utility 
could purchase RECs.  See former R.C. 4928.65, as enacted in S.B. 221, now 
renumbered R.C. 4928.645 and modified. 
{¶ 52} Without citing a statute that gives the commission authority to 
issue a refund when that refund order is not contained in the tariff, the opinion 
                                                 
3 For a concise history of electricity deregulation and the statutory scheme enacted in S.B. 221, see 
In re Application of Columbus S. Power Co., 128 Ohio St.3d 512, 2011-Ohio-1788, 947 N.E.2d 
655, ¶ 2-6. 
January Term, 2018 
 
19 
concurring in part and dissenting in part nevertheless concludes that the 
commission did not engage in retroactive ratemaking in this case.  I disagree. 
{¶ 53} While the General Assembly in S.B. 221 enacted some new 
provisions regarding the ratemaking process for certain purposes, compare R.C. 
4928.143(B)(2)(a), (C), (E), and (F) with R.C. 4909.15, 4909.17, 4909.18, and 
4909.19, the General Assembly nevertheless specified that ESP distribution rates 
were subject to the traditional ratemaking requirements of an application before 
the commission, preapproval by the commission, and the filing of rates with the 
commission prior to collection.  And the General Assembly in S.B. 221 left 
untouched the filed-rate doctrine codified at R.C. 4905.32, which provides: 
 
 
No public utility shall charge, demand, exact, receive, or 
collect a different rate, rental, toll, or charge for any service 
rendered, or to be rendered, than that applicable to such service as 
specified in its schedule filed with the public utilities commission 
which is in effect at the time.  No public utility shall refund or 
remit directly or indirectly, any rate * * * or charge * * * except 
such as are specified in such schedule * * *. 
 
{¶ 54} In matters of statutory construction, “[w]here the language of a 
statute is plain and unambiguous * * * there is no occasion for resorting to rules 
of statutory interpretation.  An unambiguous statute is applied, not interpreted.”  
Sears v. Weimer, 143 Ohio St. 312, 55 N.E.2d 413 (1944), paragraph five of the 
syllabus.  The language of R.C. 4905.32 is plain and unambiguous. 
{¶ 55} In the past we have stated that “rates approved by and filed with the 
commission are the lawful rates,” In re Complaint of Pilkington N. Am., Inc., 145 
Ohio St.3d 125, 2015-Ohio-4797, 47 N.E.3d 786, ¶ 31, and that “the commission 
may not engage in retroactive rate-making,” Keco Industries, Inc. v. Cincinnati & 
SUPREME COURT OF OHIO 
 
20 
Suburban Bell Tel. Co., 166 Ohio St. 254, 257, 141 N.E.2d 465 (1957).  
Therefore, a utility has “no option but to collect the rates set by the commission 
and is clearly forbidden to refund any part of the rates so collected.”  Id.  
Moreover, while the commission has the authority to oversee rates, “the 
commission has the power to invalidate a rate schedule and fix new rates, [but] 
this ratemaking power is prospective only.”  In re Fuel Adjustment Clauses for 
Columbus S. Power Co. & Ohio Power Co., 140 Ohio St.3d 352, 2014-Ohio-
3764, 18 N.E.3d 1157, ¶ 28, citing Ohio Util. Co. v. Pub. Util. Comm., 58 Ohio 
St.2d 153, 157-158, 389 N.E.2d 483 (1979); see also Lucas Cty. Commrs. v. Pub. 
Util. Comm., 80 Ohio St.3d 344, 348, 686 N.E.2d 501 (1997). 
{¶ 56} FirstEnergy filed an application for a standard service offer 
(“SSO”), in the form of an ESP in accordance with R.C. 4928.143.  In re 
Application of Ohio Edison Co., Pub. Util. Comm. Nos. 08-935-EL-SSO, 09-21-
EL-ATA, 09-22-EL-AEM, and 09-23-EL-AAM, 2009 Ohio PUC LEXIS 279, *8-
9 (Mar. 25, 2009).  The commission issued an opinion and order that approved 
FirstEnergy’s proposed ESP with certain modifications.  Id. at *9.  Subsequently, 
FirstEnergy withdrew its application.  Id. 
{¶ 57} FirstEnergy then filed an amended application with an ESP that 
was stipulated to by both FirstEnergy and the commission.  Id. at *11.  The 
renewable-energy rider at issue here was approved by the commission as part of 
that stipulated ESP.  Id. at *17-18. 
{¶ 58} While I agree that under the terms of the stipulated ESP, 
FirstEnergy was permitted to recover only prudently incurred costs of purchasing 
RECs, the stipulated ESP, as finalized and approved by the commission, did not 
include a provision that REC costs that were not “prudently incurred” were 
refundable to ratepayers. 
January Term, 2018 
 
21 
{¶ 59} The concurring and dissenting opinion concludes that FirstEnergy 
forfeited any argument that the refund is prohibited by R.C. 4905.32.  However, I 
categorically reject that conclusion. 
{¶ 60} When an appellant raises grounds for rehearing before the 
commission, this court has required the appellant to use a “rifle”—not a 
“shotgun”—in order to preserve an issue for appeal to this court.  Cincinnati v. 
Pub. Util. Comm., 151 Ohio St. 353, 378, 86 N.E.2d 10 (1949).  Here, in its 
application for rehearing before the commission, FirstEnergy argued that the 
commission “unlawfully required the companies to refund monies collected under 
duly authorized rates and thus the order mandates impermissible retroactive 
ratemaking.” 
{¶ 61} In support of its argument, FirstEnergy quoted R.C. 4905.32, 
italicizing for emphasis the statutory language prohibiting refunds unless are they 
“specified in such schedule.”  This citation of R.C. 4905.32 as part of 
FirstEnergy’s retroactive-ratemaking argument complies with the statutory 
requirement of R.C. 4903.10(B) that appellants are to specifically raise issues in 
applications for rehearing.  In accord with our holding in Cincinnati, FirstEnergy 
argued that the language of R.C. 4905.32 prohibits the commission from ordering 
a refund when refund language is not contained in the tariff, and FirstEnergy used 
a “rifle”—not a “shotgun”—in properly preserving this issue for appeal to this 
court. 
{¶ 62} In denying FirstEnergy’s request for a rehearing, the commission 
ignored FirstEnergy’s R.C. 4905.32 argument and chose instead to continue to 
rely on the reasoning expressed in its initial order that it did not engage in 
unlawful retroactive ratemaking based on our decision in River Gas Co. v. Pub. 
Util. Comm., 69 Ohio St.2d 509, 433 N.E.2d 568 (1982).  However, the 
commission’s reliance on River Gas is misplaced for two reasons. 
SUPREME COURT OF OHIO 
 
22 
{¶ 63} The first reason the commission’s reliance on River Gas is 
mistaken is because River Gas did not involve ratemaking.  Id. at 512-513.  The 
fuel-cost-adjustment provisions enacted by the General Assembly in R.C. 
4905.302 in the form of the Uniform Purchased Gas Adjustment (“UPGA”) 
clause authorized natural-gas companies to pass variable fuel costs directly to 
consumers without application or preapproval by the commission.  River Gas at 
513.  Because the rates varied without an application before, or prior approval of, 
the commission, the UPGA rates were a statutorily authorized departure from the 
commission’s ratemaking and preapproval authority.  Id. at 512-513.  Therefore, 
we concluded that the UPGA rates did not constitute “ratemaking in its usual and 
customary sense.”  Id. at 513.  “It is axiomatic that before there can be retroactive 
ratemaking, there must, at the very least, be ratemaking.”  (Emphasis sic.)  Id. at 
512. 
{¶ 64} The second reason the commission’s reliance on River Gas is 
misplaced is because R.C. 4905.302 mandated that the UPGA clause be included 
in every tariff of all natural-gas companies.  Id. at 509-511.  In promulgating the 
UPGA rule under the authority given by the legislature, the commission included 
a Gas Cost Recovery (“GCR”) rate.  Id. at 510.  One of the several factors in 
determining the GCR rate was the amount of refunds natural-gas companies 
received from suppliers.  Id.  The tariff at issue in River Gas contained the UPGA 
clause as required by law.  Id. at 511. 
{¶ 65} Contrary to the UPGA rates at issue in River Gas, the renewable-
energy rates at issue here were ratemaking in the traditional sense.  In River Gas, 
we stated that traditional ratemaking includes three steps: an application before 
the commission, preapproval by the commission, and the filing of the rate with 
the commission prior to the collection of the rate.  Id. at 512-513. 
{¶ 66} FirstEnergy’s stipulated ESP application was filed with the 
commission, and it included the renewable-energy rates as required by law.  See 
January Term, 2018 
 
23 
R.C. 4928.143(A); R.C. 4928.64(B)(1).  The ESP required preapproval by the 
commission.  See R.C. 4928.143(C).  And, prior to the rates being charged to 
customers, they were filed with the commission.  See R.C. 4905.32; see also, e.g., 
Rider AER tariff sheet No. 84, filed by Ohio Edison Company in Pub. Util. 
Comm. case Nos. 08-935-EL-SSO, 09-21-EL-ATA, 09-22-EL-AEM, 09-23-EL-
AAM, and 89-6006-EL-TRF on June 1, 2011 (effective July 1, 2011), available at 
http://dis.puc.state.oh.us/DocumentRecord.aspx?DocID=1772a830-ed7e-4c0c-
b28f-538392e9b82b.  If the commission intended to order a refund of any part of 
the rates, then the legislature gave the commission the discretionary authority to 
do so.  All the commission had to do was require a refund clause to be part of the 
tariff pursuant to R.C. 4905.32. 
{¶ 67} As a creature of statute, the commission “ ‘has no authority to act 
beyond its statutory powers.’ ”  In re Application of Ohio Power Co., 144 Ohio 
St.3d 1, 2015-Ohio-2056, 40 N.E.3d 1060, ¶ 32, quoting Discount Cellular, Inc. 
v. Pub. Util. Comm., 112 Ohio St.3d 360, 2007-Ohio-53, 859 N.E.2d 957, ¶ 51.  
Because the tariff at issue here did not specify a refund, the commission’s order of 
a refund of REC costs was unlawful retroactive ratemaking. 
{¶ 68} The “statutory and case law concerning retroactive ratemaking 
spans nearly 50 years.”  In re Application of Columbus S. Power Co., 128 Ohio 
St.3d 512, 2011-Ohio-1788, 947 N.E.2d 655, ¶ 13.  In matters of statutory 
construction, we presume that the legislature “knows the existing condition of the 
law, whether common law * * * or statute law.”  Wachendorf v. Shaver, 149 Ohio 
St. 231, 248, 78 N.E.2d 370 (1948), citing State ex rel. Morris v. Sullivan, 81 
Ohio St. 79, 90 N.E. 146 (1909); Norris v. State, 25 Ohio St. 217 (1874); Johnson 
v. Johnson, 31 Ohio St. 131 (1876); and S. Sur. Co. v. Std. Slag Co., 117 Ohio St. 
512, 159 N.E. 559 (1927).  Therefore, if the General Assembly intended the REC 
rates to operate like the UPGA rates at issue in River Gas when it enacted S.B. 
221, it could have done so, but it did not. 
SUPREME COURT OF OHIO 
 
24 
{¶ 69} While I am sympathetic to the problem identified by the concurring 
and dissenting opinion that the holding of a majority of the court “reduces the 
entire audit review of FirstEnergy’s REC purchases to an exercise in futility,” id. 
at ¶ 87, absent the commission’s compliance with the language of the controlling 
statutory provision, R.C. 4905.32, the commission as a creature of statute has no 
authority to act.  See In re Application of Ohio Power Co. at ¶ 32.  Under the plain 
language of the statute, once a rate has been approved and filed with the 
commission, no refund is possible unless the refund language is in the 
commission’s order establishing the rate.  See R.C. 4905.32. 
{¶ 70} It is within the sole province and sound discretion of the General 
Assembly to balance the needs of the commission, the utilities, and consumers. 
 
“In adopting a comprehensive scheme of public utility rate 
regulation, the Legislature has found it impossible to do absolute 
justice under all circumstances.  For example, under present 
statutes a utility may not charge increased rates during proceedings 
before the commission seeking same and losses sustained thereby 
may not be recouped.  Likewise, a consumer is not entitled to a 
refund of excessive rates paid during proceedings before the 
commission seeking a reduction in rates.  Thus, while keeping its 
broad objectives in mind, the Legislature has attempted to keep the 
equities between the utility and the consumer in balance but has 
not found it possible to do absolute equity in every conceivable 
situation.” 
 
Keco Industries, 166 Ohio St. at 259, 141 N.E.2d 465, quoting the trial court’s 
opinion in the case.  Because we are required neither to be assigned nor allowed 
“tasks that are more properly accomplished by [other] branches,” Morrison v. 
January Term, 2018 
 
25 
Olson, 487 U.S. 654, 680-681, 108 S.Ct. 2597, 101 L.Ed.2d 569 (1988), we must 
“apply the statute as written,” State v. J.M., 148 Ohio St.3d 113, 2016-Ohio-2803, 
69 N.E.3d 642, ¶ 12, citing 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. 
{¶ 71} Because the language of R.C. 4905.32 is plain and unambiguous, 
the commission engaged in unlawful retroactive ratemaking.  Therefore, based on 
that ground alone, I would reverse the order of the commission on the retroactive-
ratemaking issue.  I concur in reversing the order of the commission and 
remanding the cause for further proceedings, consistent with the lead opinion, on 
the trade-secret issues. 
 
O’DONNELL and DEWINE, JJ., concur in the foregoing opinion. 
_________________ 
FRENCH, J., concurring in part and dissenting in part. 
{¶ 72} I agree with the conclusion of a majority of this court that the 
Public Utilities Commission’s trade-secret determination regarding the 
information discussed in the lead opinion lacks record support.  I disagree, 
however, with the  determination reached in both the lead and concurring 
opinions that the commission engaged in unlawful retroactive ratemaking when it 
disallowed more than $43 million in renewable-energy-credit (“REC”) costs that 
appellants and cross-appellees, the FirstEnergy companies (Ohio Edison 
Company, Cleveland Electric Illuminating Company, and Toledo Edison 
Company (collectively, “FirstEnergy”)), had collected from customers.  
Therefore, I concur in part and dissent in part. 
ANALYSIS 
{¶ 73} A majority of the court holds that FirstEnergy as a matter of law is 
not required to return to ratepayers over $43 million in REC costs, even though 
FirstEnergy was authorized to recover only prudently incurred REC costs and the 
commission determined that those costs were imprudently incurred.  According to 
SUPREME COURT OF OHIO 
 
26 
both the lead opinion and the concurring opinion, FirstEnergy may keep these 
incurred costs because ordering FirstEnergy to return this money to customers is 
unlawful retroactive ratemaking.  The lead opinion offers two grounds for this 
conclusion: (1) the commission’s lack of objection to the rates charged under an 
“Alternative Energy Resource Rider” (“Rider AER”) barred a refund in this case 
and (2) R.C. 4905.32 bars any refund in this case because the commission-
approved tariff for Rider AER did not specify a refund.  Because neither ground 
justifies the result reached by a majority of this court, I dissent. 
The commission’s quarterly review and approval of Rider AER did not result in 
a fixed rate 
{¶ 74} FirstEnergy argues that the REC costs were charged and collected 
through Rider AER under a commission-approved tariff and that therefore, the 
rule against retroactive ratemaking bars any refund or disallowance of money 
already collected by its companies. 
{¶ 75} FirstEnergy is referring to the tariff language of Rider AER, which 
required the FirstEnergy companies to request approval of the rider charges from 
the commission each quarter and provided that the requested rates would go into 
effect one month later “unless otherwise ordered by” the commission.  According 
to FirstEnergy, this process gave the commission “numerous opportunities to 
review and object to the rates in Rider AER or to the process by which the 
Companies incurred costs recovered under that Rider.”  And because the 
commission took no action to delay or disapprove of the charges proposed in the 
quarterly filings before they became effective, FirstEnergy asserts that the Rider 
AER rates became fixed and, consequently, were not subject to refund. 
{¶ 76} The lead opinion agrees, finding that the commission’s failure to 
object to the rates proposed in the quarterly filings somehow turned those 
proposed rates into fixed ones.  According to the lead opinion, “[b]ecause 
FirstEnergy recovered REC costs under a ‘filed’ rate schedule, the commission 
January Term, 2018 
 
27 
was prohibited from later ordering a disallowance or refund of those costs.”  Id. at 
¶ 18.  The lead opinion is wrong to rely on this quarterly review process to reverse 
the commission’s disallowance of REC costs. 
{¶ 77} First, the lead opinion acknowledges in its statement of facts that 
FirstEnergy was allowed to recover only its “prudently incurred costs” of 
purchasing RECs, id. at ¶ 8, but it then ignores that fact in resolving this issue.  In 
FirstEnergy’s first electric-security-plan (“ESP”) case, FirstEnergy entered into a 
stipulation with the other parties that resolved all issues in the ESP case.  See In re 
Application of Ohio Edison Co., Pub. Util. Comm. Nos. 08-935-EL-SSO, 09-21-
EL-ATA, 
09-22-EL-AEM, 
and 
09-23-EL-AAM, 
Stipulation 
and 
Recommendation (Feb. 19, 2009).  Under the stipulation, the parties proposed 
Rider AER as the mechanism to recover the costs that FirstEnergy planned to 
incur in meeting its alternative-energy-resource requirements under R.C. 4928.64.  
Id. at 10-11, stipulation No. 9.  In March 2009, the commission issued an order 
adopting the stipulation, thereby approving FirstEnergy’s ESP, including Rider 
AER.  In re Application of Ohio Edison Co., Pub. Util. Comm. Nos. 08-935-EL-
SSO, 09-21-EL-ATA, 09-22-EL-AEM, and 09-23-EL-AAM, 2009 Ohio PUC 
LEXIS 279, *17 (Mar. 25, 2009). 
{¶ 78} Under the ESP order, FirstEnergy was allowed to implement Rider 
AER to “recover, on a quarterly basis, the prudently incurred costs of” obtaining 
RECs.  (Emphasis added.)  Id.  That is, the commission allowed FirstEnergy to 
automatically recover its REC costs, on the condition that a later review would be 
conducted to determine whether those costs were prudently incurred. 
{¶ 79} So while it is true that we have prohibited refunds of money 
collected under final commission-approved rates, it is not true that the rates 
charged under Rider AER were final, approved rates.  To conclude that they were, 
we must disregard the clear terms of the ESP order, which expressly limited 
FirstEnergy’s recovery to only those REC costs that were prudently incurred.  
SUPREME COURT OF OHIO 
 
28 
Nothing before us supports the lead opinion’s finding that the rates charged under 
Rider AER were fixed and thus not subject to refund. 
{¶ 80} The commission relied on River Gas Co. v. Pub. Util. Comm., 69 
Ohio St.2d 509, 433 N.E.2d 568 (1982), to support disallowing these particular 
REC costs.  The lead opinion distinguishes River Gas solely on the ground that 
FirstEnergy had already collected its incurred REC costs under the commission-
approved tariff for Rider AER.  But because the commission’s quarterly approval 
of the Rider AER tariffs did not result in a fixed rate, the attempt to distinguish 
River Gas falls short. 
{¶ 81} Second, the lead opinion is wrong to accept FirstEnergy’s 
argument, asserted in its brief, that the quarterly review process gave the 
commission “numerous opportunities to review and object to the rates in Rider 
AER or to the process by which the Companies incurred costs recovered under 
that Rider.”  The lead opinion overlooks the commission’s finding that the 
quarterly review process was never intended to be used to audit FirstEnergy’s 
REC purchases for prudence. 
{¶ 82} In fact, it was impossible for these quarterly reports to be used for 
that purpose.  Under the tariff language, FirstEnergy submitted its proposed rates 
for Rider AER each quarter, and charges went into effect one month later unless 
the commission ordered otherwise.  On rehearing below, the commission 
expressly found that there had been no meaningful opportunity to review the REC 
costs for prudence during this one-month period.  Pub. Util. Comm. No. 11-5201-
EL-RDR at 22 (Dec. 18, 2013). 
{¶ 83} The lead opinion cites no evidence that the commission could have 
determined the prudence of FirstEnergy’s REC purchases solely by looking at 
these quarterly tariff filings.  FirstEnergy in its brief claims that it “made 27 
timely quarterly * * * filings, each updating the Rider AER rate during 2009, 
January Term, 2018 
 
29 
2010, and 2011.”  And FirstEnergy later refers us to one of those filings, which 
had an effective date of July 1, 2011. 
{¶ 84} But this proposed tariff sheet contains no information that the 
commission could have reviewed to determine the prudence of FirstEnergy’s REC 
purchases.  This tariff sheet includes only the proposed Rider AER rates to be 
charged to each customer class for the next quarter.  It contains no information 
related to FirstEnergy’s REC purchases, such as the number of renewable-energy 
suppliers in the market, the number of suppliers who bid during FirstEnergy’s 
REC auctions, the quantity of RECs bid or each supplier’s bid prices.  Contrary to 
the lead opinion’s view, the commission could not have reviewed FirstEnergy’s 
REC purchases for prudence by looking at these quarterly filings. 
{¶ 85} Although we have complete and independent power to review all 
questions of law in appeals from the commission, Ohio Edison Co. v. Pub. Util. 
Comm., 78 Ohio St.3d 466, 469, 678 N.E.2d 922 (1997), we can, and should, 
consider the expertise of a state agency in interpreting a law when, as here, 
“highly specialized issues” are involved and when the commission’s expertise 
would “be of assistance in discerning the presumed intent of our General 
Assembly.”  Consumers’ Counsel v. Pub. Util. Comm., 58 Ohio St.2d 108, 110, 
388 N.E.2d 1370 (1979).  Here, the commission explained on rehearing that the 
process of quarterly filings employed in this case is a standard mechanism “in 
prudence review and true-up proceedings” (the process of reconciling the rates 
recovered as revenue by the utility with the costs incurred by the utility).  Pub. 
Util. Comm. No. 11-5201-EL-RDR at 23 (Dec. 18, 2013).  Utilities often benefit 
from this process, as it allows them to implement new rates without regulatory 
lag, id. at 23-24, and the commission observed that if the process used in this case 
is found to be retroactive ratemaking, then that process, which has been used in 
numerous other situations, will no longer be available, id. at 24.  Disregarding the 
commission’s expertise on this issue, a majority of the court renders the prudence-
SUPREME COURT OF OHIO 
 
30 
review process in this case—a review that FirstEnergy agreed to undergo in its 
ESP case—meaningless. 
{¶ 86} The commission initiated its audit review of FirstEnergy’s REC 
purchases in September 2011.  Numerous parties intervened.  The commission 
appointed an independent consultant, Exeter Associates, Inc., to review 
FirstEnergy’s REC purchases for prudence.  Exeter filed its audit report in August 
2012.  Thereafter, the parties engaged in extensive discovery, and attorney 
examiners issued several entries on motions for protective orders.  The parties 
filed depositions and direct testimony.  The commission held five days of audit 
hearings in February 2013.  The parties then filed two rounds of posthearing 
briefs.  The commission issued its order on August 7, 2013, and its final rehearing 
entry on December 18, 2013, over two years after the case began. 
{¶ 87} By the time the commission issued its final order, FirstEnergy had 
collected nearly all the incurred REC costs from ratepayers.  A majority of the 
court holds that the commission cannot order FirstEnergy to refund any REC 
costs that were recovered before the commission issued its audit order, even if the 
costs were imprudently incurred.  That holding reduces the entire audit review of 
FirstEnergy’s REC purchases to an exercise in futility.  In effect, the commission 
and the parties needlessly went through more than two years of litigation at the 
commission when everyone involved should somehow have realized from the 
outset that FirstEnergy would be entitled to keep virtually all its REC costs, 
whether prudently incurred or not. 
The court is wrong to rely on the refund language of R.C. 4905.32 
{¶ 88} The lead and concurring opinions also accept FirstEnergy’s 
assertion that the plain language of R.C. 4905.32 bars any refund in this case 
because Rider AER did not specify a refund process.  R.C. 4905.32 provides that 
“[n]o public utility shall refund or remit directly or indirectly, any rate * * * or 
charge * * * except such as are specified in [its] schedule * * *.”  Because no 
January Term, 2018 
 
31 
refunds or disallowances are specified in the commission-approved tariffs for 
Rider AER, FirstEnergy maintains that R.C. 4905.32 precludes the commission 
from ordering a refund of previously recovered REC costs in this case.  In my 
view, reliance on this provision is erroneous. 
{¶ 89} First, we lack jurisdiction over this issue.  We have jurisdiction 
only over arguments raised in a party’s application for rehearing at the 
commission.  R.C. 4903.10; Ohio Consumers’ Counsel v. Pub. Util. Comm., 114 
Ohio St.3d 340, 2007-Ohio-4276, 872 N.E.2d 269, ¶ 40.  FirstEnergy did quote 
the refund language of R.C. 4905.32 in its application for rehearing before the 
commission.  But FirstEnergy never made the specific argument on rehearing that 
it makes on appeal—that R.C. 4905.32 bars any refund in this case because Rider 
AER did not specify a refund process.  And we have strictly construed the 
specificity requirement in R.C. 4903.10.  See R.C. 4903.10(B) (application for 
rehearing “shall set forth specifically the ground or grounds on which the 
applicant considers the order to be unreasonable or unlawful”); see also Discount 
Cellular, Inc. v. Pub. Util. Comm., 112 Ohio St.3d 360, 2007-Ohio-53, 859 
N.E.2d 957, ¶ 59.  So FirstEnergy has forfeited any argument based on the refund 
provision of R.C. 4905.32. 
{¶ 90} Second, even if FirstEnergy had preserved this argument, it should 
not be relied on in this case.  Under the filed-rate doctrine, the rates approved by 
and filed with the commission are the lawful rates, unless and until a litigant 
proves otherwise.  See R.C. 4905.32; Keco Industries, Inc. v. Cincinnati & 
Suburban Bell Tel. Co., 166 Ohio St. 254, 257-259, 141 N.E.2d 465 (1957); see 
also Lucas Cty. Commrs. v. Pub. Util. Comm., 80 Ohio St.3d 344, 347, 686 
N.E.2d 501 (1997) (“while a rate is in effect, a public utility must charge its 
consumers in accordance with the commission-approved rate schedule”).  And 
although the commission has the power to invalidate a rate schedule and fix new 
rates, this authority is prospective only.  See Ohio Util. Co. v. Pub. Util. Comm., 
SUPREME COURT OF OHIO 
 
32 
58 Ohio St.2d 153, 158, 389 N.E.2d 483 (1979).  The rule against retroactive 
ratemaking thus bars the commission from ordering a refund or otherwise 
adjusting current rates to make up for overcharges under previously approved 
rates.  See In re Application of Columbus S. Power Co., 128 Ohio St.3d 512, 
2011-Ohio-1788, 947 N.E.2d 655, ¶ 15-16. 
{¶ 91} But the commission’s approval of Rider AER did not result in a 
final, approved rate, so the commission did not engage in retroactive ratemaking 
when it disallowed over $43 million in REC costs.  Because FirstEnergy could 
recover only prudently incurred REC costs under the ESP order, the Rider AER 
costs were subject to retrospective adjustment dependent on the outcome of the 
commission’s prudence review.  See, e.g., Cincinnati v. Pub. Util. Comm., 67 
Ohio St.3d 523, 527-528, 620 N.E.2d 826 (1993) (explaining that a review of a 
utility’s decision to determine whether it was prudent contemplates a 
retrospective, factual inquiry, without the use of hindsight, into the decision-
making process of the utility’s management).  Stated differently, the commission 
did not order a refund of a final, approved rate here because the rates charged in 
the Rider AER tariffs were never fixed.  Rather, those rates were subject to 
postrecovery adjustment if the commission later determined that FirstEnergy had 
not made prudent REC purchases.  In short, because the commission did not order 
a refund of lawfully recovered REC costs, any reliance on the refund provision of 
R.C. 4905.32 is misplaced. 
{¶ 92} The lead and concurring opinions also err in treating this issue as 
settled law, when it clearly is not.  They both construe the following language in 
R.C. 4905.32 to authorize a refund, so long as the refund is “specified” in the 
utility’s schedules and evenly applied: 
 
No public utility shall refund or remit directly or indirectly, any 
rate, rental, toll, or charge so specified [in its schedule filed 
January Term, 2018 
 
33 
with the Public Utilities Commission], or any part thereof, or 
extend to any person, firm, or corporation, any rule, regulation, 
privilege, or facility except such as are specified in such 
schedule and regularly and uniformly extended to all persons, 
firms, and corporations under like circumstances for like, or 
substantially similar, service. 
 
The lead and concurring opinions adopt FirstEnergy’s interpretation of the statute 
and conclude that R.C. 4905.32 precludes the commission from ordering 
FirstEnergy to refund previously recovered REC costs in this case because the 
tariff for the Rider AER does not specify a refund. 
{¶ 93} But both opinions fail to recognize that this sentence can be read 
more than one way.  The sentence contains two prohibitions.  No public utility 
shall (1) “refund or remit * * * any rate, rental, toll, or charge” or (2) “extend to 
any person, firm, or corporation, any rule, regulation, privilege, or facility.”  An 
exception directly follows the second prohibition: “except such as are specified in 
such schedule and regularly and uniformly extended to all persons, firms, and 
corporations under like circumstances.”  There is no question that the exception, 
because of its placement, applies to the second prohibition—that is, no utility may 
extend a rule, regulation or privilege to any person “except such as are specified 
in such schedule and regularly and uniformly extended to all persons.”  The lead 
opinion and the concurring opinion construe the exception to also apply to the 
first prohibition—that is, a refund may occur only if “specified” in the schedule.  
To my knowledge, the court has never expressly considered whether the 
exception applies to both prohibitions.  Despite the fact that this appears to be an 
issue of first impression, a majority of the court simply accepts FirstEnergy’s 
interpretation. 
SUPREME COURT OF OHIO 
 
34 
{¶ 94} But even if this interpretation of R.C. 4905.32 is correct, 
FirstEnergy should not be able to benefit from the fact that there was no refund 
language in Rider AER.  Under the ESP order, the commission charged 
FirstEnergy with filing tariffs consistent with that order.  2009 Ohio PUC LEXIS 
279 at *45; see R.C. 4905.30 (every public utility must apply for commission 
approval of tariff schedules that detail the rates, charges, and classifications of 
service).  So FirstEnergy should not be able to rely on the absence of refund 
language in the Rider AER tariff to avoid having to repay REC costs if those costs 
were imprudently incurred. 
CONCLUSION 
{¶ 95} For all these reasons, I would conclude that the commission did not 
engage in unlawful retroactive ratemaking.  Having reached that conclusion, I 
would proceed to address FirstEnergy’s second proposition of law, which 
challenges the commission’s findings that the specified REC purchases made in 
2010 were imprudent, and I would also address the additional propositions of law 
raised in the cross-appeal in this case that a majority of the court does not 
consider.  Because a majority of this court has determined otherwise, I 
respectfully dissent. 
_________________ 
 
James W. Burk and Carrie M. Dunn; and Jones Day and David A. Kutik, 
for appellants and cross-appellees, Ohio Edison Company, Cleveland Electric 
Illuminating Company, and Toledo Edison Company. 
 
Bruce J. Weston, Consumers’ Counsel, and Christopher Healey and 
Maureen R. Willis, Assistant Consumers’ Counsel; and Isaac, Wiles, Burkholder 
& Teetor and Mark R. Weaver, for appellee and cross-appellant, Office of the 
Ohio Consumers’ Counsel. 
 
Madeline Fleisher, for cross-appellant, Environmental Law and Policy 
Center. 
January Term, 2018 
 
35 
 
Michael DeWine, Attorney General, and Thomas G. Lindgren and 
William L. Wright, Assistant Attorneys General, for appellee and cross-appellee, 
Public Utilities Commission of Ohio. 
 
Steven T. Nourse; and Porter, Wright, Morris & Arthur, L.L.P., and 
Kathleen M. Trafford, for amicus curiae, Ohio Power Company. 
_________________