Title: Cleveland Electric Illuminating Co. v. Cleveland

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Cleveland Elec. Illum. Co. v. Cleveland, Slip Opinion No. 2021-Ohio-4463.] 
 
 
 
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. 2021-OHIO-4463 
THE CLEVELAND ELECTRIC ILLUMINATING CO., APPELLANT AND CROSS-
APPELLEE, v. THE CITY OF CLEVELAND ET AL., APPELLEES AND CROSS-
APPELLANTS. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Cleveland Elec. Illum. Co. v. Cleveland, Slip Opinion No. 
2021-Ohio-4463.] 
Ohio Constitution, Article XVIII, Sections 4 and 6—Municipal utilities—Surplus 
product—Summary judgment—Court of appeals’ judgment reversing trial 
court’s grant of summary judgment in favor of municipality affirmed. 
(No. 2020-0277—Submitted April 27, 2021—Decided December 21, 2021.) 
APPEAL from the Court of Appeals for Cuyahoga County, 
No. 108560, 2020-Ohio-33. 
_________________ 
STEWART, J., announcing the judgment of the court. 
{¶ 1} Article XVIII, Section 6 of the Ohio Constitution allows a 
municipality that operates a public utility for the purpose of supplying the utility’s 
SUPREME COURT OF OHIO 
 
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product to the municipality or its inhabitants to generate or purchase electricity and 
sell outside the municipality’s boundaries up to 50 percent of the “surplus product.”  
The Ohio Constitution, however, “necessarily precludes a municipality from 
purchasing electricity solely for the purpose of reselling the entire amount of the 
purchased electricity to an entity outside the municipality’s geographic limits.”  
Toledo Edison Co. v. Bryan, 90 Ohio St.3d 288, 293, 737 N.E.2d 529.  In this 
appeal, we consider the concept of an “artificial surplus” of electricity and whether 
a municipality violates Article XVIII, Section 6 by selling such a surplus to 
customers outside the municipality’s boundaries. 
{¶ 2} In 2001, Ohio deregulated the electricity industry.  See Migden-
Ostrander v. Pub. Util. Comm., 102 Ohio St.3d 451, 2004-Ohio-3924, 812 N.E.2d 
955, ¶ 2.  Deregulation led to the rise of wholesale markets through which 
electricity distributers may purchase electricity on demand based on the current 
power needs of its customers.  See generally In re Ohio Power Co., 155 Ohio St.3d 
320, 2018-Ohio-4697, 121 N.E.3d 315.  Appellee and cross-appellant the city of 
Cleveland, through its electricity-distribution company, appellee and cross-
appellant Cleveland Public Power (“CPP”) (collectively, “the city”), sells surplus 
electricity outside its boundaries in an amount representing approximately 4 percent 
of the electricity that the city sells inside its boundaries.  Appellant and cross-
appellee, the Cleveland Electric Illuminating Company (“CEI”), argues that 
because the city may purchase the precise of amount of electricity required to 
satisfy the current demands of its territorial customers, the electricity that the city 
sells extraterritorially as surplus is necessarily acquired solely to sell it beyond the 
city’s boundaries, in violation of this court’s decision in Toledo Edison Co. and the 
Ohio Constitution. 
{¶ 3} The Eighth District Court of Appeals determined below that Article 
XVIII, Section 6 of the Ohio Constitution does not require a municipality to buy 
“the exact amount” of electricity required by its inhabitants at any given time and 
                                                                                    
January Term, 2021 
 
3
that there may be other reasons justifying the purchase of electricity beyond a 
municipality’s immediate needs.  2020-Ohio-33, ¶ 36.  We agree.  Neither Article 
XVIII, Section 6 nor this court’s decision in Toledo Edison Co. requires a 
municipality to purchase the exact amount of electricity required to satisfy the 
current needs of its territorial customers.  Although a municipal utility may not 
acquire surplus product for the sole purpose of selling it extraterritorially, it may 
acquire excess capacity for purposes other than reselling it as surplus beyond the 
municipality’s boundaries without violating the Ohio Constitution.  We also agree 
with the court of appeals that questions of material fact exist as to whether the city 
obtained surplus electricity for the sole purpose of selling it to a neighboring city.  
We therefore affirm the judgment of the Eighth District. 
Factual and procedural background 
{¶ 4} CEI is an investor-owned utility company regulated by the Public 
Utilities Commission of Ohio (“PUCO”).  See R.C. 4905.04 (“The public utilities 
commission is hereby vested with the power and jurisdiction to supervise and 
regulate public utilities * * *”).  Article XVIII, Section 4 of the Ohio Constitution 
and Cleveland City Charter Chapter 523 authorize the city to operate CPP.  Both 
CEI and CPP distribute electricity and directly compete with each other to provide 
distribution services in Cleveland. 
{¶ 5} Both CEI and CPP purchase electricity through the wholesale 
electricity market.  PJM Interconnection, L.L.C. (“PJM”), a regional transmission 
organization (“RTO”), runs the wholesale electricity market in Ohio.  PJM’s 
mission is to ensure nondiscriminatory access to the electricity-transmission grid.  
PJM manages the generation, transmission, and distribution of electricity within its 
assigned area by establishing pricing at auction, with market administrators using 
algorithms to match the least expensive generation-supply resource with customer 
demand.  PJM’s customers may buy electricity one day in advance of its expected 
SUPREME COURT OF OHIO 
 
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use based on expected customer demand or on a real-time basis to account for 
differences between expected and actual customer demand. 
{¶ 6} Along with wholesale electricity bought through PJM, CPP has an 
interest in several electricity-generation plants through its membership in American 
Municipal Power (“AMP”), a nonprofit wholesale-power supplier representing 
municipalities in Ohio and other states.  Through AMP, the city has a portfolio of 
power-generation interests, including hydroelectric, wind, natural gas, and coal.  
Some of those interests require long-term purchases that CPP uses to mitigate the 
risk of volatility in the PJM energy markets.  CPP’s commitments for long-term 
purchases from AMP projects and generation assets will result in CPP’s cost of 
electricity dropping dramatically when it pays off the bonds used to finance 
construction relating to the projects. 
{¶ 7} In 2017, the city agreed to buy all the electricity generated by a solar-
energy project in the city of Brooklyn.  The city planned to use the electricity 
generated by the project to supply power to buildings owned by Cuyahoga County.  
The city also signed a ten-year agreement to be the exclusive electricity provider to 
several municipal buildings in Brooklyn. 
{¶ 8} CEI filed in the Cuyahoga County Court of Common Pleas a 
declaratory-judgment action against the city and CPP, alleging that the city had 
unlawfully signed an agreement to sell electricity to Brooklyn at a rate 5 percent 
below CEI’s statutorily mandated tariff.  CEI claimed that the city extended 
distribution lines from the solar-energy project solely to poach CEI’s customers.  It 
alleged that the city did not need the electricity generated by the solar project to 
serve its own citizens, because it could satisfy its territorial demands solely with 
wholesale electricity purchases, so “any and all sales of electricity to Brooklyn, the 
inhabitants of Brooklyn, and other customers outside Cleveland’s municipal 
boundaries will derive from an artificial surplus intentionally sustained and 
increased by CPP, acting as a de facto extraterritorial broker.” 
                                                                                    
January Term, 2021 
 
5
{¶ 9} The parties submitted cross-motions for summary judgment.  The trial 
court determined that electricity from the solar project would be used to serve 12 
Cuyahoga County properties and customers in Brooklyn.  It also determined that 
the city had sold as surplus outside its boundaries “a very small percentage” of the 
total electricity that it had sold to customers within its boundaries and that the 
amount was “nowhere near” the 50 percent limitation for selling surplus product 
under Article XVIII, Section 6 of the Ohio Constitution.  Finding that the electricity 
that the city had sold outside its boundaries did not exceed the constitutional 
limitation, the trial court granted the city’s motion for summary judgment on that 
claim. 
{¶ 10} CEI appealed the trial court’s judgment to the Eighth District Court 
of Appeals, arguing that the trial court erred by not granting summary judgment in 
its favor and by granting summary judgment to the city.  The Eighth District 
reversed the grant of summary judgment in favor of the city.  Although the court of 
appeals agreed with CEI that the trial court erred in granting summary judgment to 
the city because the record did not demonstrate that all the city’s electricity 
purchases are for the purpose of providing service to customers within the city’s 
boundaries, the court refused to conclude that any surplus electricity CPP possesses 
is an artificial surplus acquired only for the purpose of selling it outside the city’s 
boundaries.  2020-Ohio-33 at ¶ 35-39.  The court determined that a municipality 
may, consistent with the Ohio Constitution, “acquire a surplus of electricity for 
reasons other than ‘solely for the purpose of reselling’ surplus electricity outside its 
municipal boundaries.”  Id. at ¶ 36, quoting Toledo Edison Co., 90 Ohio St.3d at 
293, 737 N.E.2d 529.  But the court also concluded that CPP’s ten-year agreement 
to supply electricity to Brooklyn suggested that “the only way [Cleveland] could 
ensure that it had a sufficient supply of electricity to fulfill its contractual 
obligations to Brooklyn was if it intentionally purchased some electricity solely for 
the purpose of reselling it to Brooklyn.”  Id. at ¶ 38. 
SUPREME COURT OF OHIO 
 
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{¶ 11} CEI appealed to this court, and the city cross-appealed.  We accepted 
CEI’s appeal on three propositions of law: 
 
1.  A municipal utility violates Article XVIII, Sections 4 and 
6 if it sells electricity outside municipal boundaries from an artificial 
surplus, including any avoidable excess electricity a municipality 
purchases that was not to supply the city or its inhabitants. 
2.  A municipal utility violates Article XVIII, Sections 4 and 
6 if it can buy only the amount of electricity needed within the city, 
but instead it buys excess electricity and sells electricity outside 
municipal boundaries. 
3.  A municipal utility violates Article XVIII, Sections 4 and 
6 if it buys any amount of electricity for a purpose other than 
supplying that electricity to itself or its inhabitants, then sells the 
resulting excess to customers outside city limits. 
 
See 159 Ohio St.3d 1417, 2020-Ohio-3365, 147 N.E.3d 662.  We accepted the city’s 
cross-appeal on the following proposition of law: 
 
A municipal corporation has the right to sell electricity to 
extraterritorial customers so long as the amount sold to 
extraterritorial customers does not exceed fifty percent of the total 
electricity consumed within the municipal corporation’s limits, and 
so long as the municipal corporation does not purchase electricity 
solely for the purposes of reselling the entire amount of that 
electricity extraterritorially. 
 
See id. 
                                                                                    
January Term, 2021 
 
7
Analysis 
{¶ 12} Before 1912, “utilities could only be owned and operated under 
power specially conferred by legislative enactment.”  Euclid v. Camp Wise Assn., 
102 Ohio St. 207, 213, 131 N.E. 349 (1921).  Courts generally employed the rule 
that “the jurisdiction of a municipality ceases at its boundaries, and, for it to 
exercise extraterritorial jurisdiction, its power to do so must be clearly expressed.”  
See Richards v. Portland, 121 Ore. 340, 345, 255 P. 326 (1927).  But when the 
framers amended the Ohio Constitution in 1912 to establish municipalities’ home-
rule powers, they intended to “remov[e] once and for all, all legitimate questions as 
to the authority of municipalities to undertake and carry on essential municipal 
activities.”  2 Proceedings and Debates of the Constitutional Convention of the 
State of Ohio 1433 (1912). 
{¶ 13} Two specific provisions of the Ohio Constitution authorize 
municipalities to operate utilities.  First, Article XVIII, Section 4 of the Ohio 
Constitution states: “Any municipality may acquire, construct, own, lease and 
operate within or without its corporate limits, any public utility the product or 
service of which is or is to be supplied to the municipality or its inhabitants, and 
may contract with others for any such product or service.”  Second, Article XVIII, 
Section 6 of the Ohio Constitution states: 
 
Any municipality, owning or operating a public utility for 
the purpose of supplying the service or product thereof to the 
municipality or its inhabitants, may also sell and deliver to others 
any transportation service of such utility and the surplus product of 
any other utility in an amount not exceeding in either case fifty per 
cent of the total service or product supplied by such utility within 
the municipality * * *. 
 
SUPREME COURT OF OHIO 
 
8
When read in harmony, these sections “allow a municipality to purchase electricity 
primarily for the purpose of supplying its residents and reselling only surplus 
electricity from that purchase to entities outside the municipality.”  Toledo Edison 
Co., 90 Ohio St.3d at 292, 737 N.E.2d 529. 
{¶ 14} The question then is what does the phrase “surplus product” mean?  
In Toledo Edison Co., we observed that the word “surplus,” given its ordinary 
meaning, means “ ‘the amount that remains when use or need is satisfied.’ ”  Id. at 
292, quoting Webster’s Third New International Dictionary 2301 (1993).  In that 
case, four municipalities had joined to persuade a commercial customer of Toledo 
Edison’s to buy electricity from them.  Id. at 288-289.  The four municipalities 
bought electricity on the wholesale market and sold it to the commercial customer, 
which was located beyond the municipalities’ territorial boundaries.  Id. at 290.  We 
interpreted Article XVIII, Sections 4 and 6 and concluded that  
 
a municipality is prohibited from in effect engaging in the business 
of brokering electricity to entities outside the municipality in direct 
competition with public utilities.  This prohibition includes a de 
facto brokering of electricity, i.e., where a municipality purchases 
electricity solely to create an artificial surplus for the purpose of 
selling the electricity to an entity not within the municipality’s 
geographic boundaries. 
 
Id. at 293. 
{¶ 15} CEI argues that any kilowatt of electricity that the city buys beyond 
the immediate needs of its territorial customers is, by definition, surplus product.  
Yet the framers of Article XVIII, Section 6 understood it differently.  Consider that 
Section 6 and its 50 percent limitation on “surplus product” applies not only to 
traditional utilities like water and electricity, but also to transportation service.  
                                                                                    
January Term, 2021 
 
9
During the debate on Section 6 during the Ohio Constitutional Convention of 1912, 
the following exchange took place: 
 
 
MR. KRAMER: I want to ask a question or two to find out 
how far municipalities will be allowed to go into business.  Take 
Cincinnati.  It has three hundred and fifty miles of street railway.  
Suppose Cincinnati should take over that three hundred and fifty 
miles of street railway and suppose they take in $2,000,000 a year.  
Does this section mean that the city of Cincinnati could go outside 
of Cincinnati with a railway to the extent of one hundred and 
seventy-five miles of inter-urban roads, or does it mean that 
Cincinnati could go outside a sufficient extent to take in $1,000,000? 
 
MR. KNIGHT: It was intended that the mileage outside of 
the city in the case of transportation service could not be in excess 
of one-half of that within the city itself.  In the case of water supply 
it may supply outside of the city its surplus, but in no event to exceed 
one-half of that actually supplied to the people of the municipality, 
and the same way with lighting service. 
 
(Capitalization sic.)  2 Proceedings and Debates of the Constitutional Convention 
of the State of Ohio at 1455. 
{¶ 16} The debate provided further evidence clarifying that Section 6 works 
“the same way with lighting service”: 
 
Mr. HARBARGER: In lines 44 and 45 you say “in an 
amount not exceeding in either case fifty per centum of the total 
service.”  In the case of a municipal lighting plant do I understand 
SUPREME COURT OF OHIO 
 
10 
they are limited to the amount they can sell in the municipality and 
that much more? 
Mr. KNIGHT: That section applies to selling outside and 
you can only sell outside one-half as much as inside. 
 
(Capitalization sic.)  2 Proceedings and Debates at 1445. 
{¶ 17} The debate shows that the framers not only intended for 
municipalities to be allowed to purchase railways or power plants located outside 
their boundaries, but also that they intended to allow municipalities to sell the 
services or products therefrom extraterritorially.  But under CEI’s rationale 
regarding the law relating to electricity surplus, we would also have to consider any 
railway established outside a municipality’s territorial boundaries to be “surplus,” 
because more railroad tracks would be unnecessary to serve people within the 
municipality’s boundaries.  As noted above, the debate during the Constitutional 
Convention of 1912 refutes that contention. 
{¶ 18} CEI maintains that CPP has no constitutionally authorized reason to 
buy or resell extra energy.  It reasons that the city may fulfill its electricity 
requirements solely through the wholesale market, so it never needs to have any 
excess electricity that it might sell as surplus. 
{¶ 19} Our decision in Toledo Edison Co. forbids the purchase of electricity 
“solely for the purpose of reselling the entire amount of the purchased electricity to 
an entity outside the municipality’s geographic limits.”  (Emphasis added.)  90 Ohio 
St.3d at 292, 737 N.E.2d 529.  And here, the Eighth District determined that “a 
municipality may acquire a surplus of electricity for reasons other than ‘solely for 
the purpose of reselling’ surplus electricity outside its municipal boundaries.”  
2020-Ohio-33 at ¶ 36, quoting Toledo Edison Co. at 293. 
{¶ 20} CEI complains that the court of appeals failed to explain what it 
meant by the phrase “reasons other than ‘solely for the purpose of reselling.’ ”  Id., 
                                                                                    
January Term, 2021 
 
11 
quoting Toledo Edison Co. at 293.  That complaint lacks merit.  The court of appeals 
listed “cost, risk mitigation, economies of scale, environmental impact[,] and 
reliability” as reasons that the city might have for purchasing surplus electricity.  
Id. at ¶ 39.  We agree with the court of appeals.  Prices in the RTO markets vary.  
Economic practicalities might cause a municipality to commit to long-term 
purchases of electricity in quantities beyond the current, real-time demands of its 
customers.  We also recognize that volume purchasing contracts may be a hedge 
against the volatility of the spot wholesale markets.  Long-term purchasing 
commitments can stabilize a municipality’s supply and cost of electricity. 
{¶ 21} The city also offers evidence showing that PJM requires the city to 
maintain a capacity-reserve margin.  The reserve margin is determined by 
calculating the average of CPP’s coincident-peak-capacity demand from the prior 
year, adjusted for losses and increased by a PJM-determined reserve factor.  The 
surplus-reserve margin accounts for generation outages, fluctuations caused by 
weather conditions, and other changes in total customer demand. 
{¶ 22} CEI argues that even if the city’s long-term commitments and 
reserve-margin requirements lead to a surplus, the city may directly sell the surplus 
to RTO-administered markets rather than selling it extraterritorially.  It thus 
concludes that CPP may, once connected to the Brooklyn solar project, sell that 
electricity directly to the PJM wholesale market rather than to Brooklyn. 
{¶ 23} The city offers evidence indicating that selling surplus electricity to 
the wholesale market might sometimes be “a practical impossibility.”  And it 
submits that selling electricity to the wholesale market might lead to a loss for the 
city, because PJM pays a price for wholesale electricity that is lower than the price 
for which it sold that same electricity to a utility.  In the brief of amici curiae 
Buckeye Power, Inc., and Ohio Rural Electric Cooperatives, Inc., amici curiae 
claim similar difficulties, arguing that municipal-utility poaching of their customers 
“would put cooperative members, the residents of areas abutting municipalities, at 
SUPREME COURT OF OHIO 
 
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risk of bearing stranded costs.”  Such “stranded costs” arise when a utility loses 
customers to a competitor and is left with debts for infrastructure and equipment 
that it might no longer need.  But CPP has similar costs associated with its long-
term investments in AMP generation projects, and those costs would be stranded if 
CPP were to be required to purchase electricity solely on the wholesale market.  
Amici curiae offer no compelling reason why priority should be given to 
minimizing the impact of their potential stranded costs over those of CPP. 
{¶ 24} But more importantly, Article XVIII, Section 6 of the Ohio 
Constitution specifically authorizes a municipality to sell excess surplus product 
extraterritorially.  That provision does not require a municipality to sell surplus 
product back to its source.  And while it might be more economically advantageous 
for CEI if the city pays for electricity as it goes, “the courts cannot prohibit a 
municipality from making a profit on the operation of its electric light and power 
system.”  Niles v. Union Ice Corp., 133 Ohio St. 169, 182, 12 N.E.2d 483 (1938), 
citing Shirk v. Lancaster, 313 Pa. 158, 168-169, 169 A. 557 (1933). 
{¶ 25} CEI also argues that practices such as those employed by the city 
here lead to the type of unfair competition that was feared by the framers of the 
Ohio Constitution and this court in Toledo Edison Co.  It maintains that its 
regulation by the PUCO puts it at a competitive disadvantage with CPP, which 
“cherrypicks large, energy-intensive customers outside the city.”  CEI also argues 
that because the PUCO does not regulate municipal electricity distributers like CPP, 
CPP’s activities disrupt the competitive balance and harm the public interest. 
{¶ 26} Investor-owned utilities raised the same argument against Article 
XVIII, Section 6 during the Ohio Constitutional Convention of 1912.  The “chief 
assault” against municipal operation of utilities “came from spokesmen for the 
public-service corporations who argued that the amendment threatened to destroy 
their interests by failing to restrain unfair competition by municipally owned 
utilities.”  Warner, Ohio’s Constitutional Convention of 1912, 61 Ohio History J. 
                                                                                    
January Term, 2021 
 
13 
11, 
24 
(1952), 
available 
at 
https://resources.ohiohistory.org/ohj/browse/ 
displaypages.php?display[]=0061&display[]=11&display[]=31 (accessed Dec. 10, 
2021) [https://perma.cc/JS9R-7FJC].  Herbert Seely Bigelow, the president of the 
Constitutional Convention of 1912, recalled that the issue of municipal operation 
of public utilities “does not tend to sanctify the memories of the Convention for 
those whose political views are colored by their own interest in public utility 
securities.”  Bigelow, Fourth Ohio Constitutional Convention, Ohio Legislative 
History 
409, 
410 
(1913), 
available 
at 
https://www.law.csuohio.edu/ 
sites/default/files/lawlibrary/ohioconlaw/1912delegates.pdf (accessed Dec. 10, 
2021) [https://perma.cc/U9EP-5BMJ].  Facing opposition from investor-owned 
utilities, the framers were careful as to how they worded Article XVIII, Section 6: 
“Now, we took a great deal of time in getting the correct phraseology for this 
section.  The members will recall how every word was weighed, what its effect was 
in relation to what we had in mind.”  2 Proceedings and Debates of the 
Constitutional Convention of the State of Ohio at 1458.  This consideration led to 
plain language in Section 6 that permits a municipality to sell surplus product 
extraterritorially, provided that the amount sold does not exceed 50 percent of the 
amount the municipality sells within its boundaries.  CEI acknowledges in its merit 
brief that the city’s extraterritorial sales in 2017 amounted to “approximately [three 
percent] of CPP’s total sales.”  The fact that such a relatively small amount of 
surplus product was sold by CPP extraterritorially belies CEI’s claims of unfair 
competition. 
{¶ 27} Today’s wholesale electricity market operates in a way that the 
framers of the 1912 Constitution could not have foreseen.  But the changing 
electricity market does not allow us to undermine the clear language of Article 
XVIII, Section 6.  CEI’s public-policy arguments are no different from the ones 
that were made when the people of Ohio adopted the amendments to the Ohio 
Constitution in 1912.  It is up to the General Assembly and Ohio’s voters, perhaps 
SUPREME COURT OF OHIO 
 
14 
through constitutional amendment, to address any issues of competitive imbalance 
between investor-owned utilities and municipal utilities. 
{¶ 28} We now turn to the agreement at the heart of this case: the city’s 
contract to provide Brooklyn with electricity for ten years.  The court of appeals 
determined that “since the city currently generates very little power of its own, 
arguably the only way the city could ensure that it had a sufficient supply of 
electricity to fulfill its contractual obligations to Brooklyn was if it intentionally 
purchased some electricity solely for the purpose of reselling it to Brooklyn.”  2020-
Ohio-33 at ¶ 38. 
{¶ 29} A court must grant summary judgment if, after viewing the evidence 
most favorably to the nonmoving party, “reasonable minds can come to but one 
conclusion and that conclusion is adverse to the party against whom the motion for 
summary judgment is made.”  Civ.R. 56(C). 
{¶ 30} The city claims that it obtains electricity from various sources, that 
it must purchase some electricity that exceeds the daily needs of its territorial 
customers, and that it uses some of that surplus to provide electricity to Brooklyn.  
However, the record does not show the amount of electricity that CPP has in surplus 
at any given time and how much of that surplus is used to satisfy its commitment 
to Brooklyn.  We therefore agree with the court of appeals that reasonable minds 
could differ on whether the city uses an “artificial surplus” to supply Brooklyn with 
electricity.  The trial court erred by granting summary judgment in favor of the city. 
Conclusion 
{¶ 31} Neither Article XVIII, Section 6 of the Ohio Constitution nor this 
court’s decision in Toledo Edison Co. requires a municipality to purchase the exact 
of amount of electricity necessary to satisfy the current needs of its territorial 
customers.  A municipal utility may acquire excess electricity capacity for reasons 
other than reselling it as surplus beyond the municipality’s boundaries without 
violating the Ohio Constitution.  A municipal utility may not, however, acquire 
                                                                                    
January Term, 2021 
 
15 
excess capacity for the sole purpose of reselling it outside the municipality’s 
territorial boundaries. 
{¶ 32} Because there are existing issues of material fact, we affirm the 
judgment of the Eighth District Court of Appeals, which reversed the trial court’s 
grant of summary judgment in favor of the city and remanded the cause to the trial 
court for further proceedings. 
Judgment affirmed. 
O’CONNOR, C.J., concurs. 
DONNELLY, J., concurs in judgment only. 
DEWINE, J., concurs in judgment only in part and dissents in part, with an 
opinion joined by FISCHER, J. 
KENNEDY, J., dissents, with an opinion. 
BRUNNER, J., dissents, with an opinion. 
_________________ 
DEWINE, J., concurring in judgment only in part and dissenting in part. 
{¶ 33} This case calls for the application of two provisions of the Ohio 
Constitution.  The first provision authorizes a municipality to operate a public 
utility or to purchase products or services from another utility for the use of the 
municipality or its inhabitants.  Ohio Constitution, Article XVIII, Section 4.  The 
second provision permits a municipality to dispose of “surplus product” that was 
generated from the operation of its own utility by selling it to others outside the 
municipality’s limits.  Ohio Constitution, Article XVIII, Section 6.  Neither 
provision allows a municipality to act as a de facto broker by purchasing utility 
products and then reselling them to customers outside the municipality. 
{¶ 34} The plain text of these constitutional provisions dictates this result.  
And history, as well as our caselaw in the years following the adoption of the 
constitutional provisions, reinforce the conclusion that this reading is the correct 
one.  The lead opinion and the dissents, though, have gotten sidetracked.  Relying 
SUPREME COURT OF OHIO 
 
16 
on a decision of this court from 2000, they focus almost exclusively on the meaning 
of the word “surplus” in determining whether the city of Cleveland may resell 
electricity that it has purchased to customers outside the municipality.  See Toledo 
Edison Co. v. Bryan, 90 Ohio St.3d 288, 737 N.E.2d 529 (2000).  But whether 
electricity that is resold in a brokered arrangement could be described as “surplus” 
is beside the point.  Under the constitutional provisions at issue, the city lacks any 
authority to resell electricity that it has purchased to those outside the municipality; 
it may only sell excess electricity that it has produced. 
{¶ 35} I would therefore hold that a municipality’s purchase of electricity 
for purposes other than to supply the municipality or its inhabitants is 
unconstitutional under Article XVIII, Section 4 of the Ohio Constitution.  And I 
would hold that Article XVIII, Section 6 of the Ohio Constitution does not permit 
a municipality to resell electricity that it has purchased from another utility to those 
outside the municipality. 
I.  The text of the municipal-utility amendments 
{¶ 36} The lead opinion devotes relatively little of its analysis to the actual 
text of the constitutional provisions at issue.  But that’s where we need to start.  And 
a careful reading of the text dictates the outcome of this case. 
{¶ 37} Article XVIII, Section 4 of the Ohio Constitution (“Section 4”) 
provides: “Any municipality may acquire, construct, own, lease and operate within 
or without its corporate limits, any public utility the product or service of which is 
or is to be supplied to the municipality or its inhabitants, and may contract with 
others for any such product or service.”  (Emphasis added.)  By its plain terms, 
Section 4 permits a municipality to purchase a product such as electricity for the 
purpose of supplying it to the municipality or its residents.  But within this grant of 
authority is an inherent constraint: the municipality may not purchase electricity for 
purposes other than its use within the municipality’s limits. 
                                                                                    
January Term, 2021 
 
17 
{¶ 38} This is clear from the text.  Section 4 grants a municipality the 
authority to “contract with others” for “any such product or service.”  The language 
“any such product” refers back to the previous clause, “any public utility the 
product or service of which is or is to be supplied to the municipality or its 
inhabitants.”  Id.  In other words, a municipality has the power to establish a public 
utility, but there is a limitation: “the product or service” of that utility must “be 
supplied to the municipality or its inhabitants.”  Id.  And it may contract with others 
for “any such product or service”—that is, a utility “product or service [that] is or 
is to be supplied to the municipality or its inhabitants.”  Id.  Thus, both the authority 
to establish a utility and the authority to contract for utility services are cabined by 
the use requirement: the product or service in question must be supplied to the 
municipality or its inhabitants. 
{¶ 39} Article XVIII, Section 6 of the Ohio Constitution (“Section 6”) is the 
counterpart to Section 4.  Whereas Section 4 deals with a municipality’s power to 
establish its own public utility, Section 6 authorizes the municipality to sell the 
utility’s excess product.  Section 6 states: 
 
Any municipality, owning or operating a public utility for 
the purpose of supplying the service or product thereof to the 
municipality or its inhabitants, may also sell and deliver to others 
any transportation service of such utility and the surplus product of 
any other utility in an amount not exceeding in either case fifty per 
cent of the total service or product supplied by such utility within the 
municipality * * *. 
 
(Emphasis added.) 
{¶ 40} While Section 4 allows a municipality to operate a utility “the 
product or service of which” is supplied to the municipality’s residents, Section 6 
SUPREME COURT OF OHIO 
 
18 
allows a limited amount of a surplus produced by a municipal utility to be sold 
outside the municipality.  But nothing in section 6 authorizes a municipality to 
resell any product that was purchased elsewhere. 
{¶ 41} This is evident from the structure of Section 6.  The phrase “the 
surplus product of any other [i.e., nontransportation] utility” relates back to the 
“public utility” identified in the first part of the provision.  Id.  And such a public 
utility is specifically identified as “a public utility [owned or operated by the 
municipality] for the purpose of supplying the service or product thereof to the 
municipality or its inhabitants.”  Id. 
{¶ 42} In short, Section 4 “grants municipalities broad powers to own and 
operate public utilities” and authorizes them “to contract for public utility services.”  
Steinglass & Scarselli, The Ohio State Constitution 349-350 (2011).  Section 6, in 
turn, “allows a municipality that owns or operates a utility to sell the surplus product 
produced by the utility as long as the surplus does not exceed 50 percent of the total 
product used by the municipality owning or operating the utility.”  Id. at 351.  
Indeed, as one authority has explained: 
 
It is only where a utility is acquired or operated by a municipality 
for the purpose of supplying services or products to its inhabitants 
under Section 4 that the municipality is further authorized by 
Section 6 to treat undisposed of services and products as ‘surplus,’ 
which may be distributed to consumers other than inhabitants of the 
municipality. 
 
Vaubel, Municipal Home Rule in Ohio: Part V, 3 Ohio N.U.L.Rev. 1375, 1459 
(1976); see also Miller v. Orrville, 48 Ohio App. 87, 90-91, 192 N.E. 474 (9th 
Dist.1934) (“Section 4 expressly authorizes a municipality to own and operate a 
utility outside of the municipality if the product or service thereof is to be supplied 
                                                                                    
January Term, 2021 
 
19 
to the inhabitants of such municipality; and section 6 provides that a municipality 
which, through its own utility, supplies the service or product to its inhabitants, 
‘may also sell and deliver to others * * * the surplus product,’ etc.” [emphasis and 
ellipsis in original]). 
{¶ 43} The lead and dissenting opinions debate whether the practice of 
buying electricity for the purpose of reselling it outside the municipality fits within 
the meaning of “surplus” and is thus permitted under Section 6.  By homing in on 
that word, they overlook the fact that the practice runs afoul of both Section 4 and 
Section 6.  Section 4 authorizes the purchase of electricity only for the purpose of 
supplying it to the municipality or its inhabitants—not for selling it to others outside 
the municipality.  And Section 6 does not permit a municipality to dispose of excess 
product that it purchased for the use of its inhabitants; it speaks to only the disposal 
of surplus product created by a municipality’s own utility plant.  The two provisions 
neither contemplate nor allow a municipality to act as a de facto broker for the sale 
of utility products. 
{¶ 44} Quite simply, Section 4 requires that a municipality’s acquisition or 
operation of a public utility be undertaken for the purpose of supplying the 
municipality or its inhabitants, and it is only when the operation of the utility creates 
excess product beyond the needs of the municipality or its inhabitants that the 
municipality is authorized by Section 6 to sell the excess to others outside the 
municipality. 
II.  The history of the municipal-utility amendments 
{¶ 45} History reinforces that the plain meaning of the text is the correct 
one.  Before the adoption of Article XVIII in 1912, “municipalities could only 
exercise those powers granted to them by the General Assembly,” and there was a 
growing call for cities to have more control over their own affairs.  Steinglass & 
Scarselli, The Ohio State Constitution, at 49-50.  Thus, a central feature of the Ohio 
Constitutional Convention of 1912 was the proposal of a municipal-home-rule 
SUPREME COURT OF OHIO 
 
20 
amendment.  This amendment “changed the relationship between state and local 
governments by granting municipalities the specific constitutional power to choose 
their own form of government,” “to exercise the powers of government over local 
affairs independent of the General Assembly,” and “to operate and control public 
utilities.”  Id. at 345.  Following debates, the amendment was proposed by the 
convention and adopted by the voters at the September 3, 1912 general election.  
Id. at 52-53. 
{¶ 46} The topic of municipal ownership and operation of utilities was of 
particular concern to the delegates at the 1912 convention.  In years prior, the 
legislature had granted municipalities that operated water utilities limited authority 
to supply water to neighboring municipalities.  See G.C. 348, 66 Ohio Laws 207 
(1869); G.C. 352, 66 Ohio Laws 208 (1869).  Those provisions were later amended 
to apply to publicly owned electrical utilities.  See Miller, 48 Ohio App. at 92, 192 
N.E. 474.  But the question of a municipality’s “power to own and operate a public 
utility had been open to some question,” Vaubel, Municipal Home Rule in Ohio: 
Part V, at 1382-1383, and prior to the adoption of Article XVIII, “the courts had 
held that the power to contract with public utilities was dependent upon the 
uncertainties of statutory grant, like other municipal authority,” id. at 1383.  Thus, 
“[t]he convention was to provide a means for alleviating the growing inconvenience 
caused [to] municipalities by their continuing need to seek authority from the state 
legislature to compete with private firms in the expanding field of public utility 
services.”  Id.  Professor George Knight, one of the drafters of the provisions, 
explained that the amendment sought to 
 
make clearer or make broader the power of municipalities to control, 
either by leasing, constructing, or acquiring from corporations now 
owning or operating the public utilities within the corporation, the 
water supply, the lighting and heating supply and other things—
                                                                                    
January Term, 2021 
 
21 
without specifying—which come within the purview of municipal 
public utilities, thus removing once and for all, all legitimate 
questions as to the authority of municipalities to undertake and carry 
on essential municipal activities. 
 
2 Proceedings and Debates of the Constitutional Convention of the State of Ohio 
1433 (1912). 
{¶ 47} Still, the discussion of the municipal-utility amendments at the 1912 
convention focused on the authority of a municipality to operate public utilities for 
the benefit of its inhabitants and to sell the surplus product of those utilities.  As 
George W. Harris, the chairman of the convention’s committee on municipal 
government, explained, “Section 4 confers power to acquire through purchase, 
lease or construction any and all public utilities, and the power is given to condemn 
for public use any existing private utility.”  2 Proceedings and Debates at 1458.  
He elaborated on the meaning of Section 6: 
 
Section 6 gives to the municipality the right to sell an amount 
of its surplus product or service in any public utility equal to fifty 
per cent of that supplied to the inhabitants of the municipality.  . 
Now, we took a great deal of time in getting the correct 
phraseology for this section.  The members will recall how every 
word was weighed, what its effect was in relation to what we had in 
mind, and it was found an absolute necessity in order to make 
municipal ownership feasible, because if you were going to stop a 
traction line at the city limits frequently you might as well have no 
traction line, but, to prevent that, the limit of fifty per cent excess 
product or service was determined on, which seemed very 
reasonable. 
SUPREME COURT OF OHIO 
 
22 
 
(Emphasis added.)  Id.  It was therefore clear to the delegates that the provision 
allowing the municipality to sell or deliver surplus product or services outside the 
municipality was necessary to make municipal ownership and operation of a utility 
economically viable—it was foreseeable that such a utility would produce more 
product than could be used by the municipality and that the municipality would, as 
a practical matter, need to sell that surplus product elsewhere. 
{¶ 48} The notion that the surplus-sale provision is tied to a municipality’s 
own production is reflected elsewhere in the debates.  One delegate raised the 
question whether a municipality was permitted to acquire a railroad that had more 
rail line extending outside the municipality’s limits than within its limits, and the 
following exchange occurred: 
 
MR. KRAMER: Where is there anything that prevents the 
municipality from owning an interurban line clear to Columbus? 
MR. KNIGHT: What would it do with it?  What could it do 
with it?   
MR. KRAMER: Suppose it wanted to go into the railway 
service? 
MR. KNIGHT: What for? 
MR. KRAMER: As a matter of profit. 
MR. KNIGHT: It can not do it.  It can not furnish service to 
anybody outside of the corporate limits in any amount exceeding 
fifty per cent of what it furnishes inside the limits. 
 
(Capitalization in original.)  Id. at 1444.  Knight went on to say that the municipality 
“can not furnish transportation outside of its corporate limits exceeding fifty per 
                                                                                    
January Term, 2021 
 
23 
cent of what it furnishes inside.  Suppose you built a railroad clear across the state.  
The municipality couldn’t operate it.”  Id. at 1445. 
{¶ 49} Neither the plain language of the municipal-utility amendments nor 
the debate surrounding them suggest that the framers understood the provisions to 
authorize the resale of utility products purchased by the municipality from other 
suppliers.  This is consistent with broader views on municipal-utility ownership at 
the time.  As one contemporary treatise recognized, the authority of a municipality 
to provide water or light for its inhabitants does not permit the municipality “to go 
into the business of buying and selling water as a commodity to other 
municipalities.”  (Emphasis deleted.)  3 John F. Dillon, Commentaries on the Law 
of Municipal Corporations 2121 (5th Ed.1911).  But the treatise also recognized 
that  
 
[w]hen a city owns, maintains, and operates its own water or light 
plant, it is to be reasonably expected that in the prudent management 
of its works some excess beyond the natural requirements of the 
public will arise; that there will be some surplus which will be 
available for disposal over and above such as it requires for its own 
purposes and such as its inhabitants can claim by reason of the prior 
duty which it owes them.  With reference to the surplus so arising, 
the city may contract with private individuals for the private use 
thereof so long as it does so without affecting the supply which is 
required for public or quasi-public purposes. 
 
(Emphasis in original.)  Id. at 2127. 
{¶ 50} Another contemporary commentator explained that “a municipality 
may contract to furnish a supply from its plant, for use outside of the city, where 
not prohibited by statute or charter provision, and where there is sufficient water to 
SUPREME COURT OF OHIO 
 
24 
furnish the residents all that is necessary for their use.”  4 Eugene McQuillin, A 
Treatise on the Law of Municipal Corporations, Section 1800, at 3855 (1912).  But 
even when such implicit authority is recognized, “a distinction is to be drawn 
between a municipality which has contracted for a supply of water and then 
contracts to furnish a part of it to another municipality, which is unauthorized, and 
a municipality which contracts to furnish a supply from its own plant.”  Id. at 3857-
3858. 
{¶ 51} In sum, at the very same time that the framers otherwise granted 
broad home-rule powers to municipalities, they placed explicit limitations on the 
power of municipalities to sell utility products and services.  Municipalities were 
authorized to operate utilities, but they were subjected to restrictions that were 
designed to ensure that the utilities stayed within their proper purpose of serving 
the inhabitants of the municipality.  The framers recognized that economies of 
scale, vagaries in supply and demand, and the need to plan for future growth meant 
that a prudent municipal utility might sometimes produce more than its residents 
then needed.  As a consequence, the constitutional provisions allowed a 
municipality to sell its own excess product but imposed the 50 percent limitation to 
ensure that the municipal utility didn’t stray too far beyond the authorized purpose 
of serving its own citizens.  Further, the provisions allowed a municipality to make 
purchases necessary for it to serve its own citizens but did not permit the resale of 
purchased utility services. 
III.  Caselaw interpreting the municipal-utility amendments 
{¶ 52} At least until our decision in Toledo Edison, 90 Ohio St.3d 288, 737 
N.E.2d 529, this court’s longtime understanding of Sections 4 and 6 was in accord 
with the plain language of their text and the historical context in which they were 
adopted by Ohio voters. 
 
 
                                                                                    
January Term, 2021 
 
25 
A.  Cases decided before Toledo Edison 
{¶ 53} Our 20th century caselaw comports with the view that Sections 4 and 
6 limit the authority of a municipality to purchase and sell utility products and 
services.  As far back as 1919, this court described Section 4 as “expressly 
authoriz[ing] a municipality to contract with any public utility, the product or 
service of which is to be supplied to the municipality or its inhabitants.”  Ohio River 
Power Co. v. Steubenville, 99 Ohio St. 421, 124 N.E. 246 (1919).  In other words, 
the municipality may purchase electricity, but only for its own internal use. 
{¶ 54} In State ex rel. Wilson v. Hance, 169 Ohio St. 457, 458, 159 N.E.2d 
741 (1959), this court considered a contract under which a city was to lease and 
operate an electricity-generation plant for the purpose of providing electricity to 
nonresident consumers.  This court noted that Section 4 authorizes municipalities 
to acquire public utilities for the purpose of serving their inhabitants and to contract 
with others for utility products or services.  Id. at 460.  But we went on to stress 
that “the disposition of the surplus services of such utilities are strictly limited by 
Section 6 of Article XVIII.”  Id.  In analyzing that provision, this court reasoned: 
 
It is obvious from a consideration of that constitutional 
limitation that, although the framers of the Constitution believed that 
it would be advantageous for municipal corporations to have the 
power to provide public-utility services to their inhabitants and 
recognized that such an operation could create a surplus product 
which could be disposed of outside the corporate limits of the 
municipality, they clearly intended to limit municipalities primarily 
to the furnishing of services to their own inhabitants and to prevent 
such municipalities from entering into the general public-utility 
business outside their boundaries in competition with private 
enterprise. 
SUPREME COURT OF OHIO 
 
26 
 
(Emphasis added.)  Id. at 461. 
{¶ 55} In Britt v. Columbus, 38 Ohio St.2d 1, 5-6, 309 N.E.2d 412 (1974), 
this court considered whether Sections 4 and 6 granted a municipality the authority 
to appropriate property outside the municipality’s limits for the purpose of selling 
its public-utility product to nonresidents.  We held that it was not authorized to do 
so.  .  We recognized that Section 4 unquestionably gave the municipality eminent-
domain authority outside the municipality for the purpose of establishing a public 
utility.  Id. at 8, citing Blue Ash v. Cincinnati, 173 Ohio St. 345, 182 N.E.2d 557 
(1962).  But we explained that because that power was “expressly restricted to 
public utilities, the product[] or service[] of which is or is to be supplied to the 
municipality or its inhabitants, the exercise of eminent domain authority for such 
purpose under Section 4 is necessarily likewise limited.”  Id. at 8-9.  And we went 
on to note our prior decisions holding that “the power to ‘contract with others for 
any such product or service’ confers authority to contract solely for the purchase 
by the municipality of utility products or services for its inhabitants.”  (Emphasis 
added.)  Id. at 9, citing State ex rel. Mitchell v. Council of Milan, 133 Ohio St. 499, 
14 N.E.2d 772 (1938), and Ohio Power Co. v. Attica, 23 Ohio St.2d 37, 261 N.E.2d 
123 (1970).  We therefore concluded that because the municipality sought to 
exercise its eminent-domain authority “for purposes other than supplying a public 
utility product or service to [the] municipality or its inhabitants,” the municipality’s 
actions were not authorized by Section 4.  Id. 
{¶ 56} This court in Britt proceeded to consider the question whether 
Section 6 independently granted a municipality the authority to acquire land 
through eminent-domain powers for the purpose of selling excess product to 
nonresidents.  We held that Section 6 gave no such authority.  We explained that 
the framers of the amendment had anticipated that “in the operation of a public 
utility by a municipality for its inhabitants, surplus products or services might be 
                                                                                    
January Term, 2021 
 
27 
created which could * * * be disposed of beyond the corporate limits of the 
municipality.”  (Emphasis added.)  Id. at 9-10, citing Hance.  But we observed that 
while the framers had explicitly addressed the power of condemnation with respect 
to municipal ownership of public utilities under Section 4, they had not done the 
same regarding the sale of surplus product under Section 6.  Id. at 11. 
{¶ 57} The above cases demonstrate this court’s long-standing recognition 
that Section 4 authorizes a municipality to provide utility products or services to its 
inhabitants, either through its own operation of a public utility or by contracting 
with others for such products or services, and that Section 6 permits the 
municipality to sell to others only surplus product that has been generated by the 
public utility. 
B.  Toledo Edison 
{¶ 58} The one outlier case is Toledo Edison, 90 Ohio St.3d 288, 737 
N.E.2d 529.  In that brief, 11-paragraph opinion, we confronted the question 
whether “a municipality has constitutional authority to purchase electricity solely 
for direct resale to an entity that is not an inhabitant of the municipality and not 
within the municipality’s limits.”  Id. at 291.  The Toledo Edison court began by 
emphasizing the language in Section 4 permitting a municipality to operate a public 
utility “ ‘the product or service of which is or is to be supplied to the municipality 
or its inhabitants.’ ”  (Emphasis in original.)  Id., quoting Ohio Constitution, Article 
XVIII, Section 4.  Consistent with our prior cases, this court explained that under 
Section 4, “a municipality’s authority to produce or purchase electricity is limited 
‘primarily to the furnishing of services to their own inhabitants.’ ”  Id. at 291-292, 
quoting Hance, 169 Ohio St. at 461, 159 N.E.2d 741. 
{¶ 59} The court then turned to the language of Section 6.  In accord with 
our prior holdings, we recognized that “Section 6 allows a municipality that owns 
or operates a utility for the purpose of generating its own electricity to sell surplus 
SUPREME COURT OF OHIO 
 
28 
electricity.”  (Emphasis added.)  Id. at 292.  This court concluded that, read 
together, 
 
Sections 4 and 6 only allow a municipality to purchase electricity 
primarily for the purpose of supplying its residents and reselling 
only surplus electricity from that purchase to entities outside the 
municipality.  This interpretation necessarily precludes a 
municipality from purchasing electricity solely for the purpose of 
reselling the entire amount of the purchased electricity to an entity 
outside the municipality’s geographic limits. 
 
Id. 
{¶ 60} In reaching that conclusion, the Toledo Edison court correctly 
determined that the purchase of electricity authorized by Section 4 is limited to that 
which is to be supplied to the municipality or its inhabitants.  The question in that 
case could have been answered on those grounds alone: Section 4 does not permit 
a municipality to purchase electricity for the purpose of reselling it to others outside 
the municipality.  But instead, the court incorrectly assumed that the surplus-sale 
provision in Section 6 permitted the resale of excess energy that resulted from a 
purchase of electricity.  In doing so, the court overlooked the textual constraints 
imposed by Sections 4 and 6, which limit resale to the surplus product created 
through the municipality’s operation of a public utility. 
{¶ 61} Like the lead opinion in this case, the Toledo Edison majority 
focused on the meaning of the word “surplus” and whether the practice of buying 
extra electricity that is not intended for use within the municipality amounts to 
creating an “artificial surplus.”  See 90 Ohio St.3d at 292-293, 737 N.E.2d 52.  But 
the resolution of the issue in that case (and the one here) did not depend on whether 
                                                                                    
January Term, 2021 
 
29 
the sale stemmed from a “genuine” or “artificial” surplus.  This is because the resale 
of electricity purchased by the municipality isn’t authorized at all. 
{¶ 62} Because Section 4 authorizes a municipality to operate an electricity 
plant or to purchase electricity for only the purpose of supplying electricity within 
the municipality, and because Section 6 sanctions only the sale of surplus product 
generated by the municipality’s plant, the municipality has no authority to act as a 
de facto broker by purchasing electricity and reselling it to others outside the 
municipality’s limits.  Thus, the Toledo Edison court’s ultimate conclusion was 
correct: “a municipality is prohibited from in effect engaging in the business of 
brokering electricity to entities outside the municipality in direct competition with 
public utilities.”  Id. at 293.  But in suggesting that purchased products may in some 
situations be resold under Sections 4 and 6, the Toledo Edison court misread the 
constitutional text. 
IV.  Resolution 
{¶ 63} I agree with the lead opinion that the Eighth District Court of 
Appeals correctly concluded that the trial court erred in granting Cleveland’s 
motion for summary judgment.  So to that limited extent, I concur in the judgment.  
But, unlike the lead opinion, I would instruct the trial court on remand to apply the 
plain language of the constitutional provisions: Cleveland may not resell electricity 
that it has purchased. 
{¶ 64} The Eighth District also affirmed the trial court’s denial of a cross-
motion for summary judgment filed by the Cleveland Electric Illuminating 
Company seeking a declaratory judgment as to the meaning of Sections 4 and 6.  
2020-Ohio-33, ¶ 19, 42.  I would reverse the judgment of the Eighth District on that 
point and instruct the trial court on remand to grant Cleveland Electric’s motion 
and enter a declaratory judgment consistent with this opinion.  Because the court 
does otherwise, I concur in judgment only in part and otherwise dissent. 
FISCHER, J., concurs in the foregoing opinion. 
SUPREME COURT OF OHIO 
 
30 
_________________ 
KENNEDY, J., dissenting. 
{¶ 65} I dissent.  Article XVIII, Section 6 of the Ohio Constitution 
empowers municipalities to sell their surplus utility services and products to those 
outside of the municipality “in an amount not exceeding * * * fifty per cent of the 
total service or product supplied by such utility within the municipality.”  Appellee 
and cross-appellant the city of Cleveland therefore has express home-rule authority 
to contract to sell its surplus electricity to the city of Brooklyn in the amount at 
issue here—approximately 4 percent of the electricity that the city supplies inside 
its borders.  The Ohio Constitution contains no language prohibiting municipalities 
from selling electricity to nonresidents from an “artificial,” lead opinion at ¶ 30, or 
purposely created surplus of electricity, and this court may not add such language.  
Rather, courts should read the words of a constitutional provision as written and 
apply their plain meaning.  State ex rel. Sylvania Home Tel. Co. v. Richards, 94 
Ohio St. 287, 294, 114 N.E. 263 (1916).  For these reasons, I dissent and would 
reverse the judgment of the Eighth District Court of Appeals and reinstate the trial 
court’s grant of summary judgment in favor of Cleveland. 
Constitutional Interpretation 
{¶ 66} “The purpose of our written constitution is to define and limit the 
powers of government and secure the rights of the people.”  Cleveland v. State, 157 
Ohio St.3d 330, 2019-Ohio-3820, 136 N.E.3d 466, ¶ 16 (lead opinion).  Its 
language controls as written unless it is changed by the people themselves through 
the amendment procedures established by Article XVI of the Ohio Constitution.  
The Ohio Constitution is the paramount law of this state, and we recognize that its 
framers chose its language carefully and deliberately, employed words in their 
natural sense, and intended what the words said, see Gibbons v. Ogden, 22 U.S. 1, 
188, 6 L.Ed. 23 (1824), and Lawnwood Med. Ctr., Inc. v. Seeger, 990 So.2d 503, 
510 (Fla.2008). 
                                                                                    
January Term, 2021 
 
31 
{¶ 67} Therefore, in construing the Ohio Constitution, our duty is to 
determine and give effect to the meaning expressed in its plain language, State ex 
rel. LetOhioVote.org v. Brunner, 123 Ohio St.3d 322, 2009-Ohio-4900, 916 N.E.2d 
462, ¶ 50, and “ ‘[w]here the meaning of a provision is clear on its face, we will not 
look beyond the provision in an attempt to divine what the drafters intended it to 
mean,’ ”  Toledo City School Dist. Bd. of Edn. v. State Bd. of Edn., 146 Ohio St.3d 
356, 2016-Ohio-2806, 56 N.E.3d 950, ¶ 16, quoting State ex rel. Maurer v. 
Sheward, 71 Ohio St.3d 513, 520-521, 644 N.E.2d 369 (1994).  We give undefined 
words in the Constitution their usual, normal, or customary meaning, id. at ¶ 16, 
and we may go beyond the text to consider other sources of meaning, such as the 
purpose of an amendment, the history of its adoption, or its attending 
circumstances, only “when the language being construed is ‘obscure or of doubtful 
meaning,’ ” State ex rel. Wallace v. Celina, 29 Ohio St.2d 109, 112, 279 N.E.2d 
866 (1972), quoting Cleveland v. Bd. of Tax Appeals, 153 Ohio St. 97, 103, 91 
N.E.2d 480 (1950); see also Maurer at 522 (“we will not look to the history of a 
provision where * * * the language of the provision is clear”). 
The Home Rule Amendment 
{¶ 68} Prior to 1912, “the source and extent of municipal power was derived 
from the enactments of the General Assembly.”  Cincinnati Bell Tel. Co. v. 
Cincinnati, 81 Ohio St.3d 599, 605, 693 N.E.2d 212.  “[M]unicipalities could 
exercise only those powers delegated by statute.”  Geauga Cty. Bd. of Commrs. v. 
Munn Rd. Sand & Gravel, 67 Ohio St.3d 579, 582, 621 N.E.2d 696 (1993).  “Such 
power, being legislative only, could be withdrawn from the municipalities, or 
amended, at any session of the Legislature, * * * and there was neither stability of 
law, touching municipal power, nor sufficient elasticity of law to meet changed and 
changing municipal conditions.”  Perrysburg v. Ridgway, 108 Ohio St. 245, 255, 
140 N.E. 595 (1923). 
SUPREME COURT OF OHIO 
 
32 
{¶ 69} The General Assembly also had the power to create, regulate, and 
abolish municipal utilities.  Euclid v. Camp Wise Assn., 102 Ohio St. 207, 210, 131 
N.E. 349 (1921).  “Prior to the 1912 amendment, and subsequent to 1851, utilities 
could only be owned and operated under power specially conferred by legislative 
enactment.”  Id. at 213.  Under the 1851 Ohio Constitution, municipalities did not 
have the “inherent right” to operate utilities, and when authorized by statute, 
municipal utilities were subject to “restrictions and conditions relative to [the 
utility] without limit.”  Id. at 210. 
{¶ 70} To remedy those problems, the people of this state adopted Ohio’s 
Home Rule Amendment in 1912, which provides that “[m]unicipalities shall have 
authority to exercise all powers of local self-government and to adopt and enforce 
within their limits such local police, sanitary and other similar regulations, as are 
not in conflict with general laws.”  Article XVIII, Section 3, Ohio Constitution.  
Article XVIII, Section 7 states that “[a]ny municipality may frame and adopt or 
amend a charter for its government and may, subject to the provisions of section 3 
of this article, exercise thereunder all powers of local self-government.” 
{¶ 71} “[T]he intention of the Home Rule Amendment was to eliminate 
statutory control over municipalities by the General Assembly.”  Cincinnati Bell 
Tel. Co., 81 Ohio St.3d at 605, 693 N.E.2d 212.  Accordingly,  
 
“[b]y reason of Sections 3 and 7 of Article XVIII of the Ohio 
Constitution, a charter city has all powers of local self-government 
except to the extent that those powers are taken from it or limited by 
other provisions of the Constitution or by statutory limitations on 
the powers of the municipality which the Constitution has 
authorized the General Assembly to impose.” 
 
                                                                                    
January Term, 2021 
 
33 
(Emphasis added in Westlake.)  State ex rel. Commt. for the Charter Amendment, 
City Trash Collection v. Westlake, 97 Ohio St.3d 100, 2002-Ohio-5302, 776 N.E.2d 
1041, ¶ 31, quoting Bazell v. Cincinnati, 13 Ohio St.2d 63, 233 N.E.2d 864 (1968), 
paragraph one of the syllabus. 
{¶ 72} And “[w]ith respect to a municipally operated public utility, the 
municipality’s powers, rights and privileges are derived directly from the people, 
pursuant to the provisions of Sections 4 and 6 of Article XVIII of the Constitution, 
and not from the General Assembly.”  State ex rel. McCann v. Defiance, 167 Ohio 
St. 313, 316, 148 N.E.2d 221 (1958).  Article XVIII, Section 4 states, “Any 
municipality may acquire, construct, own, lease and operate within or without its 
corporate limits, any public utility the product or service of which is or is to be 
supplied to the municipality or its inhabitants, and may contract with others for any 
such product or service.”  Article XVIII, Section 6 further provides:  
 
Any municipality, owning or operating a public utility for 
the purpose of supplying the service or product thereof to the 
municipality or its inhabitants, may also sell and deliver to others 
any transportation service of such utility and the surplus product of 
any other utility in an amount not exceeding in either case fifty per 
cent of the total service or product supplied by such utility within 
the municipality, provided that such fifty per cent limitation shall 
not apply to the sale of water or sewage services. 
 
{¶ 73} The Home Rule Amendment, then, reversed the balance of power 
between the state and municipalities regarding the operation and regulation of 
municipal utilities.  As this court explained in McCann, “it would appear that the 
General Assembly has no power to limit or restrict, by regulation or otherwise, the 
power and authority of a municipality to operate a public utility for the purpose of 
SUPREME COURT OF OHIO 
 
34 
supplying the product thereof to such municipality or its inhabitants, or selling and 
delivering to others some of the surplus product thereof.”  Id. at 316. 
Toledo Edison Co. v. Bryan 
{¶ 74} In Toledo Edison Co. v. Bryan, this court confronted the same issue 
presented in this case: “whether a municipality has constitutional authority to 
purchase electricity solely for direct resale to an entity that is not an inhabitant of 
the municipality and not within the municipality’s limits.”  90 Ohio St.3d 288, 291, 
737 N.E.2d 529 (2000).  We explained that in adopting Article XVIII, Section 4, 
the people “intend[ed] to limit a municipality’s authority to produce or acquire 
electricity primarily for the purpose of serving it or its inhabitants’ needs,” id. at 
292, and that the people intended for Article XVIII, Section 6 “to limit a 
municipality’s ability to sell only that electricity that is in excess of what is needed 
by the municipality or its inhabitants,” id.  And we read Sections 4 and 6 in pari 
materia to “only allow a municipality to purchase electricity primarily for the 
purpose of supplying its residents and reselling only surplus electricity from that 
purchase to entities outside the municipality.”  Id. 
{¶ 75} “This interpretation,” this court determined, “necessarily precludes 
a municipality from purchasing electricity solely for the purpose of reselling the 
entire amount of the purchased electricity to an entity outside the municipality’s 
geographic limits.”  Id.  “This prohibition includes a de facto brokering of 
electricity, i.e., where a municipality purchases electricity solely to create an 
artificial surplus for the purpose of selling the electricity to an entity not within the 
municipality’s geographic boundaries.”  Id. at 293. 
{¶ 76} Toledo Edison Co. provides the rule of decision in this case, and the 
doctrine of stare decisis generally requires a court to adhere to an established 
precedent in subsequent cases in which the same question of law is at issue.  Clark 
v. Snapper Power Equip., Inc., 21 Ohio St.3d 58, 60, 488 N.E.2d 138 (1986).  But 
stare decisis does not compel this court to follow an incorrect interpretation of the 
                                                                                    
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35 
Constitution.  As we explained in Rocky River v. State Emp. Relations Bd., “each 
judge remembers above all that she or he has sworn to support and defend the 
Constitution—not as someone else has interpreted it but as the judge deciding the 
case at bar interprets it.”  43 Ohio St.3d 1, 6-7, 539 N.E.2d 103 (1989).  Because it 
is “beyond the power of the legislature to change or ‘correct’ judicial interpretation 
of the Constitution,” id. at 6, “it is incumbent on the court to make the necessary 
changes and yield to the force of better reasoning,” id. 
{¶ 77} In my view, Toledo Edison Co. should be overruled.  To begin, this 
court erroneously construed Article XVIII, Section 6 as imposing a prohibition on 
reselling electricity.  However, the purpose of the Home Rule Amendment was to 
rebalance the allocation of power between the state and municipalities.  Article 
XVIII, Sections 4 and 6 represent a positive grant of power to municipalities, 
creating a constitutional default rule that if a municipality owns and operates a 
utility within the bounds of the power granted to it, it is immune from regulation 
enacted by the General Assembly.  See McCann, 167 Ohio St. at 316, 148 N.E.2d 
221 (the General Assembly has “no power” to restrict municipalities’ exercise of 
power under Article XVIII, Sections 4 and 6).  Section 6 therefore limits the extent 
of the specific home-rule power granted to municipalities to operate utilities, but it 
does not prohibit a municipality from acting in ways otherwise permitted by the 
home-rule authority conferred by Article XVIII, Section 3 or by state law.  Section 
6 says what a municipality may do, not what it shall not do. 
{¶ 78} Operating a municipal utility is a proprietary function that is separate 
from a municipality’s governmental functions.  Akron v. Pub. Util. Comm., 149 
Ohio St. 347, 354, 78 N.E.2d 890 (1948); see also R.C. 2744.01(G)(2)(c) (operating 
a municipal utility defined as a proprietary function); Schenkolewski v. Cleveland 
Metroparks Sys., 67 Ohio St.2d 31, 33, 36-37, 426 N.E.2d 784 (1981) (municipal 
corporations have both governmental and proprietary functions).  And we have 
recognized that “so far as a municipality acts in a proprietary capacity it possesses 
SUPREME COURT OF OHIO 
 
36 
the same rights and powers and is subject to the same restrictions and regulations 
as other like proprietors.”  Akron at 354.  The state generally excludes municipal 
utilities from regulation, see R.C. 4928.01(A)(11) and 4933.81(A), and neither the 
court below nor the parties point to any statute prohibiting municipalities from 
reselling electricity to nonresidents. 
{¶ 79} But more fundamentally, this court in Toledo Edison Co. failed to 
give effect to the plain meaning of the Ohio Constitution’s language.  According to 
a dictionary that was published contemporarily with the adoption of the Home Rule 
Amendment, the word “surplus” meant “[t]hat which remains when use or need is 
satisfied; excess; overplus,” Webster’s New International Dictionary 2086 (1911), 
and “[b]eing or constituting a surplus; more than sufficient,” id. at 2087.  The word 
“surplus” does not have any connotation distinguishing between its being natural 
or artificial, or purposeful or accidental.  It simply means having more than enough.  
Therefore, according to the natural reading of Article XVIII, Section 6, a 
municipality has the express constitutional authority to sell its excess electricity to 
nonresidents so long as (1) the needs of its residents are satisfied first and (2) sales 
to nonresidents do not exceed 50 percent of the total electricity supplied within the 
municipality.  To hold that Section 6 prohibits sales from an “artificial” or 
purposely created surplus, then, is to add words to the constitutional provision; 
however, a court may not “add to or subtract from the plain and usual meaning of 
[a] constitutional provision,” State v. Billotto, 104 Ohio St. 13, 15-16, 135 N.E. 285 
(1922). 
{¶ 80} We are obligated to construe the words in Article XVIII, Section 6 
in the way that the people who adopted the 1912 Ohio Constitution would have 
naturally understood them.  See Centerville v. Knab, 162 Ohio St.3d 623, 2020-
Ohio-5219, 166 N.E.3d 1167, ¶ 22.  Although framed during the Ohio 
Constitutional Convention of 1912, the Constitution was adopted through the votes 
of the body of electors in this state.  And as the United States Supreme Court has 
                                                                                    
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37 
explained, that is the reason that “[t]he simplest and most obvious interpretation of 
a constitution, if in itself sensible, is the most likely to be that meant by the people 
in its adoption.”  Lake Cty. v. Rollins, 130 U.S. 662, 671, 9 S.Ct. 651, 32 L.Ed. 1060 
(1889).  It is manifest that the people in 1912 were unfamiliar with the current 
realities of electricity generation and distribution in this country, including 
deregulation, interstate wholesale markets, long- and short-term contracting, and 
reserve-capacity regulations.  We cannot take the meaning of the word “surplus” as 
it is might be understood in the modern-day law of public utilities and project it 
onto the 1912 voters. 
{¶ 81} Rather, the people who adopted Article XVIII, Section 6 understood 
it to mean what it said: municipalities would be permitted to sell as much as one-
third of its utilities’ total product to nonresidents after the needs of its residents 
were satisfied.  Such a large surplus—one-third of the total supplied to both 
residents and nonresidents—could be produced only by operating the utility at a 
capacity greater than necessary to serve the municipality’s residents, with the 
purpose of selling the excess to nonresidents.  As one delegate to the 1912 
convention explained, allowing sales to nonresidents was “an absolute necessity in 
order to make municipal ownership feasible.”  2 Proceedings and Debates of the 
Constitutional Convention of the State of Ohio 1458 (1912).  That is, a large amount 
of a utility’s production was expected to be sold to nonresidents in order to make 
sales to residents cost-effective. 
{¶ 82} In this case, Cleveland sells to nonresidents an amount of electricity 
that is approximately 4 percent of the electricity that its municipal utility supplies 
within the city, and there is no indication that the electricity supplied to 
nonresidents prevents the utility from satisfying the demand of Cleveland residents 
first.  Article XVIII, Section 6 therefore expressly authorizes these sales.  The trial 
court properly entered summary judgment in favor of the city, and I would reverse 
the contrary judgment of the court of appeals.  Because this court does not, I dissent. 
SUPREME COURT OF OHIO 
 
38 
_________________ 
BRUNNER, J., dissenting. 
{¶ 83} I agree with the lead opinion that Article XVIII, Section 6 of the 
Ohio Constitution does not require a municipal utility to purchase only the exact 
amount of electricity that it needs to serve its inhabitants and that there are 
numerous lawful reasons why it might acquire a surplus.  I disagree, however, with 
the judgment affirming the remand of this case to the trial court on the ground that 
appellee and cross-appellant, the city of Cleveland, may have violated Article 
XVIII, Section 6 when it agreed to provide electricity to appellee and cross-
appellant, the city of Brooklyn.  The lead opinion bases its determination on the 
rule that this court announced in Toledo Edison Co. v. Bryan, 90 Ohio St.3d 288, 
737 N.E.2d 529 (2000).  In my view, the facts here do not enable appellant and 
cross-appellee, the Cleveland Electric Illuminating Company (“Cleveland 
Electric”), to prevail on its claim under Toledo Edison Co. 
{¶ 84} In Toledo Edison Co., a public utility sued four municipalities after 
the municipalities formed a joint venture and began providing electricity to an 
industrial customer located outside their geographic limits.  Id. at 288-289.  In its 
complaint, the public utility identified ordinances by which the individual 
municipalities had authorized their respective utilities to enter into power-purchase 
agreements with a wholesale electricity supplier.  Id. at 289.  It also alleged that the 
resulting agreements were entered into for the purpose of enabling the 
municipalities to provide electricity to the industrial customer.  Id.  Overall, the 
public utility claimed, this meant that the purchase agreements violated Article 
XVIII, Section 4 and that the municipalities’ resale to the industrial customer of the 
electricity purchased under those agreements violated Section 6.  Id. 
{¶ 85} When the dispute reached this court, the four municipalities 
acknowledged in their briefs to this court that they had entered into the agreements 
with the wholesale electricity supplier “[a]s part of their arrangements to supply 
                                                                                    
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39 
electricity to” the industrial customer.  Toledo Edison Co. v. Bryan, case No. 1999-
1280, *7-8 (Feb. 23, 2000).  They argued, however, that these agreements did not 
mean that they acted as electricity brokers.  Id. at *8.  They also emphasized that 
some of the electricity that they provided to the industrial customer came from 
another source: it had been “reallocated from preexisting joint wholesale electricity 
purchase.”  Id. 
{¶ 86} Given that background, we observed that “[t]he municipalities had 
to purchase electricity in order to fulfill their obligation to provide [the industrial 
customer] with electricity.”  Toledo Edison Co., 90 Ohio St.3d at 289, 737 N.E.2d 
529.  .  We then held that Sections 4 and 6 prohibit a municipality from “purchasing 
electricity solely for the purpose of reselling it to an entity that is not within the 
municipality’s geographic limits.”  Id. at 293.  This includes “a de facto brokering 
of electricity, i.e., where a municipality purchases electricity solely to create an 
artificial surplus” for resale outside its boundaries.  Id.  We therefore entered 
judgment remanding the case to the trial court for it to determine “whether the 
electricity purchased by the municipalities [in the agreements with the wholesale 
electricity supplier] was solely for the purpose of resale to an entity outside the 
geographic boundaries of the municipalities.”  Id. 
{¶ 87} In my view, the holding of Toledo Edison Co. is properly understood 
as being limited to its facts.  That is, the case announces a rule to be applied when 
considering specific power-purchase agreements.  The dispute before this court was 
clearly focused on specific power-purchase agreements that the municipal utilities 
acknowledged were entered into for the purpose of resale to the industrial customer.  
This court’s holding and remand order therefore provided the trial court with a 
concrete and manageable task: it was required to determine whether the specific 
agreements with the wholesale electricity supplier were entered into “solely” for 
the purpose of resale.  If so, they were unlawful. 
SUPREME COURT OF OHIO 
 
40 
{¶ 88} The lead opinion here does not identify any fact indicating that 
appellee and cross-appellant, Cleveland Public Power (“CPP”), entered into any 
specific power-purchase agreement in order to meet its obligation to provide 
electricity to Brooklyn.  Nor does Cleveland Electric.  Instead, Cleveland Electric 
discusses in its briefs CPP’s power-purchase contracts as a whole and argues that 
they enable CPP to purchase exactly the amount of electricity that it needs to serve 
entities within Cleveland, meaning that any additional electricity that CPP obtains 
is an unlawful artificial surplus under Article XVIII, Sections 4 and 6.  I agree with 
the lead opinion’s rejecting this argument.  And because the parties have already 
had an opportunity to conduct discovery, no additional facts on these matters should 
be identified or developed on remand. 
{¶ 89} In my view, Cleveland Electric has not met its burden on summary 
judgment.  It has not identified any fact that would enable a reasonable juror to 
conclude that CPP entered into any power-purchase agreement “solely” for the 
purpose of reselling that power to Brooklyn.  Cleveland and CPP are therefore 
entitled to summary judgment on Cleveland Electric’s claim under Sections 4 and 
6. 
{¶ 90} For these reasons, I respectfully dissent. 
_________________ 
Benesch, Friedlander, Coplan & Aronoff, L.L.P., Gregory J. Phillips, 
Michael J. Montgomery, Michael D. Meuti, James E. von der Heydt, and James J. 
Walsh Jr., for appellant and cross-appellee. 
Carpenter, Lipps & Leland, L.L.P., Kimberly W. Bojko, Angela Paul 
Whitfield, and Stephen E. Dutton, for appellees and cross-appellants the city of 
Cleveland and Cleveland Public Power. 
Bricker & Eckler, L.L.P., Drew H. Campbell, and Elyse Akhbari, for 
appellee and cross-appellant Cuyahoga County. 
                                                                                    
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41 
Kevin M. Butler, Brooklyn Law Director, for appellee and cross-appellant 
city of Brooklyn. 
Thompson Hine, L.L.P., and Stephanie M. Chmiel; and Kurt Helfrich and 
Lija Kaleps-Clark, urging reversal for amici curiae Buckeye Power, Inc., and Ohio 
Rural Electric Cooperatives, Inc. 
Steven T. Nourse, urging reversal for amicus curiae Ohio Power Company. 
James E. McLean, urging reversal for amicus curiae Duke Energy Ohio, 
Inc. 
Michael J. Schuler, urging reversal for amicus curiae The Dayton Power 
and Light Company. 
Lisa G. McAlister and Gerit F. Hull, for amicus curiae American Municipal 
Power, Inc., in support of appellees and cross-appellants. 
Lisa G. McAlister, for amicus curiae Ohio Municipal Electric Association, 
in support of appellees and cross-appellants. 
Garry E. Hunter; and Paul W. Flowers Co., L.P.A., Paul W. Flowers, and 
Louis E. Grube, for amicus curiae Ohio Municipal League, in support of appellees 
and cross-appellants. 
_________________