Title: Ohio Consumers' Counsel v. Pub. Util. Comm.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Ohio Consumers' Counsel v. Pub. Util. Comm., 114 Ohio St.3d 340, 2007-Ohio-4276.] 
 
 
OHIO CONSUMERS’ COUNSEL, APPELLANT, v. PUBLIC UTILITIES  
COMMISSION OF OHIO ET AL., APPELLEES. 
[Cite as Ohio Consumers’ Counsel v. Pub. Util. Comm., 
 114 Ohio St.3d 340, 2007-Ohio-4276.] 
PUCO’s decision approving a new stipulation was not unreasonable or unlawful. 
(No. 2006-0788—Submitted April 17, 2007—Decided September 5, 2007.) 
APPEAL from the Public Utilities Commission of Ohio, No. 05-276-EL-AIR. 
__________________ 
 
O’DONNELL, J. 
{¶ 1} This is an appeal as of right by appellant, Ohio Consumers’ 
Counsel (“OCC”), from an order of the Public Utilities Commission of Ohio 
(“commission” or “PUCO”) in PUCO No. 05-276-EL-AIR.  The commission’s 
order approved a stipulation signed by intervening appellee Dayton Power & 
Light Company (“DP&L”), Cargill, Inc., Honda of America Mfg., Inc., and 
intervening appellee Industrial Energy Users-Ohio. 
Background 
{¶ 2} The backdrop for this appeal is Am.Sub.S.B. No. 3, 148 Ohio 
Laws, Part IV, 7962 (“SB 3”), effective October 5, 1999, which provided for 
restructuring Ohio’s electric-utility industry to achieve retail competition with 
respect to the generation component of electric service.  SB 3 provided for a 
transition period, termed the “market-development period,” during which an 
electric utility’s rates would be subject to certain regulatory requirements. 
{¶ 3} As a result of the failure of competition to develop according to 
expectations, DP&L filed an application in 2002 to extend its market-
development period from December 31, 2003, through December 31, 2005.  In 
September 2003, the commission approved a stipulation providing for the 
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2 
extension of DP&L’s market-development period (“MDP-extension stipulation”).  
In addition to extending the market-development period, the commission 
approved a three-year “rate-stabilization period,” to begin immediately following 
the end of the market-development period and ending on December 31, 2008.  In 
re Continuation of Rate Freeze & Extension of Market Dev. Period for Dayton 
Power & Light Co. (Sept. 2, 2003), PUCO No. 02-2779-EL-ATA, 2003 WL 
22142843 (the “MDP-extension case”) at 13, 19, 25.1 
{¶ 4} The order in the MDP-extension case also permitted DP&L to 
collect, upon commission approval, a rate-stabilization surcharge of up to 11 
percent of DP&L’s tariffed generation rates as of January 1, 2004.  Id. at 28.  The 
rate-stabilization surcharge was intended to allow DP&L to recover generation-
related cost increases for fuel, for environmental- and tax-law compliance, and for 
physical security and cyber security at plants owned by DP&L and its affiliates.  
Id. at 27.  The rate-stabilization surcharge was to be assessed on all customers in 
DP&L’s service territory, whether those customers purchased generation service 
from DP&L or another supplier.  Id. at 28.  With respect to those customers not 
taking generation service from DP&L, the rate-stabilization surcharge would act 
as a mechanism for the recovery of “provider-of-last-resort” (“POLR”) costs.2  Id.  
The MDP-extension stipulation provided that DP&L would seek approval of any 
rate-stabilization surcharge through an application filed pursuant to R.C. 4909.18.  
In Constellation NewEnergy, Inc. v. Pub. Util. Comm., 104 Ohio St.3d 530, 2004-
Ohio-6767, 820 N.E.2d 885, we upheld the commission’s approval of the MDP-
extension stipulation. 
                                                 
1.  The commission’s order and the parties in this case refer to the MDP–extension case as the 
RSP (“rate-stabilization period”) case, and the MDP–extension stipulation as the RSP stipulation. 
 
2.  POLR costs represent charges incurred by an incumbent electric-distribution utility for risks 
associated with its statutory obligation under R.C. 4928.14(C) as the default provider, or provider 
of last resort, for customers who opt for another provider who then fails to provide service.  See 
Ohio Consumers’ Counsel v. Pub. Util. Comm., 111 Ohio St.3d 300, 2006-Ohio-5789, 856 N.E.2d 
213, at ¶ 24. 
January Term, 2007 
3 
{¶ 5} Pursuant to the order approving the MDP extension, DP&L 
initiated this case by filing an application to increase rates through the 
implementation of the rate-stabilization surcharge.  Several parties intervened in 
the case before the commission, including OCC, Cargill, Inc., Honda of America 
Mfg., Inc., and Industrial Energy Users-Ohio. 
{¶ 6} After an investigation, the commission’s staff filed a written report 
regarding DP&L’s requested rate increase.  DP&L, OCC, Cargill, Honda, and 
Industrial Energy Users-Ohio each filed objections to the staff report.  A public 
hearing was held in Dayton on October 27, 2005. 
{¶ 7} On November 3, 2005, DP&L, Cargill, Honda, and Industrial 
Energy Users-Ohio filed a stipulation with the commission that, if accepted, 
would resolve all outstanding issues.  Evidentiary hearings were held, and 
testimony 
was 
presented 
regarding 
DP&L’s 
rate-stabilization-surcharge 
application, the staff report, and the stipulation. 
{¶ 8} On December 28, 2005, the commission issued its order approving 
the stipulation after making certain modifications.  Among other things, the order 
extended DP&L’s rate-stabilization period from the end of 2008 through 
December 31, 2010.  The commission authorized the implementation of an 
unavoidable rate-stabilization surcharge rider amounting to 11 percent of DP&L’s 
tariffed generation rates as of January 1, 2004.  The commission also approved an 
environmental-investment rider, which was intended to allow DP&L to recover 
“environmental plant investments and incremental operations and maintenance, 
depreciation, and tax costs.”  The environmental-investment rider was set at 5.4 
percent of DP&L’s 2004 tariffed generation rates and would increase by 5.4 
percent of DP&L’s 2004 tariffed generation rates each year of the rate-
stabilization period.  Contrary to the terms proposed in the stipulation, the 
commission required that the entire environmental investment rider be avoidable 
by customers who shop during the rate-stabilization period.  Finally, the 
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commission approved a stipulation provision allowing DP&L to collect the rate-
stabilization surcharge through its distribution-service tariffs.3 
{¶ 9} OCC filed an application for rehearing, which was denied on 
February 22, 2006.  OCC’s appeal as of right is now before this court. 
Collateral Estoppel 
{¶ 10} OCC contends that the doctrine of collateral estoppel bars 
relitigation of the issues in the MDP-extension case.  OCC asserts that the 
commission cannot approve the stipulation in this case because it alters the 
stipulation that was approved in the MDP-extension case, without the permission 
of the signatories to the first stipulation.  We do not agree that the commission’s 
decision amounted to a relitigation of previously determined issues and that the 
commission cannot change or modify earlier orders. 
{¶ 11} The doctrine of collateral estoppel operates to “preclude the 
relitigation of a point of law or fact that was at issue in a former action between 
the same parties and was passed upon by a court of competent jurisdiction.”  
Consumers’ Counsel v. Pub. Util. Comm. (1985), 16 Ohio St.3d 9, 10, 16 OBR 
361, 475 N.E.2d 782.  Collateral estoppel has been applied to commission 
proceedings.  Id. 
{¶ 12} The doctrine is inapplicable here because there was no relitigation 
in this matter of a point of law or finding of fact that was passed upon by the 
commission in the MDP-extension case.  The MDP-extension case approved, 
among other things, a rate-stabilization surcharge of up to 11 percent of DP&L’s 
tariffed generation charges as of January 1, 2004.  The rate-stabilization surcharge 
was intended to allow DP&L to recover generation-related costs from increases in 
                                                 
3. The stipulation used the term rate-stabilization charge for the rate-stabilization surcharge.  The 
rate-stabilation surcharge referred to in the MDP-extension case now consists of the rate-
stabilization charge and the environmental-investment rider.  The unavoidable rate-stabilization 
surcharge/rate-stabilization charge represents the 11 percent increase of DP&L’s tariffed 
generation rate as of January 1, 2004.   
January Term, 2007 
5 
fuel prices, actions taken to comply with environmental and tax laws and physical 
and cyber security.  The rate-stabilization surcharge was to be imposed in a rider 
on all customers, whether those customers purchased their generation from DP&L 
or from another supplier.  Finally, the surcharge was to be assessed only upon the 
commission’s approval after DP&L verified those increases in a subsequent 
application pursuant to R.C. 4909.18. 
{¶ 13} This case, in contrast, concerns the amount DP&L may charge 
through that rate-stabilization-surcharge rider.  In the MDP-extension case, the 
commission approved the procedure that DP&L needed to follow before it could 
collect a rate-stabilization surcharge and permitted DP&L to recover certain 
increases in generation-related costs, subject to PUCO approval.  And in this case, 
the commission determined that the rates that DP&L set in the rate-stabilization-
surcharge rider were reasonable and supported by the record, and it approved the 
surcharge.  Thus, collateral estoppel is not applicable. 
{¶ 14} OCC’s argument that the commission erred in changing certain 
provisions of its previous order is without merit.  The commission may change or 
modify earlier orders as long as it justifies any changes.  Consumers’ Counsel v. 
Pub. Util. Comm. (1984), 10 Ohio St.3d 49, 50-51, 10 OBR 312, 461 N.E.2d 303.  
The commission found that several important projections relied on by the MDP-
extension stipulation had not in fact materialized and that that circumstance 
justified some modifications to its earlier order.  The commission found that the 
competitive market in DP&L’s service territory had not developed as the 
commission had expected when it approved the MDP-extension stipulation.  
According to testimony at the hearing, only 0.03 percent of DP&L’s total load 
(representing seven small-business customers) had switched to a retail electric 
service provider not affiliated with DP&L.  The commission further noted that 
four rounds of competitive bidding were conducted in 2005 and that none of the 
rounds had produced a single bidder.  Finally, the commission found that the 
SUPREME COURT OF OHIO 
6 
record demonstrated that fuel and environmental costs vastly exceeded the 
commission’s expectations at the time that the MDP-extension stipulation was 
approved. 
{¶ 15} As a result, the commission determined that the stipulation in this 
case would benefit ratepayers and the public interest by protecting DP&L’s 
standard-service customers from price volatility and rate shock.  The commission 
found that there was significant value in extending the rate-stabilization period for 
an additional two years to avoid unpredictable market rates in 2009 and 2010.  
The commission further found that the stipulation provided financial stability to 
DP&L by allowing it to recover its environmental-compliance costs, which 
exceed those anticipated at the time of the MDP-extension stipulation.  Finally, 
the commission modified the stipulation by making the environmental-investment 
rider avoidable for the duration of the rate-stabilization period to better promote 
the development of competitive markets.  In sum, the record supports the changes 
and the commission explained its reasons for modifying its earlier order 
approving the MDP-extension stipulation.  See Ohio Consumers’ Counsel v. Pub. 
Util. Comm., 110 Ohio St.3d 394, 2006-Ohio-4706, 853 N.E.2d 1153, at ¶ 25. 
{¶ 16} In light of the commission’s authority to modify previous orders, 
the agreement of all signatories to the MDP-extension stipulation was not 
required.  While the commission encourages agreement on issues, it is not bound 
to accept the terms of any stipulation.  See Akron v. Pub. Util. Comm. (1978), 55 
Ohio St.2d 155, 157, 9 O.O.3d 122, 378 N.E.2d 480.  A stipulation presented to 
the commission is entitled to the force of law only if it is approved by an order of 
the commission.  See, generally, AK Steel Corp. v. Pub. Util. Comm. (2002), 95 
Ohio St.3d 81, 82-83, 765 N.E.2d 862; Ohio Adm.Code 4901-1-30(D).  As 
explained above, the commission may change or modify earlier orders as long as 
it justifies any changes.  Contrary to OCC’s assertion, the MDP-extension 
stipulation was not modified unilaterally by DP&L or Industrial Energy Users-
January Term, 2007 
7 
Ohio, the only two parties who signed both the MDP-extension stipulation and the 
stipulation at issue in this appeal.  Rather, the commission modified its earlier 
order in the MDP-extension case and sufficiently justified those changes.  We 
therefore affirm the PUCO’s determinations on these issues. 
Generation-Service Tariffs versus Distribution-Service Tariffs 
{¶ 17} OCC maintains that the commission erred when it approved a 
distribution-service rate increase to compensate DP&L for costs that are purely 
generation-service costs.  The commission’s approval of the rate and amount is in 
conformity with applicable law.  However, the commission erred in allowing 
DP&L to recover generation costs through distribution-service tariffs. 
{¶ 18} In the MDP-extension stipulation in 2003, DP&L proposed a rate-
stabilization surcharge, which was intended to allow DP&L to increase rates in 
order to recover increases in generation-related costs for fuel, for actions taken in 
compliance with environmental and tax laws and for physical security and cyber 
security.  These increased costs were to be collected from all customers, whether 
they purchased generation service from DP&L or from another supplier.  With 
respect to those customers who do not take generation service from DP&L, the 
rate-stabilization surcharge would compensate DP&L for the risks and costs that 
DP&L will incur as a POLR.  See R.C. 4928.14(C). 
{¶ 19} In this case, the commission approved a provision of the 
stipulation that allowed DP&L to place the rate-stabilization-surcharge rider in the 
company’s distribution-service tariffs.  Objections were made to the commission 
that the rate-stabilization surcharge is a generation charge that should not be 
placed in the distribution-service tariffs.  The commission rejected these 
arguments and found that it was reasonable to place the rate-stabilization 
surcharge in the distribution-service tariffs because, like distribution rates, the 
surcharge would be charged to all customers in DP&L’s service territory.  
According to the commission, this result would reduce confusion as to whether 
SUPREME COURT OF OHIO 
8 
the rate-stabilization surcharge was avoidable by customers who were not 
receiving generation service from DP&L. 
{¶ 20} OCC claims that placement of the rate-stabilization surcharge in a 
distribution-service-tariff rider for collection violates the clear intent of Ohio’s 
electric-industry-restructuring legislation.  OCC argues that it is contrary to Ohio 
law and policy that five years into electric-industry restructuring, the commission 
is essentially rebundling generation and distribution components. 
{¶ 21} The commission’s decision in this case did not address whether the 
placement of generation-related charges in distribution-service-tariff riders 
violates the provisions of SB 3.  The commission merely adopted the finding of 
the staff report that because the rate-stabilization surcharge is unavoidable, its 
placement in the distribution-service tariffs was reasonable.  However, a 
commission staff witness testified that the parties who have objected to the 
placement of the rate-stabilization surcharge in distribution-service-tariff riders 
were “technically correct.”  This witness further testified that “[w]hile staff is 
indifferent as to the placement of the [rate-stabilization surcharge] Rider, it is 
clearly generation-related and, in theory, belongs in the Generation tariffs.” 
{¶ 22} The cornerstone of SB 3 was the requirement that electric utilities 
unbundle the three major components of electric service – generation, 
distribution, and transmission.  See R.C. 4928.31(A)(1) and 4928.34(A)(1) 
through (7).  Before generation-service competition began under SB 3, customers 
received and paid for the three major components of electric service on a bundled 
basis.  That is, the three components were priced as one, and electric utilities used 
the revenues from the bundled electric services to support their generation, 
transmission, and distribution expenses and investments.  With the advent of 
customer choice of electric-generation service under SB 3, “it became necessary 
for electric utilities to unbundle the three service components and their own 
components, so that customers could evaluate offers from competitive 
January Term, 2007 
9 
generators.”  See Migden-Ostrander v. Pub. Util. Comm., 102 Ohio St.3d 451, 
2004-Ohio-3924, 812 N.E.2d 955, at ¶ 3-4. 
{¶ 23} The PUCO acknowledges that SB 3 required that rates be 
separated into separate generation-, transmission-, and distribution-service 
components.  The PUCO also concedes that there is an ongoing requirement 
under SB 3 that competitive retail electric services be unbundled, i.e., priced 
separately, to aid customers in comparison shopping.  See R.C. 4928.07. 
{¶ 24} However, the PUCO contends that SB 3 was not violated in this 
instance, because this case does not involve a competitive service.  The rate-
stabilization-surcharge rider is intended, in part, to pay DP&L for costs associated 
with its POLR obligations.  The PUCO maintains that the POLR obligation is a 
distribution-service function because only an electric-distribution utility, such as 
DP&L, can provide this service.  It is unclear why the generation costs should not 
be placed into the generation-service tariffs. 
{¶ 25} The commission itself amended the stipulation in this case so that a 
portion of DP&L’s POLR costs are avoidable by shopping customers.  As 
originally contemplated in the MDP-extension case, DP&L would collect POLR 
costs – including fuel and generation-related environmental cost increases – 
through the rate-stabilization surcharge.  In the stipulation in this case, DP&L 
split the rate-stabilization surcharge into two separate components: (1) a rate-
stabilization charge to recover fuel costs and (2) an environmental-investment 
rider to recover environmental costs.  The commission required that the entire 
environmental-investment rider be avoidable by customers who purchase 
generation service from a provider other than DP&L. 
{¶ 26} We find that the evidence supports including actual generation 
costs in the generation-service tariffs.  The commission’s own expert on staff 
testified that it is technically appropriate under SB 3 to put the rate-stabilization 
charge in the generation-service tariffs.  We share OCC’s concern that once the 
SUPREME COURT OF OHIO 
10 
industry moves past the rate-stabilization phase, the distinction between 
generation and distribution in the tariffs and rate structures will be too blurred to 
effectively apply SB 3.  Likewise, counsel for the commission represented at oral 
argument that including the charge in distribution-service tariffs instead of in 
generation-service tariffs was essentially a distinction without a difference, 
meaning that the appropriate generation charges could be recorded in the 
generation tariffs without a problem.  Accordingly, the PUCO’s order is affirmed 
with regard to the amount of the charge but is reversed with regard to the 
placement of the charge in the distribution-service tariffs.  We remand the matter 
to the commission to order DP&L to place the appropriate generation charges in 
the generation-service tariffs.  We point out that while we have affirmed the 
commission’s order with regard to the POLR costs in this and previous cases, the 
commission should carefully consider what costs it is attributing as costs incurred 
as part of an electric-distribution utility’s POLR obligations. 
Public Interest 
{¶ 27} We deny OCC’s claim that the commission approved a settlement 
that does not benefit ratepayers and the public interest.  OCC contends that the 
commission ignored evidence regarding the unfavorable rate impact the 
stipulation would have on residential customers in comparison to the provisions 
found in the stipulation approved in the MDP-extension case. 
{¶ 28} The commission did not ignore the evidence offered by OCC; the 
commission rejected it.  The commission found that the projected market rates 
offered by the OCC witness were unreliable.  The commission determined that 
price stability was of higher value in a developing market.  Specifically, the 
commission concluded that “the value of extending stable, predictable rates 
through 2010 is a significant benefit to ratepayers and the public interest and that 
such value outweighs the burden of the increased rates.” 
January Term, 2007 
11 
{¶ 29} In light of the commission’s consideration of the evidence, it 
appears that OCC is asking this court to reweigh the evidence and substitute its 
judgment for that of the commission.  OCC has not shown that the commission’s 
findings here are manifestly against the weight of the evidence, and this court will 
not second-guess the commission on questions of fact absent such a showing.  See 
Cincinnati Gas & Elec. Co. v. Pub. Util. Comm. (1999), 86 Ohio St.3d 53, 58, 
711 N.E.2d 670; Cincinnati v. Pub. Util. Comm. (1993), 67 Ohio St.3d 523, 528-
529, 620 N.E.2d 826.  We therefore affirm the PUCO’s determinations on this 
issue. 
Side Agreements 
{¶ 30} OCC argues that the stipulation is unlawful because DP&L enticed 
Cargill and Honda to sign the stipulation by offering them, in a side agreement, 
better terms than the stipulation provides to other customers in the same situation.  
We do not agree.  Specifically, OCC’s claim revolves around two “side 
agreements” whereby DP&L offered to waive a tariff provision for Honda and 
Cargill that required 60 days’ notice to return to DP&L’s standard service.  Under 
these agreements, Honda and Cargill could return to DP&L for generation service 
with 30 days’ notice.  According to OCC, these agreements amount to 
discriminatory and preferential treatment of Cargill and Honda. 
{¶ 31} However, a DP&L witness testified before the commission that 
DP&L would extend this offer to any similarly situated customer.  Thus, OCC’s 
claim that the waiver was applied in a discriminatory manner is not supported by 
the record.  In addition, contrary to OCC’s assertion, the waiver does not appear 
to be anticompetitive, because a shorter notice period gives customers more time 
to shop for another generation provider.  Moreover, OCC cannot show harm to 
residential customers, because evidence before the commission indicated that no 
residential customer in DP&L’s service territory had switched to a competitive 
generation provider unaffiliated with DP&L.  Thus, there would be no reason for 
SUPREME COURT OF OHIO 
12 
residential customers to ask for a shorter notice period to return to DP&L for 
generation service. 
{¶ 32} OCC also argues that the commission erred when it denied its 
motion to admit the side agreements into evidence.  Despite the commission’s 
conclusion that the side agreements were not relevant, it is clear from the record 
that the commission did review the side agreements.  In fact, the commission 
allowed OCC to question a DP&L witness on the nature and intent of the side 
agreements.  Thus, the commission’s exclusion of this evidence did not prejudice 
OCC.  See, e.g., Ohio Consumers’ Counsel v. Pub. Util. Comm., 111 Ohio St.3d 
384, 2006-Ohio-5853, 856 N.E.2d 940, at ¶ 22 (denial of motion to intervene did 
not prejudice OCC when commission took OCC’s filings into consideration).  
Accordingly, OCC’s arguments relating to side agreements and discriminatory 
behavior are not well taken. 
Voluntary-Enrollment Procedure 
{¶ 33} The commission’s decision on the voluntary-enrollment procedure 
was not unlawful, unreasonable, or against the manifest weight of the evidence. 
{¶ 34} The voluntary-enrollment procedure was set out in the MDP-
extension stipulation as one part of the proposed alternative to the competitive-
bidding requirement of R.C. 4928.14(B).  In addition to the voluntary-enrollment 
procedure, DP&L’s proposed alternative to competitive bidding (1) established a 
market-based standard-service offer with price monitoring by the commission to 
ensure that rates would remain market-based over time and (2) allowed the 
commission to end the rate-stabilization period if the market rates do not reflect 
the rates established in the stipulation.  In Constellation NewEnergy, 104 Ohio 
St.3d 530, 2004-Ohio-6767, 820 N.E.2d 885, at ¶ 44-49, we held that these 
provisions complied with R.C. 4928.14(B). 
January Term, 2007 
13 
{¶ 35} OCC argued that the voluntary-enrollment procedure should be 
extended beyond the commission-approved extension through 2007 to cover the 
remaining years of the rate-stabilization period. 
{¶ 36} The commission has the authority, under R.C. 4928.14(B), to 
“determine at any time that a competitive bidding process is not required, if other 
means to accomplish generally the same option for customers is readily available 
in the market and a reasonable means for customer participation is developed.”  In 
this case, the commission required that the voluntary-enrollment procedure be 
conducted in 2006 and 2007 in the same manner as in 2005.  The alternative-to-
bidding provisions of the MDP-extension stipulation – commission price 
monitoring of the market-based standard-service offer and ending the rate-
stabilization period if market rates are lower than stipulation rates – remain in 
effect under the stipulation approved by the PUCO in the instant case.  The 
OCC’s claim that the program would be more effective in the later stages of the 
rate-stabilization period is speculative.  The commission noted in its order that in 
2005, there were four rounds of competitive bidding conducted under the 
voluntary-enrollment procedure and that none of the rounds of competitive 
bidding produced a single bidder.  Finally, the commission made the 
environmental-investment rider avoidable for the duration of the rate-stabilization 
period for those who shop, in order to further promote competition. 
{¶ 37} In sum, competitive bidding will be held after the market-
development period, as R.C. 4928.14(B) requires.  In addition, the commission-
approved stipulation provided other means to accomplish generally the same 
option as a competitive bid (monitoring the standard-service offer to ensure that it 
is market based) and also provided a reasonable means of customer participation 
(conducting the voluntary-enrollment procedure in 2006 and 2007, and providing 
shopping incentives). 
SUPREME COURT OF OHIO 
14 
{¶ 38} OCC has not shown that the commission’s decision regarding the 
voluntary-enrollment procedure was unlawful, unreasonable, or against the 
manifest weight of the evidence.  We therefore affirm the commission’s 
determination. 
Three-Part Test for Settlements 
{¶ 39} OCC urges this court to revisit Consumers’ Counsel v. Pub. Util. 
Comm. (1992), 64 Ohio St.3d 123, 592 N.E.2d 1370, which endorsed the 
commission’s use of the three-part reasonableness test for reviewing settlement 
stipulations.  We decline to consider this argument due to OCC’s failure to 
preserve the issue on appeal. 
{¶ 40} OCC waived this issue by not setting it forth in its application for 
rehearing.  R.C. 4903.10 provides that an application for rehearing “shall be in 
writing and shall set forth specifically the ground or grounds on which the 
applicant considers the order to be unreasonable or unlawful.  No party shall in 
any court urge or rely on any ground for reversal, vacation, or modification not so 
set forth in the application.”  We have held that setting forth specific grounds for 
rehearing is a jurisdictional prerequisite for review.  Consumers’ Counsel v. Pub. 
Util. Comm. (1994), 70 Ohio St.3d 244, 247, 638 N.E.2d 550.  OCC also failed to 
set forth this specific issue in its notice of appeal to this court, and this failure 
precludes our considering the issue.  R.C. 4903.13; Cincinnati Gas & Elec. Co. v. 
Pub. Util. Comm., 103 Ohio St.3d 398, 2004-Ohio-5466, 816 N.E.2d 238, at ¶ 21.  
Therefore, OCC’s argument is rejected. 
Conclusion 
{¶ 41} R.C. 4903.13 provides that a PUCO order shall be reversed, 
vacated, or modified by this court only when, upon consideration of the record, 
the court finds that the order is unlawful or unreasonable.  For the reasons 
explained above, we hold that all but one of OCC’s propositions of law fail to 
establish that the commission’s order was unlawful or unreasonable.  We remand 
January Term, 2007 
15 
the case to the commission to issue an order that DP&L adjust the location of 
appropriate generation charges from distribution-service tariffs to generation-
service tariffs.  Finally, as we continue to see the rate-stabilization plans appealed 
from the commission, we presume that the commission is sharing its evaluations 
and reports on the effectiveness of competition with the legislature, as mandated 
by R.C. 4928.06(C), so that it can continue to evaluate the need for further 
legislative action. 
Order affirmed in part 
and reversed in part, 
and cause remanded. 
 
MOYER, C.J., PFEIFER, LUNDBERG STRATTON, O’CONNOR, LANZINGER and 
CUPP, JJ., concur. 
__________________ 
 
Janine L. Migden-Ostrander, Ohio Consumers’ Counsel, and Jeffrey L. 
Small, Ann M. Hotz, Larry S. Sauer, and Joseph P. Serio, Assistant Consumers’ 
Counsel, for appellant. 
 
Marc Dann, Attorney General, and Duane W. Luckey, Werner Margard 
III, and Steven L, Beeler, Assistant Attorneys General, for appellee. 
 
Faruki, Ireland & Cox, P.L.L., Charles J. Faruki, and Jeffrey S. Sharkey, 
for intervening appellee Dayton Power & Light Company. 
 
McNees, Wallace & Nurick, L.L.C., Samuel C. Randazzo, Lisa G. 
McAlister, and Daniel J. Neilsen, for intervening appellee Industrial Energy Users 
– Ohio. 
______________________