[Cite as Ohio Consumers’ Counsel v. Pub. Util. Comm., 127 Ohio St.3d 524, 2010-Ohio-6239.] 

Ohio CONSUMERS’ COUNSEL, APPELLANT, v. PUBLIC UTILITIES COMMISSION 

OF OHIO ET AL., APPELLEES. 

[Cite as Ohio Consumers’ Counsel v. Pub. Util. Comm., 

127 Ohio St.3d 524, 2010-Ohio-6239.] 

Public utilities — Natural-gas rates — Straight Fixed Variable rate design — 

Public notice of proposed change in rates — Waiver of objections to 

notice. 

(No. 2009-1547 — Submitted October 13, 2010 — Decided December 23, 2010.) 

APPEAL from the Public Utilities Commission of Ohio, 

Nos. 07-1080-GA-AIR and 07-1081-GA-ALT. 

__________________ 

CUPP, J. 

{¶ 1} This case marks the third time that we have been called upon to 

consider challenges to orders of the Public Utilities Commission of Ohio 

(“commission” or “PUCO”) that adopted a Straight Fixed Variable (“SFV”) rate 

design. We previously upheld the PUCO’s approval of a modified SFV rate 

design for Duke Energy Ohio and Dominion East Ohio. Ohio Consumers’ 

Counsel v. Pub. Util. Comm., 125 Ohio St.3d 57, 2010-Ohio-134, 926 N.E.2d 

261. In those cases, we held that the commission’s decisions to allow Duke and 

Dominion to abandon the traditional natural-gas rate design used over the past 30 

years in favor of a modified SFV rate structure were not unlawful or 

unreasonable. Under traditional natural-gas rate design, a small portion of the 

utility’s fixed delivery costs is recovered through a low fixed monthly customer 

charge with the remaining fixed distribution costs recovered through a rate that 

varies with gas usage. The SFV rate design separates or “decouples” the utility’s 

recovery of its costs of delivering gas (which are predominantly fixed) from the 
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2 

amount of gas that customers actually use (which varies from month to month). 

Under the modified SFV rate structure approved in the Duke and Dominion cases, 

most fixed costs of delivering gas are collected through a higher flat customer 

charge, with the remaining fixed costs recovered through a correspondingly lower 

variable gas-usage component. 

{¶ 2} In this case, Ohio Consumers’ Counsel (“OCC”) challenges the 

PUCO’s approval of an SFV rate design as the method by which Vectren Energy 

Delivery of Ohio, Inc., would collect its authorized revenues from the residential 

customer class. For the reasons that follow, we affirm the orders of the PUCO 

that approved the SFV rate design for Vectren as being within the lawful and 

reasonable discretion of the PUCO. 

I. Facts and Procedural Background 

{¶ 3} On November 20, 2007, Vectren filed an application to increase its 

natural gas distribution rates. Case No. 07-1080-GA-AIR.1

 Several parties, 

including OCC, intervened in Vectren’s rate case. On September 8, 2008, the 

parties filed a joint stipulation and recommendation, resolving all issues except 

for the adoption of a new rate design. 

{¶ 4} As to the matter of the rate design, Vectren’s application proposed 

a gradual transition to a true SFV rate design that would take place over a period 

of two rate-case cycles. Under a true SFV design, all fixed distribution costs are 

recovered through a flat customer charge and there is no usage or volumetric 

component of the distribution charge. The rate case under review here – the first 

rate case of the proposed two-rate-case cycle – involved a two-stage approach. 

Under the first stage, Vectren proposed an increase in the flat customer charge 

and a corresponding reduction in the volumetric (or usage) charge. Under the 

 

1. Vectren also filed applications seeking approval of an alternative rate plan (case No. 07-1081-

GA-ALT) and authority to continue certain accounting methods (case No. 08-632-GA-AAM). 
January Term, 2010 

3 

second stage, Vectren proposed a further increase in the flat customer charge and 

a further decrease in the usage charge. 

{¶ 5} As it did in the Duke and Dominion cases, OCC opposed the SFV 

rate design. OCC argued in favor of keeping the traditional rate design (low flat 

customer charge and higher usage component) and adding a sales-decoupling 

mechanism, which would allow Vectren to recover revenues lost as a result of 

decreases in customer usage. 

{¶ 6} On January 7, 2009, the PUCO issued its order adopting the 

stipulation. The PUCO’s order also approved the SFV rate design for the 

collection of natural-gas distribution rates instead of the decoupling mechanism 

advocated by OCC. 

{¶ 7} The PUCO, however, rejected the amount of the flat customer 

charge that Vectren had proposed in its application. For the first year of the rate 

plan, Vectren’s application proposed that the flat customer charge be set at $10 

per month during the summer months and at $16.75 during the winter months. 

The commission did not believe that a seasonal approach was appropriate and 

therefore decided to set the customer charge at $13.37 per month for the first year 

of the rate plan. The $13.37 customer charge included a volumetric rate 

component. 

{¶ 8} The commission also rejected Vectren’s proposed gradual 

transition to SFV. Instead, the commission decided that at the end of the first year 

(Stage One) of the rate plan, Vectren’s customer charge would be set at $18.37 

per month with no volumetric rate. That is, rather than ordering transition to a 

true SFV rate design over two rate cases as proposed in Vectren’s application, the 

commission ordered that the transition to a full SFV rate structure be implemented 

immediately upon expiration of Stage One of the current rate case. 

{¶ 9} OCC filed a timely application for rehearing. The commission 

granted rehearing on March 4, 2009, for the purpose of further considering the 
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matters raised by OCC’s application. On August 26, 2009, after further review, 

the commission rejected OCC’s application for rehearing in its entirety. 

{¶ 10} OCC’s appeal of the commission’s orders is now before us for 

final decision. 

II. Standard of Review 

{¶ 11} “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 the order to be unlawful or unreasonable.” Constellation 

NewEnergy, Inc. v. Pub. Util. Comm., 104 Ohio St.3d 530, 2004-Ohio-6767, 820 

N.E.2d 885, ¶ 50. We will not reverse or modify a PUCO decision as to questions 

of fact if the record contains sufficient probative evidence to show that the 

commission’s decision was not manifestly against the weight of the evidence and 

was not so clearly unsupported by the record as to show misapprehension, 

mistake, or willful disregard of duty. Monongahela Power Co. v. Pub. Util. 

Comm., 104 Ohio St.3d 571, 2004-Ohio-6896, 820 N.E.2d 921, ¶ 29. The 

appellant bears the burden of demonstrating that the PUCO’s decision is against 

the manifest weight of the evidence or is clearly unsupported by the record. Id. 

{¶ 12} Although this court has “complete and independent power of 

review as to all questions of law” in appeals from the PUCO, Ohio Edison Co. v. 

Pub. Util. Comm. (1997), 78 Ohio St.3d 466, 469, 678 N.E.2d 922, we have 

explained that we may rely on the expertise of a state agency in interpreting a law 

where “highly specialized issues” are involved and “where agency expertise 

would, therefore, be of assistance in discerning the presumed intent of our 

General Assembly.” Consumers’ Counsel v. Pub. Util. Comm. (1979), 58 Ohio 

St.2d 108, 110, 12 O.O.3d 115, 388 N.E.2d 1370. 

{¶ 13} Moreover, we have long recognized limitations upon our review of 

commission orders that establish rates and rate-related classifications. Green 

Cove Resort I Owners’ Assn. v. Pub. Util. Comm., 103 Ohio St.3d 125, 2004-
January Term, 2010 

5 

Ohio-4774, 814 N.E.2d 829, ¶ 24. “Our function is not to weigh the evidence or 

to choose between alternative, fairly debatable rate structures. That would be to 

interfere with the jurisdiction and competence of the commission and to assume 

powers which this court is not suited to exercise.” Cleveland Elec. Illum. Co. v. 

Pub. Util. Comm. (1976), 46 Ohio St.2d 105, 108, 75 O.O.2d 172, 346 N.E.2d 

778. This court’s task is not to set rates; rather, it is only to ensure that the rates 

are not unlawful or unreasonable and that the rate-making process itself is 

lawfully carried out. AT&T Communications of Ohio, Inc. v. Pub. Util. Comm. 

(1990), 51 Ohio St.3d 150, 154, 555 N.E.2d 288. 

III. Analysis 

A. Statutory Notice Requirements

{¶ 14} In its first proposition of law, OCC contends that the commission 

failed to enforce the public-notice requirements in R.C. 4909.18 and 4909.19 

when it approved Vectren’s rate-increase application. According to OCC, 

Vectren’s public notice of its rate application failed to convey the substance and 

prayer of the SFV rate design and the Stage Two rates. 

{¶ 15} We overrule OCC’s first proposition of law for the reasons that 

follow. 

1. OCC did not give the commission an opportunity to correct 

the alleged error 

{¶ 16} Vectren filed its rate-increase application on November 20, 2007. 

Along with its application, Vectren submitted a proposed newspaper publication 

notice for the PUCO’s approval. In an entry dated January 16, 2008, the 

commission found that Vectren’s proposed public notice complied with R.C. 

4909.18(E) and 4909.19. Three days later, Vectren began publishing notices in 

newspapers throughout Vectren’s service territory. 

{¶ 17} OCC filed a motion to intervene in Vectren’s rate case on 

November 5, 2007, which was 15 days before Vectren filed its rate-increase 
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6 

application.2 OCC did not, however, raise an objection when Vectren first 

submitted the proposed public notice with its rate-increase application. OCC also 

did not request that the commission reconsider its January 16, 2008 entry 

approving the proposed notice for publication. Instead, OCC first challenged 

Vectren’s public notice when OCC filed objections to the PUCO’s Staff Report 

on July 16, 2008. This occurred nearly eight months after Vectren first submitted 

its proposed public notice to the PUCO for approval, six months after the PUCO 

approved the proposed notice, and over five months after the notices had been 

published. 

{¶ 18} We hold that OCC’s failure to challenge Vectren’s public notice at 

an earlier juncture constitutes a forfeiture of the objection because it deprived the 

commission of an opportunity to cure any error when it reasonably could have. 

See, e.g., Parma v. Pub. Util. Comm. (1999), 86 Ohio St.3d 144, 148, 712 N.E.2d 

724 (“By failing to raise an objection until the filing of an application for 

rehearing, Parma deprived the commission of an opportunity to redress any injury 

or prejudice that may have occurred”). OCC should have challenged Vectren’s 

public notice before it was published in local newspapers, and its decision to wait 

five months after publication before raising an objection is fatal to OCC’s claim. 

2. OCC’s counterargument: subject-matter jurisdiction cannot be waived 

{¶ 19} OCC counters that it could not waive this error before the 

commission, because this court has determined that the notice provisions of R.C. 

4909.18 and 4909.19 are jurisdictional. According to OCC, utilities must comply 

with the statutory notice requirements in order for the PUCO to obtain subjectmatter jurisdiction over the utility’s rate application. OCC thus contends that no 

waiver occurred at the commission because subject-matter jurisdiction cannot be 

waived. 

 

2. Although OCC’s motion to intervene was not granted until August 1, 2008, OCC was able to 

participate fully in all proceedings before being granted intervening-party status. 
January Term, 2010 

7 

{¶ 20} Vectren and the PUCO respond that this court lacks jurisdiction to 

consider OCC’s claim of lack of subject-matter jurisdiction in the commission 

because OCC did not specifically set forth this claim in its application for 

rehearing to the commission or in its notice of appeal to this court. See R.C. 

4903.10 (“No party shall in any court urge or rely on any ground for reversal, 

vacation, or modification not so set forth in the application” for rehearing filed 

with the PUCO) and 4903.13 (requiring a party challenging a PUCO order to set 

forth the errors complained of in the notice of appeal to this court). 

{¶ 21} We need not consider whether OCC specified this claim on 

rehearing, because we find that OCC did not mention its claim of lack of subjectmatter jurisdiction in its notice of appeal to this court. OCC’s notice of appeal 

states only that “[t]he PUCO erred in unlawfully approving the utility’s proposed 

straight fixed variable rate design when the utility failed to provide adequate legal 

notice of the rate design pursuant to R.C. 4909.18 and 4909.19.” The more 

general phrase “unlawfully approving” does not equate to the more specific claim 

of lack of subject-matter jurisdiction and therefore does not state a claim of lack 

of subject-matter jurisdiction in the notice of appeal. Moreover, OCC does not 

respond to Vectren’s or the PUCO’s argument that OCC has failed to invoke this 

court’s jurisdiction over the claim of lack of subject-matter jurisdiction. That is, 

OCC failed to argue that it was not required to raise the claim in its notice of 

appeal. Accordingly, we lack jurisdiction to consider OCC’s claim that the notice 

requirement implicates subject-matter jurisdiction and therefore could not be 

waived at the PUCO. See Ohio Partners for Affordable Energy v. Pub. Util. 

Comm., 115 Ohio St.3d 208, 2007-Ohio-4790, 874 N.E.2d 764, ¶ 16. 

B. Due Process

{¶ 22} OCC asserts in its second proposition of law that the failure to 

provide proper notice violated customers’ due process rights. According to OCC, 

R.C. 4905.70 and 4929.02(A)(4) create protected property interests in customers. 
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8 

OCC argues that the PUCO terminated or diminished those interests in this case 

without affording customers notice and an opportunity to be heard. 

{¶ 23} We hold that OCC’s due process claim is unavailing because OCC 

did not raise its argument on protected property interests in its application for 

rehearing. See R.C. 4903.10. OCC also failed to set forth this specific claim in its 

notice of appeal to this court. R.C. 4903.13. These failures preclude our review 

of this issue. Ohio Consumers’ Counsel v. Pub. Util. Comm., 114 Ohio St.3d 340, 

2007-Ohio-4276, 872 N.E.2d 269, ¶ 40. See also Reading v. Pub. Util. Comm., 

109 Ohio St.3d 193, 2006-Ohio-2181, 846 N.E.2d 840, ¶ 16 (as-applied 

constitutional challenge must be raised in first instance before the PUCO). 

C. Compliance with Regulatory Practices and Commission Precedent

{¶ 24} OCC asserts in its third proposition of law that the commission 

violated its own precedents and failed to adhere to the regulatory principle of 

gradualism when it imposed the SFV rate design on Vectren’s residential 

customers. According to OCC, the commission failed to demonstrate a clear need 

to abandon the traditional natural-gas rate design used over the past 30 years and 

failed to show why prior rate-design precedent was not applicable to Vectren’s 

case. OCC contends that the commission’s failure to demonstrate a clear need for 

change resulted in rates that were unjust and unreasonable. 

{¶ 25} The arguments that OCC asserts in its third proposition of law are 

identical to arguments that we rejected in the Duke and Dominion cases. Ohio 

Consumers’ Counsel v. Pub. Util. Comm., 125 Ohio St.3d 57, 2010-Ohio-134, 

926 N.E.2d 261, ¶ 13-14. Because the PUCO gave the same rationale for 

adopting SFV in Vectren’s case, our earlier decision is dispositive of this 

proposition of law. See id. at ¶ 15-18 (finding that the commission’s policy 

decision to adopt SFV was clearly stated and reasonable) and at ¶ 19-20 (holding 

that the PUCO is not required to apply gradualism in rate-design cases). 

D. Energy Efficiency and Conservation
January Term, 2010 

9 

{¶ 26} Under its fourth proposition of law, OCC maintains that the 

commission-approved SFV rate design fails to promote energy efficiency and 

discourages conservation in violation of R.C. 4929.02(A)(4) and 4905.70. 

{¶ 27} OCC failed to set forth this proposition of law in its notice of 

appeal. We therefore lack jurisdiction to consider the arguments raised here. 

Ohio Partners for Affordable Energy, 115 Ohio St.3d 208, 2007-Ohio-4790, 874 

N.E.2d 764, ¶ 16. 

E. Manifest Weight of the Evidence

{¶ 28} OCC asserts in its fifth proposition of law that the commission’s 

approval of the SFV rate design is against the manifest weight of the evidence. 

We will address each of OCC’s claims in turn. 

1. Impact on low-income customers 

{¶ 29} OCC first claims that the commission erred when it approved the 

SFV rate design by relying in part on the unsubstantiated theory that low-income 

customers benefited from SFV. 

{¶ 30} Contrary to OCC’s assertion, the commission did not find that all 

of Vectren’s low-income customers would benefit under the SFV rate design. 

What the commission found was that low-income customers are on average highuse customers. And because high-use customers benefit from the SFV rate 

design, the commission concluded that “low-income customers, on average, 

would actually enjoy lower bills under the [SFV] rate design.” 

{¶ 31} Evidence before the commission supported this finding. Staff 

witness Stephen Puican testified that “low-income customers are, on average, not 

low usage customers. Because high-usage customers will benefit from the SFV 

rate design, and low-income customers are more likely to be high-usage 

customers, it is reasonable to conclude that low-income customers are actually 

more likely to benefit from SFV.” Vectren witness H. Edwin Overcast 

corroborated Puican’s testimony. Overcast testified that “[b]ased on the analysis 
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10 

of actual billing information for VEDO’s [Vectren’s] residential customer and 

available Census block group income data for VEDO’s service area, * * * low 

income customers in VEDO’s service area consume on average more natural gas 

annually than all but the highest income residential customers in VEDO’s service 

area.” He further testified that low-income customers would benefit by having 

lower winter gas bills under SFV. 

{¶ 32} OCC faults the PUCO for relying on Puican’s testimony while 

summarily dismissing the testimony of OCC’s expert witness Roger Colton. In 

essence, OCC is asking this court to reweigh the evidence and assign greater 

weight to Colton’s testimony than the commission did. But that is not our 

prerogative in PUCO appeals. See Util. Serv. Partners, Inc. v. Pub. Util. Comm., 

124 Ohio St.3d 284, 2009-Ohio-6764, 921 N.E.2d 1038, ¶ 35. 

2. Impact on low-use customers 

{¶ 33} OCC contends that the PUCO offered no record citation to support 

its conclusion that low-usage customers had not been paying the entirety of their 

fixed costs under the previous rate design. Likewise, OCC maintains that there is 

no record support for the PUCO’s “allegation” that high-use customers were 

overpaying fixed costs under the previous rate design. 

{¶ 34} OCC is mistaken that there was no record support for the 

conclusion that low-use customers were subsidized under the prior rate structure – 

several witnesses testified to this end. Moreover, we have accepted the 

commission’s finding that the SFV rate design was intended to remedy inequities 

in the prior rate structure caused by high-use customers overpaying their own 

fixed costs and subsidizing low-use customers. See Ohio Consumers’ Counsel v. 

Pub. Util. Comm., 125 Ohio St.3d 57, 2010-Ohio-134, 926 N.E.2d 261, ¶ 30, 33, 

46. 

3. Impact on low-income, low-use customers 
January Term, 2010 

11 

{¶ 35} OCC also contends that the commission-approved SFV design is 

bad public policy for Vectren’s low-use, low-income residential customers. 

According to OCC, the one known effect of the SFV rate design is that some of 

Vectren’s low-income and low-use customers will now be forced to subsidize 

high-use residential customers. 

{¶ 36} OCC’s assertions of unfair cost subsidization are unfounded. In 

order to remedy inequities in the prior rate plan, some low-use residential 

customers – including some who are low-income – will pay more under the new 

rate design. But low-income and low-use customers will pay more because they 

will no longer be subsidized by higher-use customers. See Ohio Consumers’ 

Counsel v. Pub. Util. Comm., 125 Ohio St.3d 57, 2010-Ohio-134, 926 N.E.2d 

261, ¶ 30, 33, 46. It does not automatically follow that low-income and low-use 

customers will now be subsidizing high-use customers under SFV. And OCC has 

offered no compelling evidence to the contrary. 

{¶ 37} As to OCC’s claim that the PUCO failed to justify terminating 

Vectren’s pilot program for low-income customers after one year, OCC 

misconstrues the commission’s order. The commission did order that the program 

be made available for one year. But the commission also stated that at the end of 

the first year, it would “evaluate the program for its effectiveness in addressing 

our concerns relative to the impact on low-usage, low-income customers.” Thus, 

OCC’s challenge to the pilot program is speculative and does not demonstrate that 

the commission’s approval of SFV was against the manifest weight of the 

evidence. 

4. Prospective studies/rush to judgment 

{¶ 38} Finally, OCC claims that the PUCO’s decision to impose the SFV 

rate design was in sharp contrast to other policy changes of the commission that 

employed more open, deliberate processes and included participation by all 

stakeholders. OCC argues that the failure to devote the necessary time to study 
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12 

the impact of SFV demonstrates that the commission’s decision is against the 

manifest weight of the evidence. 

{¶ 39} OCC made a similar “prospective studies” argument in the 

Dominion case, which we rejected. Ohio Consumers’ Counsel v. Pub. Util. 

Comm., 125 Ohio St.3d 57, 2010-Ohio-134, 926 N.E.2d 261, ¶ 53-57. This claim 

is not well taken for the same reasons. Moreover, the voluminous record in this 

case contradicts OCC’s claim that there was a rush to judgment. Likewise, OCC 

fully and extensively participated in all proceedings before the commission in 

Vectren’s rate-design case, and we find no evidence that it or any other 

stakeholder was excluded. 

IV. Conclusion 

{¶ 40} In this appeal, OCC challenges how the PUCO designed the rates 

for gas-distribution service for Vectren’s residential customers. OCC asks that we 

intervene in an area – rate design – that is traditionally within the PUCO’s 

expertise. But OCC has not sustained its burden of showing that the 

commission’s order in this case is unlawful or unreasonable or that the ratemaking process itself was unlawfully carried out. AT&T Communications of 

Ohio, Inc. v. Pub. Util. Comm., 51 Ohio St.3d at 154, 555 N.E.2d 288. 

Orders affirmed. 

 PFEIFER, LUNDBERG STRATTON, O’CONNOR, O’DONNELL, and 

LANZINGER, JJ., concur. 

 BROWN, C.J., dissents. 

__________________ 

PFEIFER, J., concurring. 

{¶ 41} I concur in the majority decision. Again, the Ohio Consumers’ 

Counsel (“OCC”) has unsuccessfully challenged PUCO’s approval of a Straight 

Fixed Variable rate design. The OCC’s office continues to tilt at windmills, when 
January Term, 2010 

13 

it could instead be engaging in a practical way to help Ohioans contain their 

energy costs. 

{¶ 42} The OCC could provide great service to Ohio consumers by 

working with the General Assembly and utilities to create incentives for utilities 

to enter into long-term contracts with natural-gas providers to take advantage of 

the current low price of natural gas. As it stands, utilities simply pass on to 

consumers the price of natural gas, whatever it is. Utilities are not given a real 

incentive to seek out a long-term, low price. In the end, it is a stable, low naturalgas price that is going to help consumers. Now is the time, while natural gas 

prices are at or near historical lows, for the OCC and General Assembly to do 

useful work for Ohio’s natural-gas consumers. 

__________________ 

 BROWN, C.J., dissenting. 

{¶ 43} I agree with the view expressed by Justice Pfeifer about the 

important service that the OCC might provide for Ohio consumers, but I do not 

believe that the PUCO’s orders should be affirmed. 

{¶ 44} n my view, the notice published by Vectren did not comply with 

R.C. 4909.19. That statute requires that a utility seeking a rate increase publish in 

Ohio newspapers a notice that conveys “the substance and prayer” of its proposal. 

Similarly, the Vectren notice did not comply with R.C. 4909.18(E), because it 

failed to “fully disclos[e] the substance of the application” and “include the 

average percentage increase in rate that a representative industrial, commercial, 

and residential customer will bear should the increase be granted in full.” I would 

therefore vacate the PUCO’s order approving a change of Vectren’s rate design to 

a two-stage modified straight fixed variable rate structure. 

{¶ 45} R.C. 4909.18(E) requires a utility seeking a rate increase to first 

submit to the commission a proposed notice to be published in newspapers in the 

communities the utility serves. The statute requires the utility to fully disclose the 
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substance of the application. R.C. 4909.18(E) further requires that the notice 

“prominently state that any person * * * may file * * * an objection to such 

increase * * *. The notice shall further include the average percentage increase in 

rate that a representative industrial, commercial, and residential customer will 

bear should the increase be granted in full.” (Emphasis added.) 

{¶ 46} Vectren’s application proposed a two-stage transition from the 

traditional natural-gas rate design under which it had previously been operating to 

a straight fixed variable design. In the traditional design, a relatively small 

portion of the utility’s fixed delivery costs are recovered through a low fixed 

monthly customer charge with the remaining fixed distribution costs recovered 

through a rate that varies with gas usage. In a straight fixed variable (“SFV”) 

design, a utility recovers its costs of delivering gas (which are predominately 

fixed) separately from the amount of gas that customers actually use (which varies 

from month to month). The expected result of the Vectren proposal to transition to 

an SFV design was that most fixed costs of delivering gas would be collected 

through a higher flat customer charge, with the remaining fixed costs recovered 

through a correspondingly lower component. 

{¶ 47} Vectren undoubtedly was aware at the time it filed its rate increase 

application that, as the PUCO ultimately acknowledged, under an SFV rate 

design, “there will be some customers who will be better off and some customers 

who will be worse off * * *. The levelized rate design will impact low-usage 

customers more * * *, since they have not been paying the entirety of their fixed 

costs under the existing rate design. High-use customers, who have been paying 

more than their share of the fixed costs, will actually experience a rate reduction * 

* *.” Yet nothing in the Vectren notice advised its customers that these 

consequences would result if the PUCO approved the change to an SFV design 

that Vectren proposed. 
January Term, 2010 

15 

{¶ 48} Vectren provided to the PUCO a proposed R.C. 4909.19 notice 

when it submitted its application for a rate-design change to an SFV design. The 

PUCO approved the notice for publication, and it was published. However, in the 

entire published notice filling a full newspaper page with fine print, there is only 

one fleeting reference relative to two significant aspects of Vectren’s application: 

(1) that the proposal included a major change in the fundamental method by 

which the way gas rates were calculated and (2) that the rate increases would be 

implemented in stages with the amount of increase varying with consumption. As 

to these two consequences, the notice contained only this text: “In the 

Application, VEDO [Vectren Energy Delivery of Ohio, Inc.] proposes changes to 

its rate schedules to reflect increases to the cost of service. Additionally, VEDO 

proposes changes to the rate design for Rate 310 (Residential Sales Service) and 

Rate 315 (Residential Transportation Service) that initiate a gradual transition to a 

straight fixed variable rate for distribution service.” 

{¶ 49} In my view, this notice is deficient because it fails to advise the 

public that Vectren sought a major change in the way customers are charged for 

natural gas and failed to notify the public that its proposed “gradual transition” to 

the new design proposed a two-stage implementation with the first rate increase to 

take effect on the effective date of the PUCO order approving rates. A second 

and distinct rate increase would be instituted on November 1, 2010. Upon 

implementation, each of the two stages would produce different consequences for 

different categories of consumers. 

{¶ 50} Similarly, the notice failed to advise Vectren’s customers of the 

“average percentage increase in rate that a representative industrial, commercial, 

and residential customer will bear should [Vectren’s] increase be granted in full.” 

(Emphasis added.) R.C. 4909.18(E). This is so because the rate-increase 

application contemplated a second rate increase after implementation of the first 

stage of implementation of the SFV design. Yet the notice advised only of the 
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16 

percentage increase that would occur if PUCO approved the first-stage increase 

described in the rate-increase proposal. The notice failed entirely to advise of the 

percentage increase that would be produced upon implementation of the second 

stage. Because R.C. 4909.18(E) requires notification of the rate increases that 

would result should the proposed increase be “granted in full,” the notice fails to 

comply with the statute as a matter of law. 

{¶ 51} In 1977 this court discussed the notice requirement of R.C. 

4909.19 as follows: 

{¶ 52} “While generally the published notice required under R.C. 4909.19 

need not contain every specific detail affecting rates contained in the application 

(indeed, such a requirement would be highly impractical and unnecessarily 

expensive), the court notes that the statute does require that the ‘substance’ of the 

application be disclosed; i. e., that the essential nature or quality of the proposal 

be disclosed to those affected by the rate increases. Although there is no specific 

test or formula this court can apply in reviewing challenges made by subscribers 

with respect to the sufficiency of the notice provided by a utility, it is clear, given 

the purposes of the publication requirement under R.C. 4909.19, that a highly 

innovative and material change in the method of charging customers should be 

included in the notice.” (Emphasis added.) Committee Against MRT v. Public 

Util. Comm. (1977), 52 Ohio St.2d 231, 233, 6 O.O.3d 475, 371 N.E.2d 547. 

{¶ 53} In my view, the change to an SFV design proposed by Vectren 

constituted a “highly innovative and material change in the method of charging 

customers” that Vectren was required to explain in its R.C. 4909.19 notice. In 

notifying its customers that Vectren “proposes changes to the rate design * * * 

that initiate a gradual transition to a straight fixed variable rate for distribution 

service,” Vectren failed to disclose the essential nature or quality of their 

proposal. I believe that R.C. 4909.18 and 4909.19 contemplate that a consumer 

be provided meaningful notice—not a cryptic single sentence containing a 
January Term, 2010 

17 

significant proposed change camouflaged by industry jargon and placed within a 

full newspaper page of fine print. 

{¶ 54} I do not believe that it would have been unduly burdensome to 

provide Vectren’s consumers with basic information as to both the nature of an 

SFV rate design and the potential consequences to them of its adoption. In Texas, 

a gas utility proposed a significant change in its rate schedule and published a 

notice that included the following information: 

{¶ 55} “• ‘The proposed change will have differing impacts on individual 

customers, depending on consumption and current applicable rate schedules.’ 

{¶ 56} “• A residential customer receiving a bill for 6 Mcf would incur 

‘an average increase of approximately $3.59 per month a 9.4% increase’; a 

commercial customer receiving a bill for 30 Mcf would incur ‘an average increase 

of approximately $13.91 per month or an 8.7% increase’; while ‘[t]he effect of the 

proposed changes to rates and services for individual customers, which may be 

significant for individual customers, will vary depending on type of service and 

consumption.’ ” Dallas v. RR. Comm. of Texas (Tex.App.2008), 2008 WL 

4823225, Util. L.Rep. 27,027. 

{¶ 57} In my view, the PUCO should have required that basic information 

of a similar nature be included by Vectren in its published notice. 

{¶ 58} Nor do I agree with the majority that the deficiencies of Vectren’s 

published notice may properly be deemed waived based on the failure of the OCC 

to complain of the inadequacies of the Vectren notice at an earlier time. First, it is 

well established that jurisdictional deficiencies in administrative proceedings 

cannot be waived. Time Warner AxS v. Publ. Util. Comm. (1996), 75 Ohio St.3d 

229, 661 N.E.2d 1097. And this court has long held that compliance with the 

notice requirement of R.C. 4909.19 gives interested parties the constructive notice 

of an application necessary to confer jurisdiction on the commission. Duff v. Pub. 

Util. Comm. (1978), 56 Ohio St.2d 367, 376, 10 O.O.3d 493, 384 N.E.2d 264. 
SUPREME COURT OF OHIO

18 

Second, R.C. 4909.18(E) requires that the published notice prominently state that 

“any person, firm, corporation, or association” may file objections to a proposed 

rate increase. It is impossible to determine what parties, if any, might have 

appeared and participated in the PUCO proceedings had meaningful and 

understandable notice been published. The OCC should have voiced its 

objections to the sufficiency of the newspaper notice in a more timely manner. 

However, its failure to have done so cannot be held against unknown persons, 

firms, corporations, or associations that potentially would have participated in the 

PUCO proceedings had Vectren complied with the notice statutes. 

{¶ 59} Accordingly, I respectfully dissent. 

__________________ 

 Janine L. Migden-Ostrander, Ohio Consumers’ Counsel, and Maureen R. 

Grady, Joseph P. Serio, and Michael E. Idzkowski, Assistant Consumers’ 

Counsel, for appellant.. 

 Richard Cordray, Attorney General, William L. Wright, Section Chief, 

and Werner L. Margard III, Assistant Attorney General, for appellee Public 

Utilities Commission of Ohio. 

 McNees, Wallace & Nurick, L.L.C., Samuel C. Randazzo, Gretchen J. 

Hummel, and Lisa G. McAlister, for intervening appellee, Vectren Energy 

Delivery of Ohio, Inc. 

______________________