Court Opinion

ID: 6774535
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:48:08.402871+00
Date Added: 2024-06-11T16:02:46.945856
License: Public Domain

Douglas, J.,
concurring. I agree with the well-reasoned and enlightened judgment of the majority. I write separately to address the dissent. Reading the majority opinion and the dissent together, one wonders if we are talking about the same case. Contrary to what the dissent may imply, all that the majority decides today is that the Public Utilities Commission of Ohio (“PUCO”) must hold a hearing to determine whether American Electric Power (“AEP”) and its subsidiary, Ohio Power Company (“OPC”), created a sham transaction in consort with Cleveland Public Power (“CPP”) to sell electricity to Medical Center Company (“MedCo”) in violation of the Certified Territory Act.
Both the majority and dissent are agreed that a direct sale of electricity from OPC to MedCo would be a violation of R.C. 4933.83. R.C. 4933.83(A), of the Certified Territory Act, guarantees each electric supplier “the exclusive right to furnish electric service to all electric load centers [ie., customers] located presently or in the future within its certified territory * * In this case, the exclusive right to furnish electricity to MedCo (a load center or customer within the meaning of R.C. 4933.81[E] of the Certified Territory Act) belongs to Cleveland Electric Illuminating Company (“CEI”). Thus, OPC, which is a competitor of CEI, may not invade CEI’s exclusive territory.
The Certified Territory Act (R.C. 4933.81 et seq.), however, explicitly carves out an exception for municipal utilities regarding the application of the Act. It is well established that, pursuant to Section 4, Article XVIII of the Ohio Constitution, municipalities may own and operate public utilities “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.” Akron v. Pub. Util. Comm. (1948), 149 Ohio St. 347, 37 O.O. 39, 78 N.E.2d 890; Pfau v. Cincinnati (1943), 142 Ohio St. 101, 26 O.O. 284, 50 N.E.2d 172; E. Ohio Gas Co. v. Pub. Util. Comm. (1940), 137 Ohio St. 225, 18 O.O. 10, 28 N.E.2d 599; Columbus Bd. of Edn. v. Columbus (1928), 118 Ohio St. 295, 160 N.E. 902. Therefore, the municipality in the case herein is excepted from the Certified Territory Act when it operates CPP, its own utility, for the purpose of generating power to serve the *528municipality or its inhabitants. It may also secure by contract from another utility a product or service for the municipality’s needs.
However, this does not permit a municipal utility to act merely as a conduit for the transfer of electricity from an outside utility into the municipality. If this were permissible, then a municipality could set up a public utility operation, acquire power from an outside utility, and convey that power to its municipal inhabitants without ever operating a generating facility. This would result in the negating of the laudatory purposes of the Certified Territory Act. Clearly, this would be impermissible.
The dissent calls MedCo’s activities an “artful compliance.” The dissent makes, I believe, the majority’s point. What we and the commission should be concerned with is whether AEP, OPC, CPP and MedCo have “artfully” or otherwise created a series of transactions which, taken together, contravene the laws of this state.
The PUCO was specifically created by the Ohio legislature to handle these types of issues, and it has the expertise to do so. Thus, we grant the commission permission to review such matters. The dissent broadens our order for a hearing into the proposition that a municipality cannot buy electricity from other electric power providers.
The majority opinion does not say that a municipality may not contract with an outside supplier of power to satisfy its needs. A home-rule municipality may still elect not to contract with its local public utility to supply the municipality’s energy requirements. What the majority is saying, however, is that when, as here, allegations of foul play are made, the PUCO may look beyond two individual contracts to determine whether the totality of the contracts evidences a sham transaction in direct violation of the Certified Territory Act. That is all the majority opinion holds. The other issues are left to another day when they are properly presented in cases coming before the court. Accordingly, I concur.