Court Opinion

ID: 6798911
Source: CourtListenerOpinion
Date Created: 2022-07-21 01:46:09.051451+00
Date Added: 2024-06-11T16:03:07.221757
License: Public Domain

Pfeifer, J.,
dissenting.
{¶45} Ultimately, a majority of this court concludes that the commission cannot change the carrying-charge rate on the deferred fuel costs because “the plan was modified well after it had expired.” Majority opinion at ¶ 24. But at its core, the modification does not affect Ohio Power Company’s electric-security plan (“ESP”) in any way. The ESP has expired and cannot be changed. The commission merely, after considering all the factors, determined that the rate of return that American Electric Power (“AEP”), the owner of Ohio Power, .stands to receive during the recovery period is excessive.
{¶ 46} When the commission approved the ESP, the economy was at its nadir and the commission was dealing with an economic environment riddled with uncertainty. Based on what it knew then, it determined that an 11.15 percent rate of return, AEP’s weighted average cost of capital, was reasonable. Several years later, after seeing the economy recover somewhat, but also seeing interest rates remain mired near zero, the commission has determined that that rate of return is excessive. It is, of course, correct in that assessment. At this time, it considers a rate of return of 5.34 percent, which corresponds with AEP’s historic cost-of-debt rate, to be reasonable. I agree.
{¶ 47} The commission is not changing the ESP; nothing in its order affects the rate of return that AEP has hitherto received. Instead, the commission has concluded that the rate of return should be adjusted going forward. AEP would not be harmed in any way by a change in the rate of return. It would continue to receive an excellent rate of return during the recovery period, even at the “mere” 5.34 percent ordered by the commission. (It is unlikely that many members of *13the public that AEP serves would be unhappy receiving a guaranteed rate of return of 5.34 percent.) Of course, a majority of this court has determined that AEP is entitled to the grossly excessive 11.15 percent, which is absurdly high given the current interest-rate environment.
Matthew J. Satterwhite and Steven T. Nourse; Porter, Wright, Morris & Arthur, L.L.P., Kathleen M. Trafford and Daniel R. Conway, for appellant and cross-appellee.
McNees, Wallace & Nurick, L.L.C., Samuel C. Randazzo, Frank P. Darr, and Matthew R. Pritchard, for appellee and cross-appellant.
Michael DeWine, Attorney General, William L. Wright, Section Chief, and Thomas W. McNamee and Ryan P. O’Rourke, Assistant Attorneys General, for appellee and cross-appellee.
Whitt Sturtevant, L.L.P., Mark A. Whitt, and Andrew J. Campbell, urging reversal for amicus curiae, East Ohio Gas Company.
{¶ 48} My incredulity at the decision of this court is magnified because of the windfall that AEP recently received when it was allowed by this court to retain $368 million dollars of charges that the commission considered unjustified. In re Application of Columbus S. Power Co., 138 Ohio St.3d 448, 2014-Ohio-462, 8 N.E.3d 863, ¶ 56. Today, it receives another unwarranted $130 million. These munificent windfalls do not materialize from thin air; they are commandeered from hardworking Ohioans. How many Christmas gifts does this court believe AEP is entitled to?
{¶ 49} I dissent.
O’Donnell and O’Neill, JJ., concur in the foregoing opinion.