A divided Ohio Supreme Court killed a series of surcharges Ohio customers have paid to FirstEnergy-owned utility companies going back to 2017.
By a 4-3 vote released Wednesday, the court said the $204 million in surcharges the utilities collected in 2017 and $168 million collected or scheduled for 2018 and 2019 must be removed.
The surcharges have cost a typical FirstEnergy residential electricity customer about $3.33 per month, or $40 annually, according to Matt Schilling, a Public Utilities Commission of Ohio spokesman.
“We’re just reviewing the decision to see exactly what it means and what happens next,” Mr. Schilling said Wednesday.
A FirstEnergy spokesman said in a statement that the company is still reviewing the decision, and that FirstEnergy believes the surcharges benefited customers.
“A third party appointed by the PUCO just this week determined that we have appropriately used DMR funds in support of grid modernization,” he wrote.
In a statement cheering the court ruling, the Environmental Defense Fund said FirstEnergy would be allowed under current Ohio law to keep surcharge money already collected, but efforts are under way to change that law.
The Northwest Ohio Aggregation Coalition, which also appealed the utilities commission’s rate-setting proceedings, also noted that the commission had made the surcharge nonrefundable. About $450 million had already been paid, while $80 million remained authorized before the court’s ruling, according to the coalition that represents Toledo, 11 neighboring municipalities, two townships, and Lucas County.
“I am proud that our communities fought for the little guy and for our businesses,” county commissioner Pete Gerken said in NOAC’s statement. “Unfortunately, even when we win, the playing field is tilted against us. We asked the PUCO to make this charge refundable and they refused. FirstEnergy got almost all of what it wanted. Nearly a half billion [dollars] was collected in what is an illegal bailout of FirstEnergy and consumers cannot get one single dime back.”
PUCO authorized the surcharges as a stated incentive to jump-start utility infrastructure upgrades. But the court found the PUCO never actually required that FirstEnergy spend the revenue on those upgrades.
“And in fact, the commission made it clear that there are no plans for FirstEnergy to take on any modernization projects in the immediate future,” Justice Michael P. Donnelly wrote in the court’s lead opinion.
Justices Judith L. French and Melody J. Stewart joined in the lead opinion, while Justice Patrick DeWine wrote a separate, concurring opinion stating that the utilities commission’s definition of “incentive” was inconsistent with the word’s commonly understood meaning.
Two dissenting opinions also were filed, one by Justice Sharon L. Kennedy, and the other by Justice Patrick F. Fischer, joined by Chief Justice Maureen O’Connor.
Justice Kennedy wrote that state law defining “incentive” includes no provision requiring that one be “conditioned or restricted or even related to the action being encouraged.” Justice Fischer wrote that because the rider was designed to foster grid modernization, “it is an incentive for modernization.”
The utilities involved include Toledo Edison, Ohio Edison, and the Cleveland Electric Illuminating Company. The surcharge was included in a rate plan PUCO authorized in 2016, which had been appealed by numerous groups.
Many critics said the Distribution Modernization Rider was really a thinly veiled subsidy to prop up FirstEnergy’s money-losing coal and nuclear power plants. Statements from the Sierra Club and the Environmental Defense Fund, both among the lawsuit’s plaintiffs, noted that FirstEnergy has sought to extend the surcharge through 2021 while its distribution arm, FirstEnergy Solutions, already in bankruptcy court, seeks help from the Ohio General Assembly.
“The decision further highlights the fact that FirstEnergy’s frequent and systemic bad decision making has led them to a point where they can only operate if Ohio electric customers are routinely bailing them out,” Neil Waggoner, the Ohio campaign representative of the Sierra Club’s Beyond Coal Campaign, said in a prepared statement. “ ... The court made the right decision. As such, maybe Ohio regulatory bodies and the state legislature should stop granting FirstEnergy bailouts.”
“State regulators cannot write blank checks to the utilities they are supposed to regulate,” John Finnigan, a senior attorney with the Environmental Defense Fund, said in a statement. “We immediately saw the $600 million subsidy for what it was — an illegal bailout of FirstEnergy’s uneconomic coal and nuclear plants. Today the Ohio Supreme Court’s order voids this illegal bailout.”
First Published June 19, 2019, 5:22 p.m.
