Ohio Supreme Court: PUCO can’t make rules instead of following state law

The Public Utilities Commission of Ohio overreached when it made up its own rules in deciding whether a provider of electric and water service was a public utility, the Ohio Supreme Court ruled.

In a ruling on the case of Wingo v. Nationwide Energy Partners, LLC., the state’s highest court said rather than following state laws, PUCO created its own “jurisdictional test” to determine whether “submetering” companies could be considered utilities.

Companies who submeter buy utility services and resell them, which was originally developed for apartments and complexes so that a larger bill could be split between the residents, according to the court.

“Today, submetering is big business, with third-party resellers such as (Nationwide Energy Partners) providing submetering services for multiple properties and landlords,” said Justice Patrick DeWine, writing for the majority in the case opinion.

The case was originally filed as a complaint with PUCO about NEP. A customer of NEP alleged that her apartment lease included a requirement that she purchase water, sewer and electric services from the energy company.

“She asserted that although ‘NEP claims to bill residents and tenants at the residential rate charged by the host utility,’ it does not offer services equivalent to those received by direct customers of the utility,” court documents stated.

In trying to dismiss the complaint with PUCO, the energy company said it is not a public utility and therefore does not fall under PUCO’s jurisdiction. To decide whether or not NEP was a utility, PUCO “examined NEP’s activities and the services NEP provided (the customer) and her landlord under a test originally set forth in a 1992 PUCO order.”

Under that test, PUCO defines a utility reseller as a public utility “if it charges a customer more for utility services than the customer would pay” for another equivalent service from a different local public utility.

In the case of the complaint against NEP, however, the utilities commission agreed with Nationwide Energy, saying they were not a public utility and for that reason, the customer’s complaint was dismissed.

After being denied another hearing twice, the customer appealed to the Ohio Supreme Court, claiming PUCO’s jurisdiction is established by state law, not by PUCO itself, and therefore PUCO should be following the law rather than its own test. On that argument, the high court agreed with the customer, saying PUCO “is making a policy judgment about who it wants to regulate.”

“It may well make sense for the General Assembly to directly address the question whether entities who engage in submetering fall within the PUCO’s jurisdiction,” DeWine wrote in the court decision. “…But until it does so, the PUCO must apply the law that is on the books.”

In its decision, the supreme court reversed the decision of the public utilities commission, and ordered it “to determine whether it has jurisdiction based upon the jurisdictional statute,” not based on their own test.

Chief Justice Maureen O’Connor joined DeWine in the decision, along with justices Sharon Kennedy, Judith French, Melody Stewart and Michael P. Donnelly. Justice Patrick Fischer was the only dissenting justice.