[This decision has been published in Ohio Official Reports at
96 Ohio St.3d 371.]
FIRSTENERGY CORPORATION ET AL., APPELLANTS, v. PUBLIC UTILITIES
COMMISSION OF OHIO, APPELLEE.
[Cite as FirstEnergy Corp. v. Pub. Util. Comm., 2002-Ohio-4847.]
Public utilities—Electric companies—Public Utilities Commission’s order
eliminating restrictions on electricity resale and distribution by landlords
to their tenants affirmed.
(No. 2001-0923—Submitted April 23, 2002—Decided October 2, 2002.)
APPEAL from the Public Utilities Commission of Ohio, Nos. 99-1212-EL-ETP,
99-1213-EL-ATA, and 99-1214-EL-AAM.
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PFEIFER, J.
{¶ 1} In 1999 Am.Sub.S.B. No. 3 (“S.B. 3”), the General Assembly adopted
a comprehensive statutory scheme to facilitate and encourage competition in Ohio’s
retail electric market. The provisions of S.B. 3 relevant to this decision are
contained in newly enacted R.C. Chapter 4928. R.C. 4928.31 requires each electric
utility that supplies retail electric service to file with the appellee, Public Utilities
Commission of Ohio (“PUCO” or “commission”), a transition plan for providing
competitive electric service in Ohio.
{¶ 2} In December 1999, appellant FirstEnergy Corporation, on behalf of
its Ohio operating companies (appellants Ohio Edison Company, Cleveland
Electric Illuminating Company, and Toledo Edison Company), filed its proposed
transition plan with the commission. Stipulated settlement agreements were
entered into between a majority of the parties to the commission proceedings, and
evidentiary hearings and local public hearings were held. These proceedings
resulted in an opinion and order, dated July 19, 2000, in which the commission
approved the settlement agreements and FirstEnergy’s transition plan, as modified
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by the settlement agreements, subject to final approval of FirstEnergy’s compliance
tariffs to be filed pursuant to the order.
{¶ 3} In its entry dated November 21, 2000, the commission found that
FirstEnergy had submitted proposed compliance tariffs as the commission had
directed in its July 19, 2000 order and the commission approved those submissions,
with certain exceptions. One exception related to restrictions on electricity resale
and redistribution by landlords to their tenants. The commission’s staff
recommended that the proposed tariffs be modified to eliminate the restrictions on
resale so that the tariffs would be consistent with the commission’s decision in
Brooks v. Toledo Edison Co., commission case No. 94-1987-EL-CSS, 1996 WL
331201, decided May 8, 1996. The commission acknowledged that it had indicated
in an earlier entry that the resale and redistribution issue would be addressed in the
context of FirstEnergy’s application for approval of its proposed compliance tariffs.
The commission adopted its staff’s recommendation for tariff modification on an
interim basis, pending further review of the issue. In furtherance of such review,
the commission solicited comments from interested parties regarding electricity
resale and the effect of S.B. 3 on the Brooks decision.
{¶ 4} The commission received numerous comments, some favoring the
commission’s policy as set forth in Brooks, and others urging change. After
considering the comments, the commission reaffirmed the Brooks decision, which
it described in its January 18, 2001 entry as follows:
{¶ 5} “The Brooks decision held that [the electric utility] could not restrict
the resale or redistribution of electric service by a landlord to a tenant if the resale
or redistribution takes place only upon property owned by the landlord, and if the
landlord was not operating as a public utility.”
{¶ 6} Given this affirmation of Brooks, the commission ordered that
FirstEnergy’s resale tariff provisions would remain in effect, as modified by its
earlier entry. The commission’s refusal to approve the unmodified tariff provisions
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January Term, 2002
as tendered by FirstEnergy forms the gravamen of FirstEnergy’s complaint in this
appeal.
{¶ 7} The cause is now before this court upon an appeal as of right.
I
{¶ 8} FirstEnergy argues that the commission erred in holding Brooks to be
controlling because S.B. 3 was enacted after the Brooks decision. FirstEnergy also
argues that S.B. 3 entitles consumers of retail electric service to choose their
suppliers.
{¶ 9} FirstEnergy asserts that tenants of apartment houses, office buildings,
and shopping centers are the ultimate consumers and fall within the purview of S.B.
3. However, this court has held that office buildings, apartment houses, and
shopping centers are “consumers” of electricity even though these consumers may
resell, redistribute, or submeter part of the electric energy to their tenants. Jonas v.
Swetland Co. (1928), 119 Ohio St. 12,
162 N.E. 45; Shopping Centers Assn. v. Pub.
Util. Comm. (1965),
3 Ohio St.2d 1,
32 O.O.2d 1,
208 N.E.2d 923. S.B. 3 did not
change the law governing the resale or redistribution of electric service by a
landlord to its tenants, and nothing in S.B. 3 overrules Jonas, Shopping Centers
Assn., or the commission’s decision in Brooks (which relied on Shopping Centers
Assn.).
{¶ 10} FirstEnergy further argues that S.B. 3 entitles tenants to choose their
own service supplier and that the commission’s decision enables landlords to
prevent tenants from doing so. To the contrary, the commission’s decision simply
affirmed the right of landlords and tenants to enter into lease agreements that
appoint the landlord to secure, resell, and redistribute electric service to its tenants.
Under such leases, agreed to by tenants, the tenants exercise choice by appointing
their landlord to make decisions and arrangements concerning electric utility
service.
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{¶ 11} For the foregoing reasons, we find that FirstEnergy’s S.B. 3
arguments are without merit.
II
{¶ 12} FirstEnergy argues that the commission’s approval of the stipulated
settlement agreements, in its July 19, 2000 opinion and order, was tantamount to
approval of the compliance tariff provisions submitted by FirstEnergy.
{¶ 13} FirstEnergy asserts that (1) it filed, as part of its proposed transition
plan, tariffs that contained resale restrictions of the sort contained in its proposed
compliance tariffs, (2) the settlement agreements concerning the proposed
transition plan did not address the restrictive tariff provisions, and (3) the parties’
failure to expressly address the issue of the restrictive tariff provisions in the
settlement agreements meant that they were implicitly approved. Relying on these
assertions, FirstEnergy concludes that the commission’s approval of the settlement
agreements in its July 19, 2000 order constituted binding prior approval of tariff
provisions containing resale restrictions.
{¶ 14} FirstEnergy’s argument is flawed. If, as FirstEnergy claims, the
settlement agreements were in fact silent as to the questioned tariff provisions, that
silence may signify little more than the parties’ lack of concern with tariff issues at
the stage of proceedings involving approval of the settlement agreements. The
commission’s July 19, 2000 order makes it clear that both the parties and the
commission would consider the content and the compliance of the tariffs in further
proceedings involving an application for tariff approval not yet filed. Further, the
commission’s statement that the settlement agreements were approved “subject to
final approval of FirstEnergy’s compliance tariffs” demonstrates that it did not
accept the proposed restrictive tariff provisions in the settlement agreements.
Moreover, in a later entry, the commission stated, “In our September 13, 2000 entry
on rehearing in this proceeding, we indicated that this resale/redistribution issue *
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January Term, 2002
… would be addressed in the context of FirstEnergy’s compliance tariff
application.”
{¶ 15} FirstEnergy has failed to convince us that the commission’s
conditional approval of the parties’ stipulated settlement agreements in its July 19,
2000 order constrained the commission to approve without modification
FirstEnergy’s tariff provisions containing restrictions on electric resale and
redistribution.
III
{¶ 16} Decisions of the commission “shall be reversed, vacated, or
modified by the supreme court on appeal, if, upon consideration of the record, such
court is of the opinion that such order was unlawful or unreasonable.” R.C.
4903.13. “Under the ‘unlawful or unreasonable’ standard specified in R.C.
4903.13, this court will not reverse or modify a PUCO decision as to questions of
fact where the record contains sufficient probative evidence to show the PUCO’s
determination is not manifestly against the weight of the evidence and is not so
clearly unsupported by the record as to show misapprehension, mistake, or willful
disregard of duty.” MCI Telecommunications Corp. v. Pub. Util. Comm. (1988),
38 Ohio St.3d 266, 268,
527 N.E.2d 777. See AT&T Communications of Ohio, Inc.
v. Pub. Util. Comm. (2000),
88 Ohio St.3d 549, 555,
728 N.E.2d 371.
{¶ 17} To the extent that this appeal turns on questions of fact, we find that
sufficient probative evidence was adduced before the commission to show that its
determinations were just and reasonable and not manifestly against the weight of
the evidence. Nor were they so clearly unsupported by the record as to show
misapprehension, mistake, or willful disregard of duty.
{¶ 18} To the extent that this appeal turns on questions of law, as it largely
does, we find that the commission correctly determined and applied the relevant
law to the facts before it.
{¶ 19} We therefore affirm the commission’s order.
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Order affirmed.
MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, DEGENARO and
LUNDBERG STRATTON, JJ., concur.
MARY DEGENARO, J., of the Seventh Appellate District, sitting for COOK, J.
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Arthur E. Korkosz; Jones, Day, Reavis & Pogue, Paul T. Ruxin and Helen
L. Liebman, for appellants.
Betty D. Montgomery, Attorney General, Duane W. Luckey, William L.
Wright and Thomas G. Lindgren, Assistant Attorneys General, for appellee.
Vorys, Sater, Seymour & Pease, L.L.P., M. Howard Petricoff and Jason J.
Kelroy, urging affirmance for amicus curiae Enron Energy Services, Inc.
Vorys, Sater, Seymour & Pease, L.L.P., and Jason J. Kelroy, urging
affirmance for amicus curiae Ohio Building Owners and Managers Association.
Bell, Royer & Sanders Co., L.P.A., and Barth E. Royer, urging affirmance
for amicus curiae Simon Property Group, Inc.
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