Duke Energy Ohio, Inc. v. Hamilton
2021 Ohio 3778
Ohio Ct. App.2021Background
- Duke Energy Ohio sued the City of Hamilton and Fairfield Township after the City amended a JEDD in 2017 to add undeveloped acreage (the "Added Area") and later provided electric service there. Duke alleged the City exceeded constitutional authority under Article XVIII, §§ 4 and 6.
- Duke pleaded two constitutional claims: (1) the City created an "artificial surplus" of electricity purchased solely to resell outside city limits; and (2) the City sold surplus power to noninhabitants in excess of the 50% limit in § 6.
- Bench trial occurred January 2020. Duke primarily cross‑examined City witnesses and did not present its own expert; the City presented lay witnesses and two industry experts.
- Trial court granted judgment for defendants: it dismissed the "artificial surplus" claim under Civ.R. 41(B)(2) (surplus resulted from legitimate procurement/forecast mismatches), and rejected the 50% claim because Duke failed to prove its calculations and the court properly accounted for electrical losses, weather normalization, and used a three‑year averaging period.
- Duke challenged evidentiary rulings and sought more detailed Civ.R. 52 findings; the trial court’s findings were deemed sufficient, and the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether City purchased electricity "solely" to resell (artificial surplus) | Duke: City purchased excess supply to create resaleable surplus outside city limits, violating Art. XVIII §§ 4 & 6 | City: Surplus arose from reasonable long‑term procurement, market changes, and forecast errors — not sole intent to resell | Affirmed dismissal: surplus not "artificial"; resulted from legitimate procurement/forecast mismatch |
| Whether City sold >50% of kWh outside municipality (Hance test) | Duke: Its kWh calculations show >50% sold to noninhabitants in relevant period (2017) | City: Calculations must include electrical losses, weather normalization, and multi‑year averaging; Duke failed to prove adjusted numbers | Affirmed for City: Duke failed to meet preponderance; court properly required losses/weather normalization and applied a three‑year average |
| Appropriate "given period of time" for Hance comparison | Duke: Use 2017 only (year JEDD was amended) | City: Use multi‑year average to normalize anomalous weather and demand | Affirmed: three‑year average reasonable; avoids distortion from anomalous months/years |
| Admissibility/competency of Perry's weather testimony | Duke: Perry’s testimony about 2017 weather was incompetent hearsay and should not inform normalization | City: Perry, as utility business manager, relied on publicly available weather data and industry calculations; testimony admissible | Affirmed: trial court did not abuse discretion; even if error, it was harmless because electrical losses omission was dispositive |
Key Cases Cited
- Toledo Edison Co. v. Bryan, 90 Ohio St.3d 288 (2000) (defines "surplus" and prohibits purchasing solely to resell outside municipality)
- Bakies v. Perrysburg, 108 Ohio St.3d 361 (2006) (municipalities may acquire/operate utilities to serve inhabitants and may sell surplus subject to constitutional limits)
- State ex rel. Wilson v. Hance, 169 Ohio St. 457 (1959) (Hance test: compare kWh supplied outside vs. inside during a given period to determine § 6 compliance)