In re Application of Duke Energy Ohio, Inc., for Approval of its Fourth Amended Corporate Separation Plan (Slip Opinion)
148 Ohio St. 3d 510
| Ohio | 2016Background
- In 2014 Duke Energy Ohio sought commission approval to amend its corporate-separation plan to allow Duke (a regulated distribution utility) to offer various nonelectric products and services directly to customers.
- Interstate Gas Supply, Inc. (IGS) objected, arguing R.C. 4928.17 requires competitive or nonelectric services be provided only through a fully separated affiliate unless the commission validly approves a functional (alternative) plan.
- The Public Utilities Commission of Ohio approved Duke’s fourth amended plan with conditions and denied IGS’s rehearing; IGS appealed.
- The core statutory provisions at issue were R.C. 4928.17(A) (default separation rule), R.C. 4928.17(C) (limited authority to approve interim functional separation plans for good cause), R.C. 4928.17(D) (amendments to approved plans), and R.C. 4903.09 (requirement that the commission state reasons for decisions).
- The Ohio Supreme Court found the commission failed to explain how its approval complied with R.C. 4928.17 (either (A), (C), or (D)) and thus violated R.C. 4903.09; the Court reversed and remanded for fuller findings.
Issues
| Issue | Plaintiff's Argument (IGS) | Defendant's Argument (Commission/Duke) | Held |
|---|---|---|---|
| Whether Duke may offer nonelectric products directly without a fully separated affiliate under R.C. 4928.17(A) | R.C. 4928.17(A) bars Duke from offering nonelectric services directly; such services must be provided by a fully separated affiliate unless the commission validly approves an R.C. 4928.17(C) functional plan | Commission approved the amendment (invoking its authority to amend plans under R.C. 4928.17(D)) and alternatively contends Duke met R.C. 4928.17(C) standards | Court did not resolve substantive statutory compliance; found commission failed to explain which statutory authority it relied on or make required R.C. 4928.17(C) findings, so remand required |
| Whether the commission made required R.C. 4928.17(C) findings (good cause, interim period, ongoing compliance with R.C. 4928.02) | Record does not show the commission found good cause or that the approval was truly interim and ensured ongoing compliance | Commission claims conditions imposed supply the good-cause and interim safeguards | Court: Commission’s orders lack the necessary findings and explanation; post-hoc appellate rationalizations are insufficient |
| Whether the commission permissibly relied on R.C. 4928.17(D) (authority to order amendments) to approve Duke’s amendment | IGS: R.C. 4928.17(D) does not supplant the substantive requirements of (A) or the limited (C) exception; commission must identify and explain legal basis | Commission/Duke: (D) authorizes amendment approval; commission has discretion | Court: Commission did not cite or explain reliance on (D) in its orders; explanation required on remand |
| Whether the commission satisfied R.C. 4903.09 (written reasons requirement) | Commission failed to explain how its decision complied with R.C. 4928.17; rehearing didn’t cure lack of explanation | Commission stated generally that decision adhered to statutory requirements but gave no detailed findings | Held: Violation of R.C. 4903.09; orders reversed and case remanded for full explanation and fact/findings supporting statutory compliance |
Key Cases Cited
- Indus. Energy Users-Ohio v. Pub. Util. Comm., 885 N.E.2d 195 (Ohio 2008) (discusses unbundling required by S.B. 3 and separation of generation, transmission, distribution)
- Migden-Ostrander v. Pub. Util. Comm., 812 N.E.2d 955 (Ohio 2004) (explains purpose of unbundling and preventing cross-subsidies)
- Gen. Tel. Co. v. Pub. Util. Comm., 285 N.E.2d 34 (Ohio 1972) (agency orders must set forth reasons in sufficient detail or be set aside)
- Ohio Consumers’ Counsel v. Pub. Util. Comm., 856 N.E.2d 213 (Ohio 2006) (agency must make discernible factual and legal basis for modifications on rehearing)
- Morgan Stanley Capital Group v. Pub. Util. Dist. No. 1 of Snohomish Cty., 554 U.S. 527 (2008) (courts generally will not accept post-hoc rationalizations from agencies)