In re Application of Ormet Primary Aluminum Corp.
129 Ohio St. 3d 9
| Ohio | 2011Background
- Ormet Primary Aluminum Corp. and Eramet Marietta, Inc. sought to establish reasonable arrangements with Columbus Southern Power Co. and Ohio Power Co. (AEP) under R.C. 4905.31 to obtain substantial electric-rate discounts.
- Discounts were tied to market conditions (delta revenue) and included employment-maintenance requirements; AEP sought to recover foregone revenue from other customers but not POLR charges.
- Ormet is Monroe County’s largest employer, with aluminum production highly electricity-intensive and electricity comprising about 35% of production costs.
- The Ohio Public Utilities Commission (PUCO) approved the arrangements in 2009 (Ormet) and 2009 (Eramet), conditioning discounts on employment safeguards and disallowing POLR charges.
- AEP sought rehearing; a third proceeding authorized delta-revenue collection from other customers, still excluding POLR charges; Ormet and Eramet intervened on appeal.
- The court consolidated the three appeals for decision and ultimately affirmed the PUCO orders.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether delta revenue recovery is mandatory or discretionary | AEP argues delta revenue must be recovered from others. | Ormet/Eramet contend recovery is permissive under the statute. | Delta-revenue recovery is discretionary. |
| Whether exclusive-supplier provisions violate policy favoring competition | AEP asserts exclusive-supplier terms undermine customer choice. | Ormet/Eramet maintain arrangement serves customer-specific needs, not broad shopping. | Exclusive-supplier provisions do not violate applicable policy. |
| Whether there is a risk that Ormet or Eramet will shop for competitive generation and return to POLR | AEP contends risk of shopping and return to POLR exists. | PUCO found no material risk given exclusive-supplier arrangement. | No substantial risk of shopping; POLR charges properly disallowed. |
| Whether utility consent is required for a reasonable arrangement | AEP claims utility consent is required for an arrangement. | Statute does not require utility consent; commission approves and oversees. | No utility-consent requirement; arrangements may be proposed by nonutilities and are subject to commission approval. |
Key Cases Cited
- Constellation NewEnergy, Inc. v. Pub. Util. Comm., 104 Ohio St.3d 530 (2004-Ohio-6767) (POLR context; pricing and shoppability considerations)
- Fayetteville Tel. Co. v. Pub. Util. Comm., 1 Ohio St.3d 167 (1982) (may language; permissive recovery of foregone revenue)
- State ex rel. Niles v. Bernard, 53 Ohio St.2d 31 (1978) (use of 'may' as permissive language)
- Elyria Foundry Co. v. Pub. Util. Comm., 114 Ohio St.3d 305 (2007-Ohio-4164) (reasonableness of agency decisions; evidentiary considerations)
- State v. Porterfield, 106 Ohio St.3d 5 (2005-Ohio-3095) (statutory interpretation; parsing terms in context)