IN RE APPLICATION OF COLUMBUS SOUTHERN POWER COMPANY ET AL.; COLUMBUS SOUTHERN POWER COMPANY, APPELLANT; PUBLIC UTILITIES COMMISSION ET AL., APPELLEES.
No. 2009-2298
Supreme Court of Ohio
March 9, 2011
128 Ohio St.3d 402, 2011-Ohio-958
Submitted February 2, 2011
Morrow, Gordon & Byrd, Ltd., and Christopher M. Shook, for appellant.
O‘CONNOR, C.J.
{¶ 1} Columbus Southern Power Company (“CSP“) appeals from the Public Utilities Commission‘s denial of its request for authority to sell or transfer two generation facilities, as well as its dеcision to deny cost recovery associated with the facilities. The commission defends its decision on the merits, and it also asserts that we lack jurisdiction to consider this matter because CSP failed to preserve these issues for appellate review.
{¶ 2} We have jurisdiction in this matter; CSP timely applied for rehearing and thereby preserved its right to appeal. On the merits, however, CSP has not shown that the commission‘s decision was unreasonable or unlawful. Therefore, we affirm.
I. Relevant Background
{¶ 3} As amended in 2008,
{¶ 4} On July 31, 2008, CSP (along with its sister utility, Ohio Power Company) filed an application seeking commission approval of an electric security plan. See
{¶ 5} The application did not include a request for increased rates to recover the costs of operating these facilities. Later in the proceedings, however, in rebuttal testimony, a CSP witness stated that cost recovery would be appropriate as an alternate remedy: “If the Companies through a Commission order are prohibited from transferring these plants or entitlements then any expense not recovered by [a particular charge] should be recovered in [a different] rate.”
{¶ 6} In its initial order, the commission denied the request for authority to transfer the facilities, finding it premature. But the commission granted CSP the alternative relief of cost recovery—roughly $51 million a year. Apparently satisfied with this resolution, the company did not seek rehearing on this particular issue.
{¶ 7} Industrial Energy Users-Ohio sought rehearing of the cost-recovery issue, however, and the commission reversed course. The commission agreed that CSP had “not demonstrated that [its] current revenue is inadequate to cover the costs associated with the generating facilities” and directed the company “to modify its [electric security plan] and remove the annual recovery of $51 million.”
{¶ 8} CSP then sought rehearing, which the commission denied. It again directed CSP to file an application when it “established a plan to exercise [its] authority to sell or transfer the facilities.” CSP‘s appeal to this court followed. The Ohio Energy Group, Office of the Ohio Consumеrs’ Counsel (“OCC“), and Industrial Energy Users-Ohio (“IEU“) intervened in support of the commission1 (collectively with the commission, “the appellees“).
{¶ 9} This appeal presents two sets of issues: one set is jurisdictional; the other, substantive. We consider both.
II. Analysis
A. CSP Preserved Its Appeal
{¶ 10} The appellees raise several arguments asserting that CSP failed to preserve its right tо appeal. All lack merit.
{¶ 12} Pursuant to
{¶ 13} CSP preserved this issue for appeal. It had asked for one of two things concerning the generation plants: transfer authority or cost recovery. In the initial order, the commission granted the latter. This ruling was not adverse to CSP. It was given what it had asked for. There was no reason to seek rehearing.
{¶ 14} Then, in its first entry on rehearing, the commission revisited the issue and denied both transfer authority and cost recovery. This modification of the order was the first ruling adverse to CSP, and CSP applied for rehearing within 30 days of it. CSP‘s application was timely, аnd we have jurisdiction over the transfer issue.
{¶ 15} The commission‘s second jurisdictional argument is plainly wrong. It claims that CSP failed to challenge the “decision on the recovery of costs” in its July 31 rehearing application. On the contrary, CSP specifically stated in that dоcument that “[i]t is unreasonable to force CSP to keep these generating units and not be able to recover any costs associated with these units.” The cost-recovery issue is also preserved.
{¶ 16} Finally, and more narrowly, OCC argues that CSP failed to raise a sрecific argument below that it raises here—namely, that the commission cannot consider traditional rate-making principles when reviewing an electric security plan. Assuming arguendo that CSP did not raise this argument below, it was before the commission due to IEU‘s argument. In its first аpplication for rehearing, IEU argued that “generation rates are no longer cost-based” and that the commission “cannot use traditional cost-based ratemaking selectively to increase rates.” Because this argument was raised before the commission on rehearing, we may consider it. ”
{¶ 17} Having found that we have jurisdiction over the entire appeal, we turn to the merits.
B. CSP Has Not Shown that the Order Was Unlawful or Unreasonable
{¶ 18} In its only proposition of law, CSP argues that in an electric-security-plan proceeding, “it is unlawful for the Commission tо deny the authority to sell * * * or transfer [generation] assets and at the same time refuse to allow * * * an adjustment for costs associated with maintaining and operating those same assets.” We disagree and hold that both decisions—the denial of CSP‘s request to sell and thе denial of cost recovery—were reasonable and lawful.
1. The Commission Reasonably Withheld Authority to Sell
{¶ 19} The commission found that CSP‘s request to sell was premature. CSP had stated in its application that it had “no immediate plan to sell or transfer [the generation] facilities.” It merely offered that if the commission authorized it to sell, it would “notify the Commission prior to any such transaction.” The commission denied the request but instructed CSP to “file a separate application, in accordance with the Commission‘s rules, at the time that it wishes to sell or transfer these genеration facilities.”
{¶ 20} Our standard of review of this issue is deferential.
{¶ 21} The commission did not abuse its discretion by withholding review of CSP‘s request to sell until CSP submitted a concrеte proposal. If nothing else,
2. The Commission Did Not Err in Denying Cost Recovery
{¶ 22} CSP asserts that if the commission denies transfer authority, then it must grant cost recovery instead. But the company hаs not shown that this is true.
{¶ 23} The governing statute,
{¶ 24} We further note that CSP has not shown that the commission‘s factual basis for denying cost recovery was unsound. The commission held that CSP had not demonstrated that its rates were inadequate to cover the costs of operating the plants. CSP adduces no evidence suggesting that this conclusion was factually inaccurate.
{¶ 25} Rather than argue that its rates are in fact inadequаte, CSP asserts that the commission never should have considered CSP‘s cost of service. The commission‘s “reference to the adequacy of current revenues,” CSP claims, “is uniquely based in the traditional cost-of-service/rate of return on investment rate making cоncepts of R.C. Chapter 4909” and “has no place in evaluating” an electric security plan.
{¶ 26} If it is true that cost of service “has no place” in evaluating an electric security plan, then why does CSP ask for a rate to “recover the costs” of running these facilities? This question need not be answered, because CSP‘s argument lacks merit. CSP cites no authority that expressly prohibits the commission from considering cost of service or adequacy of revenue when reviewing an electric security plan. On the contrary, numerous subsections of the electric-security-plan statute implicitly require the commission to consider certain costs. See
{¶ 27} CSP seems to assert that the standard to be applied here does not involve any consideration of cost. It argues in its brief that “[t]he proper standard under [Am.Sub.] SB 221 [the bill that enacted
{¶ 28} We intimate no opinion on whether
III. Conclusion
{¶ 29} For the forеgoing reasons, we have jurisdiction to consider CSP‘s appeal. Having considered the parties’ arguments, we affirm the order.
Order affirmed.
PFEIFER, LUNDBERG STRATTON, O‘DONNELL, LANZINGER, CUPP, and MCGEE BROWN, JJ., concur.
Porter, Wright, Morris & Arthur, L.L.P., and Daniel R. Conway; and Steven T. Nourse and Matthew J. Satterwhite, for appellant.
Michael DeWine, Attorney General, and William L. Wright, Werner L. Margard III, Thomas G. Lindgren, and John H. Jones, Assistant Attorneys General, for appellee Public Utilities Commission of Ohio.
Janine L. Migden-Ostrander, Consumers’ Counsel, and Terry L. Etter and Maureen R. Grady, Assistant Consumers’ Counsel, for intervening appellee, Ohio Consumers’ Counsel.
McNees, Wallace & Nurick, L.L.C., Samuel C. Randazzo, and Joseph E. Oliker, for intervening appellee, Industrial Energy Users-Ohio.