No. 93-505 | Ohio | Mar 30, 1994
Lead Opinion
The primary issue which has been properly raised in this appeal is whether the commission approved an environmental compliance plan that was not least-cost, thereby constituting a violation of R.C. 4913.04. For the reasons that follow, we decline to disturb the commission’s determination approving Ohio Power’s plan. Accordingly, we affirm the commission’s order.
I
To begin our discussion, we note that this court is ordinarily called upon to review commission decisions involving ratemaking. Although the case before us obviously affects rates (as is true with virtually everything the commission does), we are confronted here with a decision of the commission which ventures into the field of policymaking concerning the best and least-cost way for a' utility to comply with the CAAA. While the standard of review remains the same (to wit: the “unlawful or unreasonable” standard specified in R.C. 4903.13), we nevertheless recognize that in reviewing such determinations, we are being called upon not only to review the lawfulness of the commission’s order, but also to review its wisdom in reaching its conclusions. Because such a review could tend to also place this court in the policymaking arena, we continue our policy of not second-guessing the commission in its fundamental determinations which are not unlaw
II
Ohio Power’s environmental compliance plan was submitted to the commission for review and approval in the context of the overall AEP system-wide compliance plan. While we recognize that this was necessary for purposes of evaluating the Ohio Power plan, it is important to realize that only Ohio Power’s plan for compliance with the CAAA is at issue in this case. The commission’s order and the arguments of the parties, both for and against the commission’s ultimate determination, are less than a model of clarity, but that may be driven by the fact that the information being reviewed, the federal and state laws and the reports, studies and expert testimony, is voluminous and very technical. Nevertheless, it is apparent to us what the commission sought to do in this case, and we find that the commission’s order is neither unlawful nor unreasonable.
in
Pursuant to R.C. 4913.04(A), the commission was required to make a number of findings in approving Ohio Power’s plan. The specific commission finding, around which the present controversy swirls, is that Ohio Power’s plan constitutes a reasonable and least-cost strategy for compliance with the Phase I acid rain control requirements of the CAAA. R.C. 4913.04(A) provides, in pertinent part:
“[T]he public utilities commission shall issue an order approving a proposed environmental compliance plan submitted by an electric light company under section 4913.02 of the Revised Code, and the estimated costs of and schedule for implementing the plan, only if the commission finds that the plan is adequately documented and makes all of the following findings regarding the plan:
“(2) The plan constitutes a reasonable and least-cost strategy for compliance with the applicable * * * [Phase I acid rain control requirements of the CAAA] that is consistent with providing reliable, efficient, and economical electric service. Least-cost shall be measured over the period of both the Phase I and Phase II acid rain control requirements under * * * [the CAAA].”
By far the most significant issue litigated at the commission level involved the question whether it would be more cost effective to fuel-switch or to install
In a detailed and comprehensive decision, the commission determined that Ohio Power’s plan to install scrubbers at Gavin was the least-cost alternative for Phase I compliance. Under the applicable standard of review, we will not reverse the commission’s decision as to questions of fact where sufficient probative evidence is contained in the record to show that the commission’s decision 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. See MCI Telecommunications Corp. v. Pub. Util. Comm. (1988), 38 Ohio St. 3d 266" court="Ohio" date_filed="1988-08-31" href="https://app.midpage.ai/document/mci-telecommunications-corp-v-public-utilities-commission-6760615?utm_source=webapp" opinion_id="6760615">38 Ohio St.3d 266, 268, 527 N.E.2d 777, 780.
Ohio Power’s case studies showed that on an eighteen-year net present value basis, AEP’s revenue requirements under the plan to install scrubbers at Gavin (Case 2) was an estimated $121 million less than the estimated revenue requirements for the Gavin fuel-switch (Case 1) alternative. Further, if low-sulfur coal costs were to escalate more rapidly, and high-sulfur coal more slowly, than was assumed in Cases 1 and 2, the estimated revenue requirements under the Gavin-scrubber plan were shown to be $244 million less than the Gavin fuel-switch alternative (Case IS compared to Case 2S). Moreover, when Ohio Power’s plan was considered in light of the stipulation entered into in the electric fuel component proceeding (Case 2CS), installing scrubbers at Gavin was shown to be an even less costly compliance measure than had been projected in Case 2. This evidence and more contained in the record supports the commission’s factual determination under R.C. 4913.04(A)(2) that Ohio Power’s proposal to install scrubbers at Gavin was an integral part of a reasonable and least-cost plan for Phase I compliance.
Nevertheless, appellants contend that the evidence in this case establishes that had Ohio Power’s plan also included a Phase I fuel-switch at Cardinal Unit 1 and Muskingum Units 1-4, that plan would further reduce compliance costs for the AEP system. On this basis, appellants urge that the commission’s finding under R.C. 4913.04(A)(2) was unlawful since the plan approved by the commission did not provide for a Phase I fuel-switch at Cardinal Unit 1 and Muskingum Units 1-4 and, thus, the plan did not constitute the least-cost compliance strategy. Our response to appellants’ arguments is threefold.
First, R.C. 4913.04(A)(2) requires a finding that an environmental compliance plan constitutes a reasonable and least-cost strategy for compliance with the
Second, we are extremely skeptical of an interpretation of R.C. 4913.04(A)(2) that would make commission approval of an environmental compliance plan contingent upon the company’s having proposed to undertake every cost-efficient compliance action possible, regardless whether such action is necessary for the company to achieve compliance with the CAAA. In our judgment, the question to be answered under R.C. 4913.04(A)(2) is whether the compliance measures chosen by the company are the least-cost measures to bring the company into Phase I compliance. For the commission or this court to interpret R.C. 4913.-04(A)(2) as requiring disapproval of a plan that satisfies the minimum requirements of the federal law in a least-cost manner, on the basis that it may be more cost-efficient for the company to take additional compliance action during Phase I, would be to subject those affected by the CAAA to even more burdensome requirements than have already been exacted by virtue of the federal law. In the case at bar, the record is clear that Ohio Power will be able to achieve compliance with the applicable federal mandates by installing scrubbers at Gavin alone. As we have indicated, the commission’s finding that installing scrubbers at Gavin is a reasonable and least-cost compliance strategy is a factual determination which we will not disturb, given the standard by which such a determination must be judged.
Third, and finally, even if we were to assume that the commission erred in approving the plan because of the Cardinal/Muskingum fuel-switch controversy, we would nevertheless find that appellants have not been prejudiced by the commission’s decision. In its order, the commission apparently considered Ohio Power’s proposal to delay the fuel-switch at Cardinal Unit 1 and Muskingum Units 1-4 as a “scheduling” issue involving implementation of the plan. The commission apparently sought to approve Ohio Power’s plan to fuel-switch Cardinal Unit 1 and Muskingum Units 1-4, but to defer final judgment on the scheduling/timing of the fuel-switch at these facilities. In this regard, counsel for
In its brief, Ohio Power argues, among other things, that since a Phase I fuel-switch at Cardinal Unit 1 and Muskingum Units 1-4 is unnecessary for Ohio Power to meet the Phase I requirements of the CAAA, such compliance measures were arguably beyond the proper scope of the commission’s inquiry in this case. Thus, Ohio Power apparently agrees that the commission’s approval of the plan did not extend any protections to Ohio Power with respect to the company’s proposal to delay compliance action at Cardinal Unit 1 and Muskingum Units 1-4. Ohio Power’s position on this issue was further clarified at oral argument, where Ohio Power conceded that it will be willing to do whatever the commission requests at the two-year review of the plan which is shown to be prudent and least-cost with respect to the implementation of compliance measures at Cardinal Unit 1 and Muskingum Units 1-4.
Under these circumstances, even if we were to conclude that Ohio Power’s plan was not least-cost, we would nevertheless find that appellants have not been harmed by the commission’s approval of the plan. At the R.C. 4913.05 review, appellants will be able to voice their concerns regarding the scheduling/implementation of the fuel-switch at Cardinal Unit 1 and Muskingum Units 1-4. Additionally, we note that in its entry denying rehearing, the commission “strongly suggested” that Ohio Power prepare to fuel-switch Cardinal Unit 1 in Phase I while designating Muskingum Units 1-4 as transfer units. The commission has indicated, in no uncertain terms, that it intends to enforce compliance with its order to ensure cost-effective implementation of the plan. With mechanisms peculiar to and within its control, the commission will almost certainly be able to make its “suggestions” much more than that.
IV
Appellants also challenge the commission’s finding that Ohio Power’s plan was adequately documented. However, we find that the record does not support appellants’ contentions. Although the plan may not have been documented to the degree appellants would have preferred, we have no quarrel with the commission in this regard. Appellants also contend that the commission erred in failing to address certain issues raised in their application for rehearing. However, on the
Appellant IEC further challenges the commission’s decision, claiming that Ohio Power and/or the commission unlawfully modified the proposed plan. We find no support for this proposition in the record. Ohio Power’s plan called for installing scrubbers at Gavin, switching to lower-sulfur coal at Muskingum Unit 5 and Kammer Units 1-3, and continuing to burn existing fuel supplies at Ohio Power’s remaining Phase I affected units. The plan proposed by Ohio Power was based upon the AEP system-wide compliance strategy which included provisions for a Phase II fuel-switch at Cardinal Unit 1 and Muskingum Units 1-4. Throughout the entire proceeding, Ohio Power’s compliance strategy remained unchanged. Thus, no modification occurred. Additionally, with regard to the commission’s alleged modification of the plan, the commission specifically stated in its entry denying rehearing that Ohio Power’s plan had been approved as filed. Furthermore, even if the commission did modify the plan by requiring a Phase I fuel-switch at Cardinal Unit 1, that is precisely what IEC has suggested would have resulted in a least-cost plan. Thus, IEC would not have been prejudiced by the alleged modification.
Finally, appellants raise a number of arguments concerning the constitutionality of Am.Sub.S.B. No. 143, 144 Ohio Laws, Part I, 817, the legislation which enacted, inter alia, R.C. Chapter 4913. Appellants claim that Am.Sub.S.B. No. 143, through its various provisions, creates a preference for Ohio high-sulfur coal, discriminates against out-of-state low-sulfur coal suppliers, and, thus, violates the Commerce Clause of the United States Constitution. However, we find that appellants lack standing to challenge the constitutionality of this legislation.
In Palazzi v. Estate of Gardner (1987), 32 Ohio St.3d 169, 512 N.E.2d 971, syllabus, this court held that: '
“The constitutionality of a state statute may not be brought into question by one who is not within the class against whom the operation of the statute is alleged to have been unconstitutionally applied and who has not been injured by its alleged unconstitutional provision.”
The class against whom Am.Sub.S.B. No. 143 is alleged to be unconstitutionally applied is out-of-state coal suppliers. Appellants are not members of that class. Moreover, appellants have failed to demonstrate, to our. satisfaction, that they have been injured by the provisions of the legislation which are alleged to be unconstitutional. Insofar as appellants lack standing to challenge the constitu
V
For the foregoing reasons, we affirm the commission’s order approving Ohio Power’s environmental compliance plan.
Order affirmed.
Dissenting Opinion
dissenting. The majority opinion is an admirably practical way of dealing with an admittedly difficult problem, but I cannot read R.C. 4913.04(A)(2) in the same way. That provision requires that a plan for complying with the federal Clean Air Act Amendments of 1990, in order to be approved by the Public Utilities Commission, must, among other requirements, constitute “a reasonable and least-cost strategy for compliance with the applicable acid rain control requirements that is consistent with providing reliable, efficient, and economical electric service.” Once a plan has been approved, a utility’s implementation of the plan is declared by statute to be a prudent management decision for rate-making purposes. R.C. 4909.157(A).
Although Ohio Power’s plan called for switching from high-sulfur coal at several locations when Phase I of the federal Act begins in 1995, and also for using scrubbers at the Gavin locations at that time, the plan for several other locations called for no changes until Phase II, in 2000. Ohio Power has never sought to modify its plan.
There may have been conflicting evidence as to whether the alternative strategy of switching to low-sulfur coal or natural gas at the other locations (Cardinal Unit I and Muskingum Units 1-4) in 1995 would cost less than waiting until 2000 to do so, but the fact is that the commission found that the earlier fuel switch at those locations would cost less, and there is evidence in the record to support that finding.
In view of the commission’s finding that a strategy of switching to low-sulfur fuels at the other locations in 1995, rather than waiting until 2000 to do so, would cost significantly less, I cannot conclude that the plan actually submitted by Ohio Power is a “reasonable and least-cost strategy” for compliance with applicable acid rain control requirements. It may lie within the universe of all “reasonable” strategies for compliance, but it is not “least-cost,” and the requirement is in the conjunctive.