*1 (R M), & Sunoco, Appellant, v. Inc. Company Appellees. al., et Sunoco, (R M)
[Cite as
Inc.
&
v. Toledo Edison
Co.,
Introduction & owns and (R M) Sunoco, Inc. operates petroleum-refining facilities in states, several including Oregon, Ohio. purchases electric service for its Oregon facility from the Company, Toledo Edison intervening appellee. This case involves a contract between Sunoco and Toledo Edison for the sale of electricity. contract,” The contract is a “special approved by appellee (“PUCO” “commission”) Public Utilities Commission of Ohio pursuant to R.C. 4905.31, which permits “reasonable arrangement^]” public between utilities and their Generally, customers. such contracts include arrangements differ from the standard rate schedules and are often tailored to a specific customer’s service. The case also concerns a contract between BP Oil Company and Toledo Edison for electricity. the sale of BP operates owns and a competing refinery adjacent located refinery. Both the BP Sunoco and contracts contain generally clauses called “most favored nation” clauses. These clauses—titled “Comparable Facility Price Protection” —allow Sunoco and BP to utilize “arrangement, rates or for their charges” facilities that Toledo Edison given has to the other. The sole issue in this case is whether Sunoco could invoke the most-
favored-nation clause to extend the duration of its contract with Toledo Edison to match the duration of BP’s contract with Toledo Edison. If the can be contract, used to extend the then Sunoco would pay paid the same rate that for electric service from February 2008 until December If the contract million Toledo Edison over extended, obligated pay $13 Sunoco would be is not bills. higher electric *2 language of the most-favored-nation plain found that the The commission match the of its contract to to extend the duration not allow Sunoco clause did several errors that the commission committed contract. We find of BP’s duration result, clause. As a we the most-favored-nation construing in favor of Sunoco. judgment commission and render the decision of the reverse
Facts (R M) Toledo Edison Sunoco, against filed a complaint Inc. & commission, In before proceedings Commission of Ohio. the Public Utilities facts, following include the informa- joint which stipulations filed parties tion. contract with 1996, entered into an electric-service Toledo Edison BP, 1996, a similar contract with Edison entered into Also Toledo
Sunoco. The Agreement.” BP or “the 1996 Agreement” referred to as “the hereinafter until that it would remain in effect June provided BP Agreement entered into an electric- and Toledo Edison May On Sunoco 8}{¶ (the Agreement”), or “the 1999 which Agreement” “Sunoco service is a Agreement Edison contract. Sunoco the 1996 Sunoco-Toledo replaced 4905.31. Under the by pursuant authorized the PUCO R.C. special contract contract, service pricing was entitled to for electric special terms of the that it Agreement provided standard tariff rates. The Sunoco that was below BP Agreement. same date as the through in effect June 2006—the would remain BP identical most- Agreement and the contained Agreement The Sunoco and BP could utilize the clause to Generally, clauses. favored-nation charges” rates or Toledo “arrangement, a the form of obtain benefit—in —that clause was titled agreements, the other. In each of these given Edison had BP disputes Price Protection.” No one “Comparable Facility in the clause. facilities as that term is defined most-favored-nation comparable are that restructured Assembly legislation enacted In late the General from buy electricity customers to electric-utility industry to allow retail Ohio’s 3,No. company. than their local electric See Am.Sub.S.B. someone other IV, was Laws, Chapter legislation Part 7962. Codified as R.C. Ohio of cases at the PUCO 3.” What followed was series commonly known “S.B. attempted in which the and other electric utilities PUCO involving Toledo Edison to a market-rate structure. regulated from a rate structure to ease the transition (“ETP”) case, Application In re Ohio Edison electric-transition-plan See the 09-1212-EL-ETP; 2000), rate-stabilization-plan and the (July PUCO No. Co. (Oct. 2003), (“RSP”) No. case, PUCO In re Ohio Edison Co. Application of 03-2144-EL-ATA, in which the PUCO allowed Toledo Edison and large customers to extend the terms of their 3 service pre-S.B. contracts. joint The first extension was proposed through stipulation filed
Toledo parties Edison and other to Toledo ETP Edison’s case. The electric- transition-plan stipulation provided that each electric-service customer that had into a special entered contract with Toledo given Edison would be one-time continue, cancel, opportunity contracts, or extend the terms of special provided gave those customers Toledo timely Edison notice. As was required by the electric-transition-plan stipulation and the commission’s order approving stipulation, gave notice to each special-contract customer of the option extend the duration of its contract. Sunoco elected to extend the terms of Likewise, its 1999 with Toledo Edison. elected to extend the terms of its 1996Agreement with Toledo Edison.1 *3 The opportunity next in extend occurred Toledo Edison’s RSP case. case, In that the commission again approved joint stipulation filed Toledo Edison and parties allowing other Toledo Edison’s customers to extend the term any special contract “upon customer, request or its agent, received within days 30 of the However, Commission’s order in this case.” unlike in the case, ETP stipulation and the PUCO’s order in the RSP case did not require Toledo Edison to notify extend, its contract customers of opportunity Toledo Edison directly Sunoco, did not BP, communicate with other contract customer regarding option. Nevertheless, within that 30-day window, BP requested Toledo Edison extend the 1996 BP Agreement, which Toledo Edison agreed to do. Sunoco did not submit a request to Toledo Edison to extend the Agreement. Sunoco A final stipulated contract extension was in approved Toledo Edison’s (“RCP”) case,
rate-eertainty-plan In Application Co., re Ohio Edison PUCO 05-1125-EL-ETA, No. a case that is still open. stipulation The in the RCP case provided that the special contracts that were extended under the RSP case—such as the BP Agreement 31, continue effect until December 2008. The —would stipulation provided further that special contracts case, extended under ETP but not extended under the RSP case—such as the Sunoco Agreement —would continue effect only Thus, until February 2008. Sunoco’s agreement was scheduled to ten expire months before BP’s agreement. 16, 2007, On or May about Toledo Edison informed
{¶ Sunoco that the 14} Sunoco Agreement would in February terminate 2008.
1. specific depended The contract extensions were upon not for a date but instead the date that longer regulatory Toledo charges. Edison could no collect transition 13, 2007, stating sent a letter to Toledo Sunoco On November to utilize the Agreement right under the exercising [Sunoco] “is that Sunoco that arrange- the term of including, particular, Company arrangement BP Oil 31, disputing 2008” and until December which has been extended ment February 2008. Sunoco Agreement to terminate Sunoco right Edison’s with Toledo Edison Agreement invoked the most-favored-nation must match the duration agreement of Sunoco’s that the duration as evidence Agreement. the BP 16, 2007, with a letter to Sunoco responded Toledo Edison On November provision of the of the impact “a of the
stating interpretation that it has different contract,” to extend the term right that Sunoco had disputing 31, 2008. until December Agreement 6, 2007, filed a with the commission complaint December On challenged 4905.26. Sunoco Toledo Edison’s Toledo Edison under R.C.
against to December duration of the Sunoco refusal to extend the in February if was terminated complaint alleged intended, “millions of electric bills would be dollars Toledo Edison Sunoco’s adjacent to the competitive disadvantage at a higher,” “operate and Sunoco would facility.” into an escrow account the February agreed pay On the cost of alleged and Toledo Edison should be difference between what Sunoco date and December February billing electric service between its Sunoco’s 31, 2008. denying its order the commission issued February On *4 clause was a The commission found that the most-favored-nation
complaint. charges to rates and application that was limited price-protection provision commission held that had not Accordingly, for electi-ical service. Sunoco most-favored-nation clause allowed sufficient evidence to show provided 31, 2008, to match the to extend the duration of its contract December agreement. date of the BP termination commission denied timely application rehearing. filed a for application. court, law. For raising propositions to this four appealed 21}
{¶ 1, 3, 4 and below, sustain of law Nos. propositions reasons discussed we order. reverse the commission’s Review
Standard of
reversed, vacated,
shall
that a PUCO order
be
provides
“R.C. 4903.13
record,
when,
of the
the court
upon
court
consideration
only
modified
Inc.
NewEnergy,
the order to be unlawful or unreasonable.” Constellation
finds
¶
Comm.,
530,
questions
PUCO,
of law” in appeals from the
Ohio Edison Co. v. Pub. Util.
(1997),
Comm.
78 Ohio St.3d
678 N.E.2d
explained
we have
that we
may rely
expertise
on the
of a
agency
state
interpreting
“highly
law where
specialized
would,
issues” are
agency
therefore,
involved and “where
expertise
be
assistance
discerning
presumed
intent of our
Assembly.”
General
Consumers’
v.
Counsel
Pub. Util. Comm.
58 Ohio St.2d
O.O.3d
Analysis A. Sunoco’s Proposition Law No. In law, its first proposition of Sunoco contends that the commission
erred when it found that the plain language of the most-favored-nation clause in the Sunoco Agreement did not allow Sunoco to extend the duration of its contract make identical to the BP Agreement. agree. We The commission’s interpretation of the most-favored-nation clause was unlawful and unreasonable following reasons.
1. The PUCO erred title of considering the the clause Sunoco first contends that the PUCO wrongfully relied on the heading in interpreting the scope order, and intent of the clause. commission noted that the most-favored-nation clause is titled “Comparable Facility Price Protection.” The commission then stated that first indica- “[t]he tion of scope of the most itself, favored nation clause is the title of the clause plainly which indicates that the clause is provide price intended to protection *5 comparable between facilities and is not intended to deal with the termination date of the contract.” Sunoco maintains the PUCO erred in this regard because the 1999 Agreement prohibits Sunoco clause using headings interpret to scope any and intent of clause. titled “Clause Agreement, of the 10.6 is correct. Section in have been Agreement this headings appearing clause “The Heading,” provides, do not They reference. ready of convenience and for the purpose inserted define, or intent scope limit or extend the not be deemed to to and shall purport Thus, relying commission erred they pertain.” clauses to which heading. the clause not counter that Sunoco did and Toledo Edison both The PUCO rehearing for at the by raising application appeal this issue for
preserve R.C. 4903.10 and 4903.13. to this court. See appeal or in its notice commission before us. properly find that this issue is We both contained the rehearing application appeal and notice unlawful in that it finds unjust “The language: identical Order
following
(hereinafter
clause’) of the
Price Protection’
‘MFN
Facility
that the ‘Comparable
* * *
to obtain a
provision
allowed Sunoco to invoke the
only
1999 Agreement
Agreement
identical to that
between
for
from Toledo Edison
price
power
* * *
Edison,
not allow it to invoke the
and Toledo
and did
Company
BP Oil
make it identical to the BP
the duration of the contract to
MFN clause to extend
omitted.)
(Footnote
found that the title of the
The commission
Agreement.”
indicates that
the clause is intended
“plainly
most-favored-nation clause
is not intended to deal
comparable
between
facilities and
provide price protection
rehearing application
date of the contract.” Sunoco’s
with the termination
that the title
finding
referred to the commission’s
appeal specifically
notice of
Protection”)
only
provide
was intended
Facility Price
heading (“Comparable
to invoke the
(“only
facilities
allowed Sunoco
price protection
comparable
between
from Toledo Edison identical to that
power
to obtain a
provision
price
Edison”).
We conclude
Company
between
Oil
issue for our review. See Discount
preserve
was sufficient to
this
language
Comm.,
360,
2. The PUCO misconstrued of the most-favored-nation 9.2, in the 1999 Agree- the most-favored-nation clause Section
ment, provides: is or arrangement, charges rates or which Company provides “If the to a during Agreement, Comparable at time the term of this be effect right will have the territory, certified then the Customer
Facility within its Facility. The Customer must charges rates or for its arrangement, utilize firm and arrangement including and conditions of the with all other terms comply load interruptible characteristics/conditions.” *6 not of this clause did plain language found that the The commission Edison to in its 1999 with Toledo Agreement termination date
allow Sunoco’s Edison. Specifi- of BP’s 1996 with Toledo match the termination date interpret ‘arrange- to the word rejected “attempts commission cally, the the with the duration of ment,’ relationship in this to infer provision, as used comparable the context of the reasoned that “within contract.” The commission contract is referred to or ‘term’ of the provision, the duration facility price Clearly, the arrangement.’ conditions of the from the ‘terms and separately in the most of this which is contained ‘during agreement,’ the term language clause, to of the contract applicable provisions makes that clause favored nation Thus, can find that the most contract. we not [sic] other than the duration or ‘term’ of BP’s adopt the duration favored nation clause enables Sunoco contract.” not interpretation supported that the commission’s Sunoco contends agree clause. with Sunoco and of the most-favored-nation We
by plain reading of the first reading its interpretation- -specifically find that the commission’s — interpretation not a reasonable of the most-favored-nation clause—is sentence of the clause. plain language clause, language the commission based construing plain fact that the duration or “term this Agreement” finding solely —set in of the most-favored-nation clause—is referred forth the first sentence arrangement” from the “terms and conditions of the the second separately commission, phrase “during to the According sentence of the clause. to all Agreement” applicable term of this made the most-favored-nation except of the contract the contract’s duration. The commission’s provisions other in the most- reasoning appears phrases separated to be that because these are contexts, favored-nation clause and used different Sunoco and Toledo Edison duration) (meaning intended the words and “term” to have “arrangement” on this the commission con- meanings. Presumably reasoning, different based scope “arrange- cluded that the duration of the contract was outside the of an ment.” This was error. The first sentence of the most-favored-nation clause arrangement, charges “If rates or Company provides
reads as follows: during Agreement, which is or be in effect at time the term of this then the will have the Comparable Facility territory, within its certified Customer Facility.” rates or for its This right arrangement, charges to utilize commission found. The limiting, language but not the manner the context, merely means that Sunoco provision, proper of this when construed Agree- the term of this only “during can invoke the most-favored-nation clause obligations limits Toledo Edison’s way, ment.” Stated another the first sentence under the most-favored-nation clause to the “term of this Agreement,” meaning that Sunoco has no to invoke the clause after the has right expired. invoked the expired, “during Because Sunoco clause before at Agreement” provision appeal. term this is not issue *7 meaning
3. The of the word “arrangement” By focusing its attention on the phrases “during the term of this Agreement” and “terms and conditions of the arrangement,” the commission dispositive question overlooked the this case: the meaning of the word “arrangement.” Section 9.2 of the most-favored-nation clause that “the provides (here Sunoco) Customer will have right [any] utilize rates or arrangement, charges Facility” Thus, for its provides Toledo Edison to BP. the crux of the issue before us is whether the duration of the BP contract an “arrangement” was provided Toledo Edison that Sunoco could for its facility. utilize Sunoco asserts that the “arrangement” word the most-favored-nation clause allows Sunoco to utilize all terms and conditions of the BP Agreement for facility, including contract duration. primary argument is “arrangement” word means the “entire contract” or “entire agreement.”2 We need not decide whether the intended that parties the word “arrangement” be to mean interpreted agreement.” Rather, “entire contract or we need determine only whether “arrangement,” clause, as used in the most-favored-nation encom- the duration passes competitor’s contract. When confronted with an issue of contract interpretation, our role is to effect to
give
the intent of the parties. We will examine the contract
aas whole
and
presume
the intent of the
parties is reflected
the language of the
addition,
contract.
In
we will look to the plain
ordinary
meaning
language used in the contract unless another meaning
clearly
is
apparent from
the contents of
agreement.
the language
clear,
When
of a written contract is
a court may look no further than
writing
itself to find the intent of the
law,
parties.
“As matter of
a contract
unambiguous
if it
given
can be
Galatis,
legal
definite
meaning.”
216,
Ins. Co. v.
100 Ohio St.3d
2003-
Westfield
¶
Ohio-5849,
1256,
797
11.
N.E.2d
The most-favored-nation clause states that if Toledo Edison
“provides
arrangement, rates or charges
which is or
be in effect at any
during
time
Agreement,
term of this
to a Comparable Facility within
territory,
its certified
then the Customer will have the
right
arrangement,
utilize that
rates or
brief,
reply
argues
2.
“arrangement,”
for the first time that the word
as set forth in
614-17,
4905.31,
Light
predecessor
means “contract.” See Lake Erie Power &
G.C.
to R.C.
Co.
Telling-Belle
v.
467,
234,
947,
Vernon Co.
App.
paragraph
57 Ohio
11
14
O.O.
N.E.2d
one of
syllabus.
arguments
reply
Sunoco is forbidden to raise new
brief. State ex rel. Colvin v.
in its
Brunner,
¶
110,
None have merit. Counterarguments
a.
Edison’s
Toledo
to include duration does
Interpreting “arrangement”
i.
a sociis
not violate the doctrine of noscitur
“arrange-
of the word
interpretation
that Sunoco’s
argues
sociis,
“it is
the maxim noscitur
in the most-favored-nation clause violates
ment”
(2001),
known from its associates.” Ashland Chem.
v. Jones
Co.
Ohio St.3d
sociis,
price such as the choice between and firm interruptible power was so important to Sunoco.” Yet Toledo Edison no compelling argument why offers “arrangement” must be construed so narrowly. Had Toledo Edison wanted the apply only specific most-favored-nation clause to terms the contract such as type power supplied, using “arrangement” broad term like is an way odd to limit the reach of that “arrangement,” clause. The word because breadth, most, all, seemingly would cover if not nonprice provisions terms and contract. competitor’s
ii. Eveleth is not persuasive
Toledo Edison asserts that several
jurisdictions
courts
other
have
reviewed similar
most-favored-nation clauses
electric-utility-supply contracts
rejected
the very arguments that Sunoco makes here. Toledo Edison states
the commission had the benefit of
decisions,
several of these court
but
only
Toledo Edison cites
one: Eveleth Taconite Co. v. Minnesota
Light
Power &
Eveleth, however,
Co.
301 Minn.
court went
the four corners of the contract and relied on extrinsic
evidence of precontract negotiations between the customer and the utility to
Minn,
Eveleth,
determine the
parties.
contrast,
intent of the
See
301
at 27. In
extrinsic evidence cannot
be considered
this case because the outcome turns
solely
plain
on the
language
the most-favored-nation clause. See
v.
Shifrin
Ents.,
City
(1992),
Forest
Inc.
64 Ohio St.3d
syllabus.
597 N.E.2d
comparable facility
The commission cited Eveleth and reasoned that “within the context of the
price provision,
separately
the duration or ‘term’ of
contract
is referred to
from the ‘terms and
”
Minn,
Eveleth,
27-28,
arrangement.’
conditions of the
See
301
at
407 distinguishable are Furniture Truck Rental and Waterloo iii. Baker Car & “consis- jurisdictions that courts in other also contends Toledo Edison nation clauses end on most favored found that contracts with tently have itself contains unless the contract the contract specified termination date of the contract’s term.” authorizing an extension specific Rental, Rock Inc. v. Little court to Baker Car & Truck Edison refers the v. Ltd. Components, Furniture Ark. 925 S.W.2d Waterloo Haworth, (C.A.7, 2006), F.3d 641. Inc. on the fact that neither Furniture turned Both Baker Car and Waterloo of its contract clauses to invoke the most-favored-nation attempted had
plaintiff Car, 359, 363; Ark. at Baker already expired. contract had See until after case, Furniture, to this there is no at 645-646. contrast 467 F.3d Waterloo clause its 1999 the most-favored-nation that Sunoco invoked dispute before result, reject Toledo Edison’s As a we expired. with Toledo Edison had contract persuasive authority. on these cases as rely invitation to Counterarguments b. The Commission’s contracts is unwarranted perpetual i. The fear of PUCO’s of the most- interpretation that if The first counters Sunoco’s PUCO “unintended and would be prevails, consequences clause favored-nation to extend would be able the PUCO claims Specifically, irrational.” continue to indefinitely should Toledo Edison contract with Toledo Edison facilities operating compara- other oil refineries’ special enter into contracts with merit. and without facility. argument speculative The PUCO’s ble contracts special other any There is no evidence the record BP, for that matter. refinery other oil involving Toledo Edison Indeed, operated by those beyond is silent as to whether refineries the record territory. This case BP even exist Toledo Edison’s service Sunoco and to extend that request and Sunoco’s only Agreement the 1999 Sunoco concerns Based on Agreement. date of the 1996 expiration to match the 31, 2008. case, on December expired facts of this BP’s stipulated no to December Thus, will be extended the Sunoco further. conditions case are not “terms and
ii. set forth the RSP Requirements under the most-favored-nation arrangement” to utilize an that for a customer provides most-favored-nation clause all other terms and conditions comply that customer “must with “arrangement,” *10 load interruptible firm and arrangement including of the characteristics/condi- “arrangement” encompasses that an assuming states that tions.” The PUCO extension, arrangement BP allowing to extend its contract pursuant December was made to the RSP case. The PUCO notes that stipulation that case offered all of special-contract Toledo Edison’s custom- including BP and opportunity Sunoco—a one-time to extend their agree- ers— ments, Toledo provided they notify their decision to extend their contracts within days of the commission’s order approving stipulation. BP; The PUCO maintains that Sunoco arrangement was offered the same complied with the notification requirement, but Sunoco did not. According to the PUCO, Sunoco cannot utilize the arrangement offered to BP because Sunoco failed to comply with the terms and arrangement. conditions What the PUCO overlooks here is that if accepted Sunoco had case, Edison’s offer the RSP there would be no need to resort to the most- favored-nation clause as means of extending contract with Toledo Edison. offer, itself, Acceptance of the would have extended the Sunoco through December 2008. The whole aim of the most-favored-nation clause is to allow beneficiary to avail itself aof contractual arrangement merely based the fact that another Toledo Edison enjoys customer that arrangement. That aim is defeated if “terms and conditions of the arrangement” includes a prerequi- site that precludes Sunoco from invoking the clause in place. the first contract, In interpreting a required, we are if possible, give effect to “ every provision of the contract. one construction of a ‘[I]f doubtful condition ” in a written contract’ would render a clause meaningless and it is possible that another construction give would that same and purpose, then the latter construction prevail. must Foster Wheeler Enviresponse, Inc. v. Franklin Cty. (1997), Convention Facilities Auth. 78 Ohio St.3d 678 N.E.2d quoting Farmers Natl. Bank v. Delaware Ins. Co. 83 Ohio St. 94 N.E. 834, paragraph six of syllabus. We find the notice requirement of the RSP stipulation is not a term or condition of an “arrangement.” Simply stated, the PUCO’s construction here would render the “all phrase other terms and conditions of arrangement” a nullity and defeat purpose of the most- favored-nation clause.
5. Conclusion to Proposition of Law 1No. proposition first of law is well taken. The most-favored-nation clause is not strictly price-protection Instead, provision. the clause allows Sunoco to utilize any more favorable “arrangement, rates or charges” that Toledo Edison offers to a competitor of Sunoco. plain clause, Under the language the word “arrangement” encompasses all nonprice terms of a competitor’s contract. nonprice and, Duration is a term aof contract consequently, subject Moreover, to the clause. this interpretation agreed consistent with the clause, purpose which is to ensure that neither Sunoco nor BP obtains a
409 to to allow Sunoco Edison’s refusal the other. Toledo advantage over competitive at a placed contract Sunoco to match BP’s its contract invoke the clause to extend Therefore, the most-favored-nation we hold that disadvantage. competitive to Agreement of its 1999 termination date to extend the allows Sunoco Agreement. 1996 BP date of the match the termination 3 and Law Nos. Propositions B. Sunoco’s relying for on 3, commission faults the of law No. Sunoco proposition plain language factors that were outside and other considerations” “equitable 4, of law No. in case. In proposition this ruling against in Sunoco of the contract was it found that Sunoco erred when the commission asserts Sunoco in the RSP decisions attack” the commission’s “collaterally to attempting cases. RCP taken for the of law are well propositions fourth third and Sunoco’s reasons.
following
was unlawful
reliance on extrinsic evidence
1. The commission’s
it
order is unlawful because
First,
claims that the commission’s
consumer,” should have extended
Sunoco,
energy
“a sophisticated
found
case,
the commission found
just as
did. Because
contract in the RSP
in resolving
dispositive
clause was
of the most-favored-nation
plain language
rely
to
on
it,
unlawful for the commission
we find that was
the issues before
City
v.
See
Forest
agreement
parties.
written
matters outside the
Shifrin
Ents., Inc.,
syllabus.
597 N.E.2d
64 Ohio St.3d
case,
in this
Second,
if
evidence could be considered
even
extrinsic
Any
unlawful.
discussion
was unreasonable and
specific
on this
evidence
relying
to
in
3 cases is irrelevant
or did not do
the S.B.
about what Sunoco did
case,
because the
and Toledo Edison
the intent of Sunoco
determining
17, 1999,
S.B. 3 was enacted.
May
was executed on
Agreement
before
surrounding
invest
When circumstances
in an effort
evidence can be considered
meaning,
with a
extrinsic
special
597 N.E.2d
Shifrin,
intention.
Ohio St.3d
give
parties’
effect to the
here,
occurring
after
But
the commission relied
circumstances
syllabus.
commission
was error. The
their contract
1999. This
parties
had formed
denying
on the
3 cases as
basis
should not have relied
S.B.
had
parties
record that
was no evidence
when there
complaint
contract was formed.
deregulation
when the
the effects
electric
contemplated
orders
collaterally
prior
attack the PUCO’s
2. Sunoco did not
]
was a
complaint
found that Sunoco’s
The commission also
“collateral
cases, and that to
in the RSP and RCP
decisions”
commission’s]
attack
[on
provide
allow this attack
“at this late
could
with an unfair
to occur
date”
“Sunoco
BP which
took the risk
advantage
apparently
over
followed
cases and
extend its contract at
time when
market rates
known to
today’s
were not
them.”
The commission’s references to
attacks” and “this late
]
“collateral
misrepresent
date”
the record
this case. The Sunoco
was set to
expire
attempted
2008. On
February
November
invoke
the most-favored-nation clause to extend its contract.
When
*12
rejected
clause,
to
attempts
complaint
Sunoco’s
invoke the
Sunoco filed a
with the
5, 2007,
commission on December
to enforce its
the
_rights under
contract.
complaint
grounded solely
Sunoco’s
before the
was
on
rights
commission
its
under the
contract
most-favored-nation clause of its
with
Edison.
Sunoco
referred to
and
complaint
the RSP
RCP cases in its
means
only
by
as the
which
BP
was able to have its
with Toledo Edison extended. Rather than
cases,
attacking these
Sunoco relied on these cases to
show how
was able to
sum,
extend the
of its
duration
contract.
no evidence
in the
exists
record to
support the
that
in
finding
rights
Sunoco sat on its
order
obtain an
to
unfair
MCI Telecommunications Corp. v. Pub. Util. Comm.
See
advantage over BP.
(PUCO
(1987),
32 Ohio St.3d
rejecting complaint Hosp. Com- munity Mut. Ins. (when Co. 54-55, 46 Ohio St.3d 544 920 N.E.2d the terms of a plain contract are and unambiguous, contract cannot be given different from the one plain reflected its in order to language provide result). a more equitable Because previously the commission had found that the contract was plain unambiguous, commission to give the was bound effect to the contract’s express terms and was from prohibited rewriting the contract to remedy any unfairness to BP. Toledo Edison counters that commission authority the had the under
R.C. 4905.31to that making determine Sunoco was “collateral untimely attack” that, on the in allowed, decisions the RSP and RCP if cases would disadvantage BP in competitive the current electric market. no dispute There is commission authority the has under
{¶ R.C. 64} 4905.31 to regulate, supervise, special But how far modify contracts. authority commission’s under this here, statute extends need not decided be because nowhere in the commission’s orders this case did commission claim using authority be its under R.C. 4905.31. R.C. 4903.09 requires PUCO all cases to “findings opinions file of fact and setting written forth the reasons cannot of fact.” We at, findings said upon arrived based the decisions
prompting under 4905.31 authority R.C. find exercised properly commission this making decision upon that statute never relied the commission when case. Proposition Law No.
C. Sunoco’s that the commission law, maintains proposition In its second 65} {¶ relationship of the contractual history consider the when it refused to erred Agreement. interpreting Edison in the Sunoco and Toledo between certain when it failed consider commission erred also claims Blank, Rate manager Department of David internal memoranda FirstEnergy. parent corporation, Toledo Edison’s As declining consider evidence. did not err The commission sections, be considered to evidence cannot extrinsic preceding
discussed in the intentions when contracting parties’ give effect to N.E.2d 64 Ohio Shifrin, St.3d unambiguous. clear syllabus.
Conclusion *13 are well first, third, fourth of law propositions and find Sunoco’s We 67} {¶ on those issues and Therefore, of the commission taken. we reverse order lawof proposition second in favor of Sunoco. Sunoco’s judgment enter overruled.
Order reversed. Lundberg Stratton, JJ., C.J., concur. O’Connor, and and Pfeifer Cupp, JJ., and dissent. O’Donnell, Lanzinger, J., dissenting. Lanzinger, (R M), Sunoco, advantage Inc. & took competitor of Company, BP Oil Although had the Company. Sunoco a contract extension with Toledo Edison
of Nevertheless, so, to do it did not seek extension. opportunity same Sunoco’s clause within majority holds that the most-favored-nation part, majority In of BP’s extended term. benefit guarantees Sunoco Although parties. the intent of the holding enforcing justifies intended, and vigorously disputes Toledo Edison that this result was asserts of its contract to to extend the duration is not entitled contends of not included within the the contract duration is match BP’s because I therefore dissent. “arrangement.” agree and
412 The contract between Sunoco and Toledo Edison is an electric-service (“ESA”) approved by the Public Utilities Commission of Ohio
(“PUCO” “commission”) or under R.C. 4905.31. This statute authorizes the supervise special PUCO to arrangement discounted between an electric utility “Every of its one customers. such schedule or arrangement reasonable shall commission, be under the of supervision regulation and is subject to alteration, added.) change, or modification by the commission.” (Emphasis R.C. 4905.31(E). of part As its regulatory authority, approved commission stipulation that special contracts under extended case electric-transition-plan 19, 2000), Application (July re Ohio {In Edison Co. PUCO No. 09-1212-EL- of ETP) (In but not extended under re rate-stabilization-plan Application case (Oct. 2003), 03-2144-EL-ATA) Ohio Co. No. PUCO would continue of only February until 2008. re Application Co., Ohio Edison PUCO No. 05- of 1125-EL-ETA. The commission held that the most-favored-nation clause not did entitle Sunoco to the ten-month extension that BP had negotiated with Toledo Edison. a heavy bears burden in challenging by showing PUCO orders
“that the commission’s decision is against the manifest weight of the
evidence
clearly
unsupported by
record.” Monongahela
Power
v. Pub.
Co.
Util.
Comm.,
¶
Reference to of Contract Clause I would hold that Sunoco waived the argument that the commission improperly relied on the title of the disputed clause failing to include this point in its for in application rehearing Nevertheless, and its notice of appeal. if even Sunoco is held not to have waived the the point, commission’s reference supportable. Section 10.6 of explains Sunoco’s ESA headings clause “for are the of purpose ready convenience and reference” and “shall not be deemed to define, limit or or scope extend the intent of the they pertain.” clauses to which to the ESA places refer at several in order does The commission majority makes Protection,” and the Facility Price “Comparable
section titled But provision.” phrase “price protection much the commission’s use of referring and to clause” also the words “most-favored-nation use parties both is found within phrase although of neither the Section discussing section, in full: which reads the disputed refinery oil operating as an Facility A shall be defined “9.1 Comparable Company, territory of the Toledo Edison service
and located within the certified January territory is defined as such service charges rates which arrangement, or If an Company provides “9.2 the to a of this Agreement, the term during at time may any
or be effect the will have territory, then the Customer within its certified Comparable Facility The Customer charges Facility. rates or arrangement, utilize that right to including the arrangement and conditions of must with all other terms comply interruptible firm load characteristics/conditions.” commission did not discuss specifically determined that this section The time that the length mentions- the of Nothing the of the contract. duration “an arrangement, of ESA does refer to contract is effect. Section 9 to which, facility, if will be available comparable rates charges,” or offered 9.2 offers a facility, comparable the customer. Section 9.1 defines Section i.e., between arrangement, provides price protection utilize” a similar “right to correctly commission during term the ESA. As the comparable facilities of of ESA. noted, of with termination date paragraph neither Section deals simply this clause describes “Comparable The Price Protection” for Facility title clause,” not or does limit of “most-favored-nation title this scope extend its or intent.
Reading of First of Clause Sentence first alleged reading to the commission’s second error relates rates or provides arrangement, 9.2. “If the Company sentence Section this during at the term of charges which is or be effect time territory, then the Comparable Facility to a within its certified Agreement, arrangement, charges for its right will have the to utilize that rates Customer a customer an guaranteeing this sentence Facility.” seeing Instead comparable facility during that of a opportunity to obtain treatment similar to term, can “merely means that Sunoco invoke majority ESA’s states term Stated only Agreement.’ ‘during most-favored-nation under the most- obligations the first sentence limits Toledo Edison’s way, another has that Sunoco Agreement,’ meaning of this favored-nation clause the ‘term This expired.” after the has seems no to invoke the clause right language. me to rewrite the *15 importantly, More the commission has been reasonable in observing
{¶ 78} the duration or “term” of the contract is to separately referred Sunoco’s ESA from the “terms and conditions of the The is arrangement.” distinction also seen 9.2, gives the second sentence of Section the a which customer reciprocal comply must all obligation: “The Customer with other terms and conditions of firm arrangement the including interruptible load charaeteristics/conditions.” added.) (Emphasis Thus, provides “arrangement, if the an company charges” rates or while effect, i.e., term,
the is in any at during comparable time the to (a customer), of facility competitor the will then right customer have the to arrangement, charges facility. utilize rates or for its own There is no need to arrangement reword the clause—-an the competitor benefits within the meaning of this section gives opportunity the customer the to make the same arrangement. Meaning “Arrangement” of
The majority interprets The term “arrangement” through complicated ignoring point. method while a fundamental Although word “arrangement” is contract, undefined within the specific the term has a forth meaning set in R.C. 4905.31, ESA, governs 4905.31. R.C. which a public utility states that not is prohibited “filing from establishing entering schedule or or any into reasonable arrangement public utility customers, with another or with one or more of its * * * consumers, employees or providing any following : for “(A) The division or surplus distribution of its profits; “(B) A sliding including scale of charges, variations based upon rates stipulated variations in cost as in the provided arrangement^] schedule or “(C) A charge minimum for service to 83} be rendered unless such minimum
{¶ charge prohibited franchise, made or by the terms of the or grant, ordinance public utility under which such operated; “(D) A used, classification of upon service based the quantity the time used, used,
when purpose use, which the duration other consideration; reasonable “(E) other Any financial device that be practicable or advantageous added.)
to parties interested.” (Emphasis Significantly “arrangement” the term does not include duration of the or the contract term. The statute obligation utility establishes the arrangement” PUCO, concludes, file “schedule or with the and the section such “Every schedule or reasonable arrangement supervision shall be under the regulation commission, subject alteration, and is change, added.) modification (Emphasis commission.” thus ESA relates *16 that of “financial devices” to types refers the “arrangement” and special pricing, are in R.C. 4905.31. listed
Other Jurisdictions
nation
with most favored
that contracts
“consistently have found
Courts
unless the contract
in the contract
specified
the
date
clauses
termination
end
term.”
the contract’s
authorizing an extension of
language
contains specific
itself
¶
Rental,
v.
Rock
&
Inc.
Little
at
Baker Car
Truck
Majority
48. See
opinion
Compo
Furniture
(1996),
also Waterloo
Ark.
nation clause past express It does not extend the term of the contract. date”). to attempted in these were fact the contracts cases termination that express tried to extend the expiration, after their while Sunoco be extended the point is is that significant the ESA not expired, termination date before —the unless duration clause does not function to extend the ESA’s most-favored-nation within contract. to do so exists the authority a within authority expressed the of type As an of extension example Saikhon, Farm Inc. v. United at
contract, the most-favored-nation clause issue 489, Am., Cal.Rptr. (1980), 104 Cal.App.3d AFL-CIO Workers of to a to its contract “termination party extend specifically contracting authorized the term” “during by produce company the union with another negotiated date” from noticeably absent type the This of agreement. of ESA. could purchaser electricity held that a Supreme The Minnesota Court clause, the contract
not, duration the most-favored-nation extend under Taco with another customer. Eveleth utility’s the electric contract upon based 20, 221 (1974), Minn. & Co. N.W.2d Light nite Co. v. Minnesota Power conditions,” most- or as used in the phrase that the “terms The court stated and clause, the to mean the covenants parties favored-nation “was intended the ‘term’ than and that word “other its duration provisions” * * * of duration of the contract meaning signifying period a distinct has could, the election upon more terms and conditions during which favorable at relied into Id. Eveleth agreement.” syllabus. substituted plaintiff, be a contract’s “term” or duration distinguished that upon Colorado decision also “ ‘conditions, “terms,” limitations and proposi which are the from contract’s contracting parties agree comprise govern the acts which tions which ” Hurd v. quoting or to do.’ at Whitsett impliedly to do not Id. expressly separate phrases use of explained, 84. As Eveleth two 4 Colo. clause, is, or conditions” “term” “terms the most-favored-nation contexts, further was evidence clause and in different different parts parties had those meanings. intended words have different Although Id. majority attempts distinguish ground phrase Eveleth on the that it uses “arrangement, place conditions,” rates changes” of “terms or this is a distinction without a authority difference. There no within the for ESA own to extend its contract term simply advantage because took of an opportunity lengthen its ESA with Toledo Edison.
Conclusion I cannot with agree majority opinion a most-favored-nation tool extending clause is a beyond term its termination date. *17 Nothing in gives Sunoco’s ESA it that authority. Section 8 language relates to contract, the “term and date” effective of the while Section 9 includes the “arrangements, rates charges” that are to be offered to competitor during a contract term. ESA, Had Sunoco wished obtain longer it could have negotiated an agreement by such including specific language authorizing longer term, or opted extended or it could have to extend its contract duration in the summer of 2004 as authorized the commission’s RSP order. Because it did neither, the commission did not in err denying Sunoco the relief it requested. I respectfully dissent and would hold that the
{¶ PUCO acted in reasonably 91} determining Sunoco’s contract ended in February, December, rather than 2008. I affirm would the PUCO orders all respects. J., dissenting.
Cupp, I remain unconvinced that the term “arrangement,” {¶ 92} as used (R Sunoco, M) Inc. & Edison Company electric-service agreement, —Toledo includes meaning within its the duration of the contract such that may utilize longer duration the BP Oil Company Edison contract to —Toledo extend the duration of its own special objection contract over the of Toledo Edison. language employed in the Sunoco-Toledo special Edison contract
uses the terminology “arrangement, rates charges” to describe what provisions in Toledo Edison special contracts with other customers may take advantage of. 4905.31, R.C. permits which such special
{¶ contracts public 94} between utilities and their customers upon approval Public Utilities Commission of (“PUCO”), Ohio includes illustrative list of such “arrangement^].” None of them involve the of a special Rather, duration contract. it is they clear that service, involve conditions as as charges. well rates and Because the Sunoco- “rates terminology separately uses already Edison contract of the word plain to conclude it is reasonable charges,” contract, necessarily special Sunoco-Toledo used “arrangement,” matters. and similar of service something akin to conditions means contracts, has these Moreover, PUCO, special approve which must 95} {¶ duration of something than other to mean “arrangement” the term construed also over the PUCO grants the statute oversight that Because of the the contract. before contracts contracts, approve special the PUCO must and because these expertise effective, special the PUCO has it is evident that can become they determination, has used its which I to the would defer PUCO’s matter. the duration of not include does “arrangement” that the term expertise, special contract of its own length extend contract such that special with Toledo special BP’s upon length Toledo Edison based with Edison. Therefore, dissent. respectfully I J., the foregoing opinion. concurs in
O’Donnell, Boehm, Boehm, for appellant. Kurtz & David F. Lowry and *18 Jones, General, Wright, L. DeWine, H. Attorney and John William Michael General, for Public Utilities McNamee, Attorneys appellee W. Assistant Thomas Commission Ohio. Alexander;
Calfee,
Griswold,
N.
Lang,
Halter
James F.
Trevor
&
Company.
Toledo Edison
Hayden,
intervening appellee
A.
Mark
Appellees.
al.,
Hobbs, Appellant;
Mullen;
et
Mullen
In re
Mullen, as In re
417,