The Ohio Consumers Counsel and Northeast Ohio Public Energy Council argued that the Public Utilities Commission of Ohio (PUCO) approved an excessive rate, stating that PUCO allowed Dominion to base its rate request on calculations used in its last full rate case, which was in 2008, rather than on current market conditions.
The Supreme Court of Ohio rejected this argument, however, with Justice Melody Stewart writing that the court found that nothing in state law provided a basis on which to conclude that the settlement approved by the PUCO was unreasonable or unlawful.
East Ohio Gas Company, which does business as Dominion, filed a request with the PUCO to implement a capital expenditure program rider (CEP rider) in 2019. Since 2012, the PUCO issued a series of orders authorizing Dominion to implement a capital improvement program to maintain its infrastructure. It allowed the company to defer collecting charges from customers for the expenses.
The 2019 CEP rider request was filed with the PUCO as an alternative rate plan to pay for past expenditures for infrastructure and technology upgrades. Under Ohio law, an alternative rate plan is a more streamlined process than a traditional rate plan.
Dominion proposed a 9.91% rate of return for the CEP rider, based on the rate of return that the PUCO approved in its last full traditional rate case that was decided in 2008.
Consumer groups objected, saying the rate was too high based on interest rates and earnings of other utilities in 2019 and 2020, arguing that using an outdated rate of return would lead to consumers being overcharged for gas service.
To assure Dominion’s future rates were in line with current market conditions, the PUCO then ordered Dominion to file a traditional rate case in October 2023 rather than October 2024 as the company originally planned.
The consumer advocates appealed the decision to the Supreme Court.
Justice R. Patrick DeWine wrote that he was concerned the majority opinion would create confusion by implying that public utilities did not have to consider current market conditions in determining a utility’s costs of obtaining capital — costs that are ultimately passed on to consumers. In Justice DeWine’s view, the law did require the PUCO to consider current market conditions, but the PUCO had considered current market conditions by ordering Dominion to advance the filing of its next base rate case.
Chief Justice Kennedy and Justice Michael P. Donnelly joined Justice DeWine’s opinion.