Citywide Coalition for Util. Reform v. Pub. Util. Comm.

SUPREME COURT CASES

Laws-info.com » Cases » Ohio » Supreme Court » 1993 » Citywide Coalition for Util. Reform v. Pub. Util. Comm.

State: Ohio

Court: Supreme Court

Docket No: 1992-2078

Case Date: 11/03/1993

Plaintiff: Citywide Coalition for Util. Reform

Defendant: Pub. Util. Comm.

Preview:Citywide Coalition for Utility Reform, Appellant, v. Public
Utilities Commission of Ohio et al., Appellees.
[Cite as Citywide Coalition for Util. Reform v. Pub. Util.
Comm. (1993), Ohio St.3d .]
Public Utilities Commission -- Electric companies -- Rate

increase -- Commission's retention of declining block rate

structure and decision to consider the issue again in

electric company's next rate case not unreasonable or

unlawful, when.

(No. 92-2078 -- Submitted June 2, 1993 -- Decided
November 3, 1993.)

Appeal from the Public Utilities Commission of Ohio, No.
91-410-EL-AIR.

On April 2, 1991, intervening appellee Cincinnati Gas &
Electric Company ("CG&E") filed an application with appellee
Public Utilities Commission ("commission") seeking to increase
its rates for electric service. In the application, CG&E
proposed to retain its winter declining block rate structure,
under which residential rates decrease for usage over one
thousand kilowatt-hours ("kWh") per month.1

Appellant Citywide Coalition for Utility Reform ("CCUR")
intervened below, contending that the declining block rate was
not cost-justified. It recommended that the differential
between the two winter blocks be reduced by one half in this
proceeding, and be completely eliminated in CG&E's next rate
case.

The commission agreed that the rate structure was "not
necessarily cost-based," but retained it to prevent the already
significant rate increase imposed in this case from having a
disproportionate impact on the company's space-heating
customers. The commission also ordered CG&E to conduct further
analyses on this issue for presentation and consideration in
its next rate case.2

On July 2, 1992, the commission denied CCUR's request for
rehearing on this issue. The cause is now before this court
upon an appeal as of right.

Legal Aid Society of Cincinnati, Jennifer L. Branch and
Frank J. Wassermann, for appellant.

Lee I. Fisher, Attorney General, James B. Gainer, Duane W.
Luckey, Thomas W. McNamee and Kaye Pfister Willi, Assistant
Attorneys General, for appellee.

James J. Mayer and Michael A. Gribler; Squire, Sanders &
Dempsey, Alan P. Buchmann, Arthur E. Korkosz and Lisa R.
Battaglia, for intervening appellee, Cincinnati Gas & Electric
Company.

Per Curiam. CCUR argues that a non-cost-based declining
block rate structure does not promote energy conservation and
must be eliminated under the Public Utilities Regulatory
Policies Act of 1978, Section 2601 et seq., Title 16, U.S. Code
("PURPA") and R.C. 4905.70.3

CCUR's reliance on the declining block standard proposed
by PURPA is clearly misplaced. The commission is not required
to adopt or implement that standard (Fed. Energy Regulatory
Comm. v. Mississippi [1982], 456 U.S. 742, 749-750, 102 S.Ct.
2126, 2132, 72 L.Ed.2d 532, 540-541; Greater Cleveland Welfare

Rights Org., Inc. v. Pub. Util. Comm. [1982], 2 Ohio St.3d 62,
67, 2 OBR 619, 623-624, 442 N.E.2d 1288, 1294), and has not
done so. See In re Cincinnati Gas & Elec. Co. (Mar. 18, 1981),
PUCO No. 80-260-EL-AIR, 42 PUR4th 252, 302-304.

Nor have we construed R.C. 4905.70 so as to require the
elimination of declining block rates in this proceeding. CCUR
relies on our decision in Cleveland v. Pub. Util. Comm. (1980),
63 Ohio St.2d 62, 69, 17 O.O.3d 37, 42, 406 N.E.2d 1370, 1377,
in which we observed that declining block rates generally do
not promote energy conservation and encouraged the commission
to continue its efforts to eliminate such rate structures "in
order to comply with R.C. 4905.70." However, we held that it
was reasonable to retain the structure in that case, based upon
the commission's judgment that its elimination would have too
sudden an impact on high-use customers.

Here, CCUR argues that there is no evidence in the record
to show the extent to which space-heating customers will be
harmed by the adoption of its proposal, or even the extent to
which they use in excess of one thousand kWh of electricity per
month. We disagree.

CCUR's own witness testified that the winter tail block
has "a very large effect" on space-heating customers, and that
CCUR's proposal would increase the winter tail rate by
seventy-three percent in this case. CCUR faults the
commission's reliance on the seventy-three-percent figure,
noting that it was based on CG&E's requested
twenty-five-percent revenue increase. It asserts that, because
the commission's order reduced CG&E's requested increase to
approximately seventeen percent, the increase to the winter
tail rate would be proportionately reduced to approximately
fifty percent.

In addition, CCUR claims that it is more appropriate to
consider its proposal's effect on large-use customers' bills,
rather than just the percentage increase to the winter tail
rate. It contends that the average increase to residential
winter bills in this case is 33.38 percent and that under its
proposal, the increase to large-use customers' winter bills
would be 44.8 percent. CCUR argues that this deviation from
the average (thirty-four percent) is reasonable, considering
that the commission approved an even larger deviation (forty
percent) in its inter-class revenue distribution.4 There, CCUR
contends rates for residential customers were increased by

16.32 percent while the average increase for all customer
classes was 11.61 percent.

We have afforded the commission considerable discretion in
matters of rate design, and will not reverse a determination
based on its judgment absent a showing that it is against the
manifest weight of the evidence, and is so clearly unsupported
by the record as to show misapprehension, mistake or willful
disregard of duty. Gen. Motors Corp. v. Pub. Util. Comm.
(1976), 47 Ohio St.2d 58, 66, 1 O.O.3d 35, 40, 351 N.E.2d 183,
189; Indus. Protestants v. Pub. Util. Comm. (1956), 165 Ohio
St. 543, 60 O.O. 498, 138 N.E.2d 398; MCI Telecommunications
Corp. v. Pub. Util. Comm. (1988), 38 Ohio St.3d 266, 268, 527
N.E.2d 777, 780.

The record clearly shows that space-heating customers (and
all other residential customers) will experience a significant

rate increase in this proceeding, even without the adoption of
CCUR's proposal. That such proposal would have an additional
and significant effect on large-use customers, including space
heating customers, is also evident from the record, and even by
CCUR's own testimony and arguments. Accordingly, we cannot
find the commission's retention of that rate structure in this
case, and its decision to consider this issue again in CG&E's
pending rate case, to be unreasonable or unlawful.

Order affirmed.
Moyer, C.J., A.W. Sweeney, Douglas, Wright, Resnick, F.E.
Sweeney and Pfeifer, JJ., concur.

FOOTNOTES
1 Specifically, under CG&E's residential rate structure, the
per kilowatt-hour ("kWh") rate for all summer usage (June
through September) remained constant, and the rate for
non-summer service (October through May) was divided into two
blocks. The rate in the first block (for usage under one
thousand kWh per month) was the same as the summer rate, and
the rate in the second ("winter tail") block, for additional
usage over one thousand kWh per month, was lower.
2 CG&E has complied with the commission's order in its rate
case currently pending before the commission.
3 The purpose of PURPA is "to encourage --

" (1) conservation of energy supplied by electric
utilities;

"(2) the optimization of the efficiency of use of
facilities and resources by electric utilities; and

"(3) equitable rates to electric consumers." Section
2611, Title 16, U.S. Code.

To meet these goals, PURPA establishes various standards
(e.g., for declining block rates, seasonal rates and lifeline
rates) for state regulatory authorities to consider. Declining
block rates are generally subject to criticism as promoting
wasteful consumption of electricity (see Gen. Motors, infra)
and PURPA proposes their elimination unless they are shown to
be cost-justified:

"The energy component of a rate, or the amount
attributable to the energy component in a rate, charged by any
electric utility for providing electric service during any
period to any class of electric consumers may not decrease as
kilowatt-hour consumption by such class increases during such
period except to the extent that such utility demonstrates that
the costs to such utility of providing electric service to such
class, which costs are attributable to such energy component,
decrease as such consumption increases during such period."
Section 2621(d)(2), Title 16, U.S. Code.

Similar to PURPA, R.C. 4905.70 provides in part:

"The public utilities commission shall initiate programs
that will promote and encourage conservation of energy and a
reduction in the growth rate of energy consumption, promote
economic efficiencies and take into account long-run
incremental costs. * * * [T]he public utilities commission
shall examine and issue written findings on the declining block
rate structure, lifeline rates, long-run incremental pricing,
peak load and off-peak pricing, time of day and seasonal
pricing, interruptible load pricing, and single rate pricing

where rates do not vary because of classification of customers
or amount of usage."

Broadly speaking, the inter-class revenue distribution determines the contribution that each customer class must make to satisfy the utility's revenue requirement as determined under R.C. 4909.15(B).

Download 1993-ohio-78.pdf