Editorial: HB 690 would aid PUCO reform in balancing the public’s interest with utility interests


A recent editorial by the Cleveland Plain Dealer:

If the House Bill 6-FirstEnergy scandal has done nothing else, it has educated Ohioans about the cozy insiders’ world of utility regulation in Ohio.

In part, that insularity is natural. Much of what’s discussed and decided hinges on exceedingly technical engineering, financial and legal questions that only insiders can answer.

But further cloistering those processes is a Public Utilities Commission of Ohio that, not unusually for state utility commissions, is pretty insulated from the people – that is, from the rank-and-file Ohioans whose interests it’s supposed to balance against those of the state’s electric, gas and telephone companies.

Per current Ohio law, the governor appoints the five PUCO commissioners from a list submitted by a nominating council composed of an array of interest-group representatives. That nominating council mechanism itself was the result of a 1982 reform passed by the General Assembly aimed at heading off a ballot issue calling for popular election of PUCO members. (And it worked: In November 1982, a constitutional amendment calling for an elected PUCO – an amendment proposed by voter petition – lost at the ballot box, drawing 33% of the statewide vote on that issue.)

As might be expected, a nominating panel composed, ultimately, of Statehouse insiders tends to take its cue from other insiders rather than from the general public. In other words, in many respects, the nominating council has become a closed loop in recommending prospective commissioners to the governor.

In a further complication, the Ohio Supreme Court adheres to a legal doctrine, embraced in the 1950s, which says that when the high court rolls back a PUCO-approved rate increase, consumers are not entitled to a refund of the improperly charged amounts.

That paradox was alluded to in a seeming jest from former PUCO chair Asim Haque in June 2019 text messages that surfaced recently as part of the FirstEnergy-HB 6 scandal. The texts were between Haque, PUCO chair from May 2016 to March 2019, and then-FirstEnergy Senior Vice President Michael Dowling, one of two top FirstEnergy executives later forced to resign amid the HB 6 bribery scandal.

The texts suggest Haque knew a distribution modernization charge the commission had let FirstEnergy impose on consumers by final order of 2017 (amounting to from $168 million to $204 million a year) was liable to be overturned by the Supreme Court (as it was in June 2019) – but that the no-refund rule would let the utility keep the money theretofore charged.

That’s not a bit amusing to ratepayers who have had to shoulder such improperly approved PUCO charges without a hope of getting reimbursed should they be found to have been wrongly charged.

Luckily, the extra scrutiny HB 6 has prompted on the PUCO and its internal coziness with utilities is behind a needed revisiting of the PUCO makeup and the 1982 PUCO reforms.

In a welcome development that could reduce the PUCO’s insularity, two Ohio House Republicans, one a Greater Clevelander, have introduced a bill that could diversify the PUCO’s makeup.

House Bill 690, sponsored by Reps. Laura Lanese, of suburban Columbus, and Gayle Manning, of North Ridgeville, would require one of the five PUCO members to be nominated by the Office of Consumers’ Counsel. The counsel’s office represents Ohio’s residential utility consumers before the PUCO.

Greater Cleveland co-sponsors of the Lanese-Manning bill are Reps. Kent Smith, a Euclid Democrat; Casey Weinstein, a Hudson Democrat; Sharon Ray, a Wadsworth Republican; and Dan Troy, a Willowick Democrat. Five downstate legislators, three of them Republicans, also are co-sponsoring the bill.

The measure would require the Office of Consumers’ Counsel to nominate three candidates to the governor for appointment to the PUCO. The governor could not reject all three nominees. As with other appointees to the PUCO, a nominee recommended by the Consumers’ Counsel, and appointed by the governor, would have to be confirmed by the state Senate.

The legislature is out of session until November, but the Lanese-Manning bill deserves hearings and consideration in the meantime. It could and should inspire a welcome debate about state government’s proper role – and appropriate personnel – in overseeing multibillion-dollar enterprises that affect every Ohio household and every Ohio business. Adding perspective to the PUCO – via a Consumers’ Counsel nominee – would add needed insights to the commission’s role in balancing utilities’ corporate interests with the public interest.

— Cleveland Plain Dealer, June 17