Advocates on both sides stumbled momentarily Wednesday when the Ohio Supreme Court considered whether big increases in certain utility charges are legal.
At issue is whether the state’s regulator, the Public Utilities Commission of Ohio, acted legally in 2023 when it allowed Columbia Gas of Ohio to increase total fixed monthly charges from $36 a month to $58 a month by 2027 — a 50% increase.
That’s money customers have to pay before they burn the first molecule of gas — regardless of how much or little they consume and how much hardware is needed to serve them.
As it allowed the increase, the PUCO also allowed the elimination of energy-efficiency programs for non-low-income customers.
Consumer groups sued, making several legal arguments, basically boiling down to the claim that in allowing the rate design, the PUCO failed to protect consumers.
Daniel Abrams represents the plaintiffs, the Energy Law and Policy Center and the Citizens Utility Board.
On Wednesday, he told the justices that the PUCO allowed Columbia to abandon energy efficiency programs for most customers based on some dodgy math.
The efficiency programs provided rebates to install energy-efficient appliances, which Abrams said save everybody money by reducing peak demand and system costs.
The program served 850,000 customers and saved more than $800 million, he said.
But in its ruling, the PUCO said getting rid of the efficiency program would save ratepayers $120 million.
“This point entirely ignores the benefits of the programs,” Abrams said.
“Columbia itself touted its programs as award-winning, and demonstrated that these programs delivered $2.37 in benefit to the system for every $1 spent on them.”
Those savings don’t take into account the overall benefits of using less natural gas, which requires polluting processes such as fracking to obtain. And burning it is a major contributor to global warming.
Abrams also argued that by allowing Columbia to rely so heavily on fixed monthly charges, the PUCO was going against the original reason for allowing them.
In 2008, it allowed fixed charges “to compensate Columbia for lost sales tied to energy conservation.
In the order in this case, the commission eliminated the very energy-efficiency programs that justified the shift toward fixed charges in the first place.”
Since then, fixed charges have surged — from $12.16 in 2008 to $36.15 in 2021 to $58 in 2027 if the court allows the structure to stand.
While fixed charges made up 20% of a customer’s bill in 2008, they will comprise 70% about 14 months from now, Abrams said.
Assistant Attorney General Jullian P. Johnson appeared on behalf of the PUCO.
Early in his presentation, Justice Pat DeWine interrupted to ask how relying so heavily on fixed charges and abandoning a major efficiency program benefitted customers.
Johnson responded, in essence, that it did because it provided Columbia says it needs the money.
“It benefits customers because it provides Columbia with the necessary funding it needs to continue to provide safe and reliable service,” he said.
“Columbia needs to have sufficient funding to continue providing…”
DeWine interrupted again.
“That’s the overall amount Columbia needs to collect. That’s kind of circular, right?” he said.
“Part of this is moving toward higher fixed rates, right? That’s a philosophical change — how the rates are being done. Why does that benefit customers? Can you explain that”
Johnson repeated his earlier point.
“Well, it benefits customers because customers will not receive safe and reliable service unless Columbia has this,” he said.
Melissa Thompson, an attorney for Columbia Gas, said the new rate structure met the goal that “rates should be fair in apportioning costs.”
She said that’s so “because customers’ bills reflected the actual usage of providing gas delivery rather than just the volume consumed.”
Her argument seemed to ignore, however, that the fixed rates are applied regardless of the amount of infrastructure needed to supply gas.
In other words, in 2027 you’ll pay $58 regardless of whether you live in an 8,000-square-foot mansion on a five-acre lot, or if you live in a 500-square-foot apartment in a crowded neighborhood with many customers paying for each mile of gas main.
Thompson also made a technical distinction.
She said the only truly fixed cost in current bills is $3.76 a month. The rest of the fixed charges customers will have to pay are “riders” — charges to cover infrastructure improvements.
The riders were modified as part of the same proceeding that axed the energy-efficiency incentives for non-low-income customers.
Columbia originally asked to increase the total of such costs to $80 a month by 2027.
DeWine seemed to trip up Abrams, the attorney for the groups challenging the rate arrangement.
“Is it true that most of those aren’t at issue because most of those are riders that already had been approved?” DeWine asked.
“I’m not sure,” Abrams said.
The Ohio Supreme Court will deliberate and then issue a ruling in the coming months.
This story was originally published by the Ohio Capital Journal and republished here with permission.