State regulators erred when they allowed an electric utility in Dayton to keep $61.1 million in “significantly excessive” profits rather than refunding the money to customers, the Ohio Supreme Court ruled last week.
The Public Utilities Commission of Ohio, which oversees the prices that utility companies charge customers, determined that AES Ohio in 2018 and 2019 failed the “significantly excessive earnings test” in state law.
This means they charged customers $61.1 million beyond what the regulators – gubernatorial appointees who oversee the gas and electric distribution utilities – deem to be a fair return on their investments in the grid.
Instead of demanding a refund, the regulators in 2021 unlawfully allowed AES Ohio to keep the money because it had promised to invest it in the electric grid over the next four years, the justices said.
There’s nothing in state law that allowed AES Ohio to keep significantly excessive profits based on a commitment to make investments down the line, the court ruled. If state lawmakers wanted to allow an “offset” instead of a refund to customers, they “would have chosen words to that effect.”
The ruling could spur refunds for AES 527,000 customers in west-central Ohio. The Ohio Consumers’ Counsel, a state agency that represents residential ratepayers’ interests before state regulators, appealed the case to the Supreme Court. Its director, Maureen Willis, said in a statement the office will keep pressing for refunds.
“Wow. What a ruling,” she said. “It comes at a time when AES consumers could use a break. The PUCO should do right by consumers and order the full $61 million refund.”
The justices ordered the PUCO to redo the earnings test. If corporate profits are deemed “significantly excessive,” then the regulators must issue refunds.
Mary Ann Kabel, a spokeswoman for AES Ohio, said the company is still reviewing the decision and said the PUCO will chart out a path forward for the matter.
A PUCO spokesman said the agency is reviewing the ruling and will comply with any order. He emphasized the agency decision was “a wide ranging settlement amongst numerous parties.”