Ohio Submeterers Argue They Should Retain Ability to Add Extra Fees to Customer Bills

Last month, the Public Utilities Commission of Ohio ruled (Docket No. 15-1594-AU-COI) that submetering businesses can be regulated, if their total bill exceeds the price that would have been charged by a regulated utility by a yet-to-be-determined percentage. In response, two Ohio submetering companies now are saying that – if they are to be controlled by the state’s regulators – they want to be able to retain their ability to add charges as they see fit, according to a January 18 report by The Columbus Dispatch.

Nationwide Energy Partners and American Power & Light are intervenors in the filing. They contend, as American Power said in its filing, that“If the Commission proceeds to adopt a threshold percentage, it should ensure that the percentage is applied only to the charges for the submetered utility as measured at the tenant’s, lessee’s or condominium unit owner’s submeter. The percentage should not be applied to other charges that a landlord, condominium association or lessor may contractually assess, including charges for maintenance and lighting of common areas, charges to cover services such as meter reading and billing services, and other miscellaneous charges such as condominium association dues ...."

Submetering companies act as intermediaries between regulated utilities and residents in some apartments and condominiums, selling electricity, sometimes at substantial markups. The business model has been unregulated in Ohio but would violate the law or rules in most states.

Indeed, Nationwide argues, that it already charges the same as the regulated rates. This excludes the extra fees, which Nationwide Energy says often are assessed at the discretion of the property owner.

"NEP supports efforts to protect consumers from being charged unreasonably high rates and for the last three years has advocated that consumer protections be in place, while respecting property owners' rights to offer the benefits of submetering services to their residents," Nationwide CEO Gary Morsches told the local news outlet in a recent email.

About a dozen parties filed comments about what level of charges should be allowed.

A coalition of consumer advocates says that the PUCO's December ruling was flawed because there is no fair way to compare the bills of submetered customers with the bills of customers of regulated utilities, the Dispatch reported.

"No direct comparison can be made because residential consumers served by submeterers have fewer protections - and thus less service quality - than residential customers of the local public utility," said a January 13 filing by the Office of the Ohio Consumers' Counsel, the Coalition on Housing and Homelessness in Ohio, and the Ohio Poverty Law Center, among others.

"At the very least,” they said, “the PUCO should require submeterers to provide the same consumer protections that local public utilities are required to provide to their customers. Submeterers should also be required to defend their costs in a proceeding before the PUCO."

Meanwhile, the newspaper reported, several large regulated utilities said earlier this month that the PUCO should be looking at submeter companies' actual costs for electricity and water, which includes bulk-buying discounts. The utilities, including American Electric Power, said submeter companies can earn a profit of 45 percent merely by buying at a commercial rate and reselling at the higher rate for households.

The commission will now review the testimony with the intent of issuing a ruling setting the percentage markup it would allow. Regardless of the outcome, several parties are likely to appeal in court, leading to a potentially long wait for a resolution, The Columbus Dispatch said.