U.S. Supreme Court Win Secures Significant Savings for Ohio Consumers

Ohio law requires transmission owners to belong to a federally approved regional transmission organization (RTO), such as PJM Interconnection. Participation is mandatory. In other states where this is not required, the Federal Energy Regulatory Commission (FERC) allows a half-percent bump in returns on transmission spending as an incentive for these companies to join an RTO or an Independent System Operator (“ISO”). This is called an RTO Participation Adder, which is basically extra profit.

But, American Electric Power Service Corporation (AEP), Duke Energy Ohio (Duke) and FirstEnergy Corp., operating as American Transmission Systems, Inc., convinced FERC to allow them to charge the half percent or 50-basis point RTO adder anyway. This means the utilities earned an extra 0.50% paid for by consumers without any corresponding benefit, because Ohio law already requires RTO membership. Over time, that extra profit adds up to hundreds of millions of dollars.

“How can something be an incentive if you're required by law to do it?"
— U.S. Sixth Circuit Appeals Court

In Feb. 2022, OCC challenged these add on charges at FERC in Case No. EL22-34. FERC partially agreed with OCC. Its Dec. 2022 ruling stopped AEP from charging what former FERC Commissioner Christie referred to as “FERC candy taken directly from consumers and redistributed to transmission owners.” Unfortunately, FERC allowed RTO adders to continue for Duke and FirstEnergy because the adder was a result of prior settlements with the utilities.

OCC appealed to the U.S. Sixth Circuit Court of Appeals, insisting that none of the utilities should get to charge consumers this unneeded add-on. The Court issued its decision agreeing with OCC’s arguments in Jan. 2025. That meant that Duke and FirstEnergy, like AEP, could no longer boost their profits with the adder.

The utilities then asked the U.S. Supreme Court to overturn the Sixth Circuit’s decision. The Court declined to hear the case, cementing a major win for OCC and Ohio consumers.

“This is a huge win for Ohio consumers. For too long, utilities have padded their profits with unnecessary charges. Now, hundreds of millions of dollars will stay in the pockets of the people who actually pay the bills.”

— Maureen Willis, Agency Director of the Office of the Ohio Consumers’ Counsel

What This Means for Consumers

Ending these unjustified adders will save AEP, Duke and FirstEnergy consumers more than $400 million in savings for Ohio electric consumers through 2031 with similar savings continuing beyond that.

Projected Consumer Savings through 2031:

AEP Customers: $220 million
FirstEnergy Customers: $126 million
Duke Customers: $99 million

OCC’s win not only ends these unnecessary charges but will result in perpetual savings for Ohio consumers well beyond 2031.

Learn More:

What’s Next?

OCC has a pending complaint at FERC (EL23-105) addressing other aspects of the high transmission costs Ohioans are paying. It focuses on the lack of regulatory review and oversight on billions of dollars in local transmission projects and costs. Here is a link to the complaint: https://elibrary.ferc.gov/eLibrary/filedownload?fileid=71E68331-C0C2-CD4E-A699-8ADD52F00000

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