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Office of the Ohio Consumers' Counsel

The Ohio House
Government Oversight Committee

Testimony Opposing Senate Bill 9
(As to PUCO Regulations Needed for Consumer Protection)

Presented by Bruce Weston
Ohio Consumers’ Counsel

On Behalf of the
Office of the Ohio Consumers’ Counsel

December 9, 2021

Hello Chair Wilkin, Vice-Chair White, Ranking Member Brown, and members of the Committee. I hope you and your colleagues are well. As agency director, I am testifying on behalf of the Office of the Ohio Consumers’ Counsel for the millions of Ohio residential utility consumers who would be affected by Senate Bill 9. Thank you for this opportunity to testify.

I am providing limited opponent testimony on the Bill, with regard to the Bill’s potential for preventing or reducing the regulations needed for protection of utility consumers. Accordingly, for consumer protection, please exempt the PUCO’s regulations from Senate Bill 9. In this regard, I understand that yesterday there was a precedent of the Committee adopting Amendment AM_134_2285 to exempt the Ohio Casino Control Commission from the Bill.

Utilities have a bargain with the government to allow them to operate as monopolies in exchange for government regulation to protect consumers from their monopoly power. Senate Bill 9’s potential for preventing or reducing regulations of utility monopolies can break that bargain against the public interest.

Instead of fewer regulations, the public can need more PUCO regulations as utility service issues change or develop over time. Also, new regulations are needed for reforms of PUCO processes that favor utilities. Likewise, many existing PUCO regulations are needed for consumer protection and should not be eliminated under the Bill as a trade for new regulations.

The COVID pandemic has highlighted the essential nature of utility services and the need for consumer protection regulations. Many Ohioans have struggled during this time with a lack of money for utilities, health, food, and housing. There are PUCO regulations, for example, to protect Ohioans from unreasonable disconnections of their utility service. Disconnection of utility service can even be life threatening. There was a tragedy in 2011 when two consumers in Cincinnati died from hypothermia after their electric service was disconnected during cold weather.

The PUCO also conducts limited regulation of some non-monopoly providers of services that are vested with the public interest. An example is the PUCO’s oversight of energy marketers. In allowing for electricity marketing, the legislature required the PUCO, in R.C. 4928.10, to adopt rules including “a prohibition against unfair, deceptive, and unconscionable acts and practices in the marketing, solicitation, and sale of such a competitive retail electric service and in the administration of any contract for service, and also shall include additional consumer protections concerning all of the following....” R.C. 4929.22 contains a similar requirement for the PUCO to adopt rules to regulate natural gas marketers.

But just recently (September 8, 2021) the PUCO wrote that it could not propose various additional consumer protection rules regarding energy marketers. The PUCO explained that “[i]n light of R.C. 121.95, only limited amendments are being proposed for this set of five-year rule reviews.” The PUCO also noted the constraint in R.C. 121.95(F) that state agencies (including the PUCO) “may not adopt a new regulatory restriction unless it simultaneously removes two or more existing regulatory restrictions.” (See Attached PUCO Entry at paragraphs 6 and 7, without Attachments.)

This result where R.C. 121.95 is preventing the PUCO from adopting consumer protection regulations is bad for Ohioans. More regulations are needed to protect consumers. Thus, PUCO regulations should be exempted from Senate Bill 9 and from R.C. 121.95. Alternatively, with regard to energy marketing, the legislature should enact changes to protect Ohio consumers by banning: door-to-door energy sales; automatic renewal of energy contracts; and “teaser” rates (where energy is marketed using a low initial price that soon is replaced with a higher price). Attached is recent “shadow-billing” information from Columbia Gas showing that its consumers have paid energy marketers about two billion dollars more than what Columbia charged for natural gas since 1997.

Additionally, the FirstEnergy and House Bill 6 scandals have shown a need for more regulations. The PUCO should have more (not less) authority, jurisdiction and regulations to investigate utilities, their management and the complicated arrangements with utility affiliates. And there should be more (not less) regulations for safeguards, remedies and penalties involving any misconduct by utilities and the PUCO.Having said the above, there are some utility regulations that should be eliminated, like those (including the statute) for allowing so-called electric security plans. Electric security plans, especially as implemented by the PUCO, can hinder the competitive market that we support for power plants and can be used to allow utility cherry-picking of charges (so-called riders) that drive up consumers’ electric bills. Those regulations have burdened consumers with subsidies, such as to AEP, Duke and AES for uneconomic and polluting OVEC coal plants (before the coal
plant subsidies of House Bill 6).

In conclusion, for consumer protection PUCO regulations should be exempted from Senate Bill 9 and current R.C. 121.95. In this regard, I understand that yesterday there was a precedent of the Committee adopting Amendment AM_134_2285 to exempt the Ohio Casino Control Commission from the Bill. Thank you for your consideration.