The Ohio Supreme Court’s recent decision has reshaped the regulatory environment for submetering companies, a move that could significantly impact renters across the state. These companies, previously beyond the reach of certain state regulations, have now been classified as public utilities, thereby subjecting them to new consumer protection measures.
Historically, submetering firms have avoided oversight by the Public Utilities Commission of Ohio (PUCO). The PUCO commissioners, supported by the submetering industry, landlords, and various trade groups, have maintained that these companies do not fall under the category of public utilities. However, the court’s ruling has overturned this stance, aligning with American Electric Power’s view against Nationwide Energy Partners, a key player in the submetering sector.
Justice Pat DeWine articulated in his opinion that Nationwide Energy Partners operates in a manner similar to a utility company. The company procures electricity, installs necessary infrastructure, and manages its distribution, much like traditional utilities. “It directly bills tenants for their use of electricity and may disconnect service if a tenant fails to pay,” DeWine noted, emphasizing the company’s profit from reselling electricity.
Maureen Willis, director of the Ohio Consumers’ Counsel, hailed the decision as a victory for consumers, asserting that it enforces fair play in the sale of essential electric services in Ohio. Despite the unanimous ruling, Justice Jennifer Brunner, the court’s sole Democrat, concurred with the decision but not its rationale.
Understanding Submetering
Submetering has disrupted the longstanding arrangement between states and utility companies, where utilities were granted monopolies in exchange for regulatory oversight to ensure fair treatment of customers. Submetering firms purchase electricity at commercial rates and resell it to residents at residential rates, claiming to keep charges competitive. Court records reveal that some submetering companies have paid landlords substantial sums, such as “door fees,” to secure the right to resell electricity.
Nationwide Energy Partners has claimed a significant customer base across numerous complexes. Critics, however, argue that submetering often results in inflated bills that don’t align with actual consumption. Complaints have been lodged with the Ohio Attorney General and PUCO, but without PUCO jurisdiction, little action has been taken.
While the ruling will primarily impact Columbus and Cincinnati, where submetering is prevalent, it could also halt the spread of submetering practices across other major Ohio cities. The industry has been criticized for creating two customer classes: those protected from monopoly practices and those who are not.
According to American Electric Power, submetering allows unregulated charges to be passed on to consumers, and the Ohio Consumers’ Counsel has pointed out the lack of consumer choice in power suppliers for submetered customers.
Future Implications
The case has been sent back to the PUCO to determine whether Nationwide Energy Partners has improperly operated as an unregistered electric supplier within American Electric Power’s territory, potentially leading to fines. Meanwhile, legislative efforts are ongoing, with Nationwide Energy Partners lobbying for legal changes to classify them as non-utilities, while others push for more comprehensive consumer protections.
Disclosures indicate that Nationwide Energy Partners currently employs multiple lobbyists to influence lawmakers. Rep. Sean Brennan, a proponent of stricter regulations, expressed his satisfaction with the court’s decision, asserting, “If it looks like, sounds like, and smells like a utility, it is one, and needs to be regulated accordingly.”
