As Pending in the Senate Energy Committee
136th General Assembly
Regular Session Sub. S. B. No. 2
2025-2026
Senator Reineke
A B I L L
To amend sections 4905.03, 4906.01, 4906.03,
4906.04, 4906.07, 4906.10, 4909.04, 4909.05,
4909.052, 4909.06, 4909.07, 4909.08, 4909.15,
4909.156, 4909.17, 4909.173, 4909.174, 4909.18,
4909.191, 4909.42, 4911.15 , 4928.01, 4928.05,
4928.08, 4928.14, 4928.141, 4928.142, 4928.144,
4928.17, 4928.20, 4928.23, 4928.231, 4928.232,
4928.34, 4928.542, 4928.64, 4928.645, 4929.20,
5727.01, 5727.031, 5727.06, and 5727.11; to
enact sections 122.161 , 4903.27, 4905.321,
4909.041, 4909.042, 4909.181, 4909.47, 4928.041,
4928.081, 4928.101, 4928.102, 4928.103,
4928.149, 4928.1410, 4928.73 , 4929.201,
4929.221, 4929.222, 4933.51, 4933.52, 4933.54,
4933.56, 4933.58, 4933.59 , and 5727.76; and to
repeal sections 3706.40, 3706.41, 3706.43,
3706.431, 3706.45, 3706.46, 3706.49, 3706.491,
3706.55, 3706.551, 3706.59, 3706.63, 3706.65,
4928.143, 4928.148, and 4928.642 of the Revised
Code regarding public utilities and competitive
retail electric and natural gas services, to
make changes regarding electric company property
taxation, and repeal parts of H.B. 6 of the
133rd General Assembly.
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 4905.03, 4906.01, 4906.03,
4906.04, 4906.07, 4906.10, 4909.04, 4909.05, 4909.052, 4909.06,
4909.07, 4909.08, 4909.15, 4909.156, 4909.17, 4909.173,
4909.174, 4909.18, 4909.191, 4909.42, 4911.15 , 4928.01, 4928.05,
4928.08, 4928.14, 4928.141, 4928.142, 4928.144, 4928.17,
4928.20, 4928.23, 4928.231, 4928.232, 4928.34, 4928.542,
4928.64, 4928.645, 4929.20, 5727.01, 5727.031, 5727.06, and
5727.11 be amended and sections 122.161 , 4903.27, 4905.321,
4909.041, 4909.042, 4909.181, 4909.47, 4928.041, 4928.081,
4928.101, 4928.102, 4928.103, 4928.149 , 4928.1410, 4928.73 ,
4929.201, 4929.221, 4929.222, 4933.51, 4933.52, 4933.54,
4933.56, 4933.58, 4933.59 , and 5727.76 of the Revised Code be
enacted to read as follows:
Sec. 122.161. (A) As used in this section:
(1) "Subdivision" means a municipal corporation, township,
or county.
(2) "Legislative authority" means the legislative
authority of a municipal corporation, a board of the township
trustees, or a board of county commissioners.
(3) "Subdivision's territory" means, in the case of a
municipal corporation, the territory of the municipal
corporation; in the case of a township, the unincorporated
territory of the township; or, in the case of a county, the
unincorporated territory of the county.
(4) "Brownfield" has the same meaning as in section
122.6511 of the Revised Code.
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(5) "Former coal mine" means a location that was, but is
no longer, used in connection with the extraction of coal from
its natural deposit in the earth.
(6) "Qualifying property" has the same meaning as in
section 5727.76 of the Revised Code.
(B) A legislative authority may adopt and certify to the
director of development an ordinance or resolution requesting
that the director designate the site of a brownfield or former
coal mine within the subdivision's territory as a priority
investment area. The ordinance or resolution shall describe the
boundaries of the proposed area and shall specify that
qualifying property in the priority investment area shall be
exempt from taxation for five years pursuant to section 5727.76
of the Revised Code.
The director, upon receipt of that certification, shall
designate the proposed area as a priority investment area if the
director determines that the area meets the designation
standards set forth in rules adopted by the director. Those
standards shall specify that the director must prioritize the
designation of areas negatively impacted by the decline of the
coal industry.
The director shall notify the legislative authority of the
director's decision within ninety days after receiving the
certified ordinance or resolution. If the director does not
issue a decision within those ninety days, the request for
designation shall be considered approved by operation of law.
(C) The director of development shall immediately notify
the public utilities commission, the power siting board, and the
tax commissioner if the director approves the designation of a
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priority investment area under division (B) of this section or
if the designation is approved by operation of law.
Sec. 4903.27. For all cases involving an application
pursuant to section 4909.18 of the Revised Code, the public
utilities commission shall not permit any new discovery
beginning not later than two hundred fifteen days after the
application is submitted.
Sec. 4905.03. As used in this chapter, any person, firm,
copartnership, voluntary association, joint-stock association,
company, or corporation, wherever organized or incorporated, is:
(A) A telephone company, when engaged in the business of
transmitting telephonic messages to, from, through, or in this
state;
(B) A for-hire motor carrier, when engaged in the business
of transporting persons or property by motor vehicle for
compensation, except when engaged in any of the operations in
intrastate commerce described in divisions (B)(1) to (9) of
section 4921.01 of the Revised Code, but including the carrier's
agents, officers, and representatives, as well as employees
responsible for hiring, supervising, training, assigning, or
dispatching drivers and employees concerned with the
installation, inspection, and maintenance of motor-vehicle
equipment and accessories;
(C) An electric light company, when engaged in the
business of supplying electricity for light, heat, or power
purposes to consumers within this state, including supplying
electric transmission service for electricity delivered to
consumers in this state, but excluding a regional transmission
organization approved by the federal energy regulatory
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commission; .
An electric light company does not include a self-
generator or mercantile customer self-power system.
(D) A gas company, when engaged in the business of
supplying artificial gas for lighting, power, or heating
purposes to consumers within this state or when engaged in the
business of supplying artificial gas to gas companies or to
natural gas companies within this state, but a producer engaged
in supplying to one or more gas or natural gas companies, only
such artificial gas as is manufactured by that producer as a by-
product of some other process in which the producer is primarily
engaged within this state is not thereby a gas company. All
rates, rentals, tolls, schedules, charges of any kind, or
agreements between any gas company and any other gas company or
any natural gas company providing for the supplying of
artificial gas and for compensation for the same are subject to
the jurisdiction of the public utilities commission.
(E) A natural gas company, when engaged in the business of
supplying natural gas for lighting, power, or heating purposes
to consumers within this state. Notwithstanding the above,
neither the delivery nor sale of Ohio-produced natural gas or
Ohio-produced raw natural gas liquids by a producer or gatherer
under a public utilities commission-ordered exemption, adopted
before, as to producers, or after, as to producers or gatherers,
January 1, 1996, or the delivery or sale of Ohio-produced
natural gas or Ohio-produced raw natural gas liquids by a
producer or gatherer of Ohio-produced natural gas or Ohio-
produced raw natural gas liquids, either to a lessor under an
oil and gas lease of the land on which the producer's drilling
unit is located, or the grantor incident to a right-of-way or
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easement to the producer or gatherer, shall cause the producer
or gatherer to be a natural gas company for the purposes of this
section.
All rates, rentals, tolls, schedules, charges of any kind,
or agreements between a natural gas company and other natural
gas companies or gas companies providing for the supply of
natural gas and for compensation for the same are subject to the
jurisdiction of the public utilities commission. The commission,
upon application made to it, may relieve any producer or
gatherer of natural gas, defined in this section as a gas
company or a natural gas company, of compliance with the
obligations imposed by this chapter and Chapters 4901., 4903.,
4907., 4909., 4921., and 4923. of the Revised Code, so long as
the producer or gatherer is not affiliated with or under the
control of a gas company or a natural gas company engaged in the
transportation or distribution of natural gas, or so long as the
producer or gatherer does not engage in the distribution of
natural gas to consumers.
Nothing in division (E) of this section limits the
authority of the commission to enforce sections 4905.90 to
4905.96 of the Revised Code.
(F) A pipe-line company, when engaged in the business of
transporting natural gas, oil, or coal or its derivatives
through pipes or tubing, either wholly or partly within this
state, but not when engaged in the business of the transport
associated with gathering lines, raw natural gas liquids, or
finished product natural gas liquids;
(G) A water-works company, when engaged in the business of
supplying water through pipes or tubing, or in a similar manner,
to consumers within this state;
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(H) A heating or cooling company, when engaged in the
business of supplying water, steam, or air through pipes or
tubing to consumers within this state for heating or cooling
purposes;
(I) A messenger company, when engaged in the business of
supplying messengers for any purpose;
(J) A street railway company, when engaged in the business
of operating as a common carrier, a railway, wholly or partly
within this state, with one or more tracks upon, along, above,
or below any public road, street, alleyway, or ground, within
any municipal corporation, operated by any motive power other
than steam and not a part of an interurban railroad, whether the
railway is termed street, inclined-plane, elevated, or
underground railway;
(K) A suburban railroad company, when engaged in the
business of operating as a common carrier, whether wholly or
partially within this state, a part of a street railway
constructed or extended beyond the limits of a municipal
corporation, and not a part of an interurban railroad;
(L) An interurban railroad company, when engaged in the
business of operating a railroad, wholly or partially within
this state, with one or more tracks from one municipal
corporation or point in this state to another municipal
corporation or point in this state, whether constructed upon the
public highways or upon private rights-of-way, outside of
municipal corporations, using electricity or other motive power
than steam power for the transportation of passengers, packages,
express matter, United States mail, baggage, and freight. Such
an interurban railroad company is included in the term
"railroad" as used in section 4907.02 of the Revised Code.
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(M) A sewage disposal system company, when engaged in the
business of sewage disposal services through pipes or tubing,
and treatment works, or in a similar manner, within this state.
As used in division (E) of this section, "natural gas"
includes natural gas that has been processed to enable
consumption or to meet gas quality standards or that has been
blended with propane, hydrogen, biologically derived methane
gas, or any other artificially produced or processed gas.
As used in this section, "gathering lines" has the same
meaning as in section 4905.90 of the Revised Code, and "raw
natural gas liquids" and "finished product natural gas liquids"
have the same meanings as in section 4906.01 of the Revised
Code.
As used in this section, "self-generator" has the same
meaning as in section 4928.01 of the Revised Code, and
"mercantile customer self-power system" has the same meaning as
in section 4928.73 of the Revised Code.
Sec. 4905.321. Notwithstanding any provision of the
Revised Code to the contrary, all charges paid by customers to a
public utility that are later found to be unreasonable,
unlawful, imprudent, or otherwise improper by the public
utilities commission or the supreme court shall be promptly
refunded to the customers who paid such charges. The commission
shall order such refunds in a manner designed to allocate the
refunds to customer classes in the same proportion as the
charges were originally collected.
Sec. 4906.01. As used in Chapter 4906. of the Revised
Code:
(A) "Person" means an individual, corporation, business
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trust, association, estate, trust, or partnership or any
officer, board, commission, department, division, or bureau of
the state or a political subdivision of the state, or any other
entity.
(B)(1) "Major utility facility" means:
(a) Electric generating plant and associated facilities
designed for, or capable of, operation at a capacity of fifty
megawatts or more;
(b) An electric transmission line and associated
facilities of a design capacity of one hundred kilovolts or
more;
(c) A gas pipeline that is greater than five hundred feet
in length, and its associated facilities, is more than nine
inches in outside diameter and is designed for transporting gas
at a maximum allowable operating pressure in excess of one
hundred twenty-five pounds per square inch.
(2) "Major utility facility" does not include any of the
following:
(a) Gas transmission lines over which an agency of the
United States has exclusive jurisdiction;
(b) Any solid waste facilities as defined in section
6123.01 of the Revised Code;
(c) Electric distributing lines and associated facilities
as defined by the power siting board;
(d) Any manufacturing facility that creates byproducts
that may be used in the generation of electricity as defined by
the power siting board;
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(e) Gathering lines, gas gathering pipelines, and
processing plant gas stub pipelines as those terms are defined
in section 4905.90 of the Revised Code and associated
facilities;
(f) Any gas processing plant as defined in section 4905.90
of the Revised Code;
(g) Natural gas liquids finished product pipelines;
(h) Pipelines from a gas processing plant as defined in
section 4905.90 of the Revised Code to a natural gas liquids
fractionation plant, including a raw natural gas liquids
pipeline, or to an interstate or intrastate gas pipeline;
(i) Any natural gas liquids fractionation plant;
(j) A production operation as defined in section 1509.01
of the Revised Code, including all pipelines upstream of any
gathering lines;
(k) Any compressor stations used by the following:
(i) A gathering line, a gas gathering pipeline, a
processing plant gas stub pipeline, or a gas processing plant as
those terms are defined in section 4905.90 of the Revised Code;
(ii) A natural gas liquids finished product pipeline, a
natural gas liquids fractionation plant, or any pipeline
upstream of a natural gas liquids fractionation plant; or
(iii) A production operation as defined in section 1509.01
of the Revised Code.
(C) "Commence to construct" means any clearing of land,
excavation, or other action that would adversely affect the
natural environment of the site or route of a major utility
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facility, but does not include surveying changes needed for
temporary use of sites or routes for nonutility purposes, or
uses in securing geological data, including necessary borings to
ascertain foundation conditions.
(D) "Certificate" means a certificate of environmental
compatibility and public need issued by the power siting board
under section 4906.10 of the Revised Code or a construction
certificate issued by the board under rules adopted under
division (E) or , (F), or (G) of section 4906.03 of the Revised
Code.
(E) "Gas" means natural gas, flammable gas, or gas that is
toxic or corrosive.
(F) "Natural gas liquids finished product pipeline" means
a pipeline that carries finished product natural gas liquids to
the inlet of an interstate or intrastate finished product
natural gas liquid transmission pipeline, rail loading facility,
or other petrochemical or refinery facility.
(G) "Large solar facility" means an electric generating
plant that consists of solar panels and associated facilities
with a single interconnection to the electrical grid that is a
major utility facility.
(H) "Large wind farm" means an electric generating plant
that consists of wind turbines and associated facilities with a
single interconnection to the electrical grid that is a major
utility facility.
(I) "Natural gas liquids fractionation plant" means a
facility that takes a feed of raw natural gas liquids and
produces finished product natural gas liquids.
(J) "Raw natural gas" means hydrocarbons that are produced
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in a gaseous state from gas wells and that generally include
methane, ethane, propane, butanes, pentanes, hexanes, heptanes,
octanes, nonanes, and decanes, plus other naturally occurring
impurities like water, carbon dioxide, hydrogen sulfide,
nitrogen, oxygen, and helium.
(K) "Raw natural gas liquids" means naturally occurring
hydrocarbons contained in raw natural gas that are extracted in
a gas processing plant and liquefied and generally include
mixtures of ethane, propane, butanes, and natural gasoline.
(L) "Finished product natural gas liquids" means an
individual finished product produced by a natural gas liquids
fractionation plant as a liquid that meets the specifications
for commercial products as defined by the gas processors
association. Those products include ethane, propane, iso-butane,
normal butane, and natural gasoline.
Sec. 4906.03. The power siting board shall:
(A) Require such information from persons subject to its
jurisdiction as it considers necessary to assist in the conduct
of hearings and any investigations or studies it may undertake;
(B) Conduct any studies or investigations that it
considers necessary or appropriate to carry out its
responsibilities under this chapter;
(C) Adopt rules establishing criteria for evaluating the
effects on environmental values of proposed and alternative
sites, and projected needs for electric power, and such other
rules as are necessary and convenient to implement this chapter,
including rules governing application fees, supplemental
application fees, and other reasonable fees to be paid by
persons subject to the board's jurisdiction. The board shall
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make an annual accounting of its collection and use of these
fees and shall issue an annual report of its accounting, in the
form and manner prescribed by its rules, not later than the last
day of June of the year following the calendar year to which the
report applies.
(D) Approve, disapprove, or modify and approve
applications for certificates;
(E) Notwithstanding sections 4906.06 to 4906.14 of the
Revised Code, the board may adopt rules to provide for an
accelerated review of an application for a construction
certificate for construction of a major utility facility related
to a coal research and development project as defined in section
1555.01 of the Revised Code, or to a coal development project as
defined in section 1551.30 of the Revised Code, submitted to the
Ohio coal development office for review under division (B)(7) of
section 1551.33 of the Revised Code. Applications for
construction certificates for construction of major utility
facilities for Ohio coal research and development shall be filed
with the board on the same day as the proposed facility or
project is submitted to the Ohio coal development office for
review.
The board shall render a decision on an application for a
construction certificate within ninety days after receipt of the
application and all of the data and information it may require
from the applicant. In rendering a decision on an application
for a construction certificate, the board shall only consider
the criteria and make the findings and determinations set forth
in divisions (A)(2), (3), (5), and (7) and division (B) of
section 4906.10 of the Revised Code.
(F) Notwithstanding sections 4906.06 to 4906.14 of the
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Revised Code, the board shall adopt rules to provide for an
accelerated review of an application for a construction
certificate for any of the following:
(1) An electric transmission line that is:
(a) Not more than two miles in length;
(b) Primarily needed to attract or meet the requirements
of a specific customer or specific customers;
(c) Necessary to maintain reliable electric service as a
result of the retirement or shutdown of an electric generating
facility located within the state; or
(d) A rebuilding of an existing transmission line.
(2) An electric generating facility that uses waste heat
or natural gas and is primarily within the current boundary of
an existing industrial or electric generating facility;
(3) A gas pipeline that is not more than five miles in
length or is primarily needed to meet the requirements of a
specific customer or specific customers.
The board shall adopt rules that provide for the automatic
certification to any entity described in this division when an
application by any such entity is not suspended by the board, an
administrative law judge, or the chairperson or executive
director of the board for good cause shown, within ninety days
of submission of the application. If an application is
suspended, the board shall approve, disapprove, or modify and
approve the application not later than ninety days after the
date of the suspension.
(G) Notwithstanding sections 4906.06 to 4906.14 of the
Revised Code, the board shall adopt rules to provide for the
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accelerated review of an application for a construction
certificate for any of the following that are located in a
priority investment area designated and approved under section
122.161 of the Revised Code:
(1) An electric generating plant and associated
facilities;
(2) An electric transmission line and associated
facilities;
(3) Gas Pipeline infrastructure.
The board shall render a decision on an application
submitted under this division not later than forty-five days
after receipt of the application. If the board does not render a
decision within forty-five days, the application shall be
considered approved by operation of law, and the board shall
issue a certificate to the applicant.
The board shall adopt rules to implement this division,
including rules that prioritize applications for construction on
areas negatively impacted by the decline of the coal industry.
Sec. 4906.04. No person shall commence to construct a
major utility facility in this state without first having
obtained a certificate for the facility. The replacement of an
existing facility with a like facility, as determined by the
power siting board, shall not constitute constitutes the
construction of a major utility facility that requires a
certificate. Such replacement of a like facility is not exempt
from any other requirements of state or local laws or
regulations. Any facility, with respect to which such a
certificate is required, shall thereafter be constructed,
operated, and maintained in conformity with such certificate and
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any terms, conditions, and modifications contained therein. A
certificate may only be issued pursuant to Chapter 4906. of the
Revised Code.
A certificate may be transferred, subject to the approval
of the board, to a person who agrees to comply with the terms,
conditions, and modifications contained therein.
Sec. 4906.07. (A) Upon the receipt of an application
complying with section 4906.06 of the Revised Code, the power
siting board shall promptly fix a date for a public hearing
thereon, not less than sixty forty-five nor more than ninety
sixty days after such receipt, and shall conclude the proceeding
as expeditiously as practicable.
(B) On an application for an amendment of a certificate,
the board shall hold a hearing in the same manner as a hearing
is held on an application for a certificate if the proposed
change in the facility would result in any material increase in
any environmental impact of the facility or a substantial change
in the location of all or a portion of such facility other than
as provided in the alternates set forth in the application.
(C) The chairperson of the power siting board shall cause
each application filed with the board to be investigated and
shall, not less than fifteen days prior to the date any
application is set for hearing submit a written report to the
board and to the applicant. A copy of such report shall be made
available to any person upon request. Such report shall set
forth the nature of the investigation, and shall contain
recommended findings with regard to division (A) of section
4906.10 of the Revised Code and shall become part of the record
and served upon all parties to the proceeding.
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Sec. 4906.10. (A) The power siting board shall render a
decision upon the record either granting or denying the
application as filed, or granting it upon such terms,
conditions, or modifications of the construction, operation, or
maintenance of the major utility facility as the board considers
appropriate. The certificate shall be subject to sections
4906.101, 4906.102, and 4906.103 of the Revised Code and
conditioned upon the facility being in compliance with standards
and rules adopted under section 4561.32 and Chapters 3704.,
3734., and 6111. of the Revised Code. An applicant may withdraw
an application if the board grants a certificate on terms,
conditions, or modifications other than those proposed by the
applicant in the application.
The board shall not grant a certificate for the
construction, operation, and maintenance of a major utility
facility, either as proposed or as modified by the board, unless
it finds and determines all of the following:
(1) The basis of the need for the facility if the facility
is an electric transmission line or gas pipeline;
(2) The nature of the probable environmental impact;
(3) That the facility represents the minimum adverse
environmental impact, considering the state of available
technology and the nature and economics of the various
alternatives, and other pertinent considerations;
(4) In the case of an electric transmission line or
generating facility, that the facility is consistent with
regional plans for expansion of the electric power grid of the
electric systems serving this state and interconnected utility
systems and that the facility will serve the interests of
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electric system economy and reliability;
(5) That the facility will comply with Chapters 3704.,
3734., and 6111. of the Revised Code and all rules and standards
adopted under those chapters and under section 4561.32 of the
Revised Code. In determining whether the facility will comply
with all rules and standards adopted under section 4561.32 of
the Revised Code, the board shall consult with the office of
aviation of the division of multi-modal planning and programs of
the department of transportation under section 4561.341 of the
Revised Code.
(6) That the facility will serve the public interest,
convenience, and necessity;
(7) In addition to the provisions contained in divisions
(A)(1) to (6) of this section and rules adopted under those
divisions, what its impact will be on the viability as
agricultural land of any land in an existing agricultural
district established under Chapter 929. of the Revised Code that
is located within the site and alternative site of the proposed
major utility facility. Rules adopted to evaluate impact under
division (A)(7) of this section shall not require the
compilation, creation, submission, or production of any
information, document, or other data pertaining to land not
located within the site and alternative site.
(8) That the facility incorporates maximum feasible water
conservation practices as determined by the board, considering
available technology and the nature and economics of the various
alternatives.
(B) If the board determines that the location of all or a
part of the proposed facility should be modified, it may
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condition its certificate upon that modification, provided that
the municipal corporations and counties, and persons residing
therein, affected by the modification shall have been given
reasonable notice thereof.
(C) A copy of the decision and any opinion issued
therewith shall be served upon each party.
(D) The board shall render a decision under this section
not later than one hundred twenty days after the date the
application is filed. If the board does not render a decision
within the time period required by this division, the
application shall be deemed approved by operation of law, and
the board shall issue a certificate to the applicant.
Sec. 4909.04. (A) The public utilities commission, for the
purpose of ascertaining the reasonableness and justice of rates
and charges for the service rendered by public utilities or
railroads, or for any other purpose authorized by law, may
investigate and ascertain the value of the property of any
public utility or railroad in this state used or useful for the
service and convenience of the public, using the same criteria
that are set forth in section sections 4909.042 and 4909.05 of
the Revised Code. At the request of the legislative authority of
any municipal corporation, the commission, after hearing and
determining that such a valuation is necessary, may also
investigate and ascertain the value of the property of any
public utility used and useful for the service and convenience
of the public where the whole or major portion of such public
utility is situated in such municipal corporation.
(B) To assist the commission in preparing such a
valuation, every public utility or railroad shall:
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(1) Furnish to the commission, or to its agents, as the
commission requires, maps, profiles, schedules of rates and
tariffs, contracts, reports of engineers, and other documents,
records, and papers, or copies of any of them, in aid of any
investigation and ascertainment of the value of its property;
(2) Grant to the commission or its agents free access to
all of its premises and property and its accounts, records, and
memoranda whenever and wherever requested by any such authorized
agent;
(3) Cooperate with and aid the commission and its agents
in the work of the valuation of its property in such further
particulars and to such extent as the commission requires and
directs.
(C) The commission may make all rules which seem necessary
to ascertain the value of the property and plant of each public
utility or railroad.
Sec. 4909.041. As used in sections 4909.041, 4909.042, and
4909.05 of the Revised Code:
(A) A "lease purchase agreement" is an agreement pursuant
to which a public utility leasing property is required to make
rental payments for the term of the agreement and either the
utility is granted the right to purchase the property upon the
completion of the term of the agreement and upon the payment of
an additional fixed sum of money or title to the property vests
in the utility upon the making of the final rental payment.
(B) A "leaseback" is the sale or transfer of property by a
public utility to another person contemporaneously followed by
the leasing of the property to the public utility on a long-term
basis.
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Sec. 4909.042. (A) With respect to an electric light
company that chooses to file a fully forecasted test period
under section 4909.18 of the Revised Code, the public utilities
commission shall prescribe the form and details of the valuation
report of the property of the utility. Such report shall include
all the kinds and classes of property, with the value of each,
owned, held, or projected to be owned or held during the test
period, by the utility for the service and convenience of the
public.
(B) Such report shall contain the following facts in
detail:
(1) The original cost of each parcel of land owned in fee
and projected to be owned in fee and in use during the test
period, determined by the commission; and also a statement of
the conditions of acquisition, whether by direct purchase, by
donation, by exercise of the power of eminent domain, or
otherwise;
(2) The actual acquisition cost, not including periodic
rental fees, of rights-of-way, trailways, or other land rights
projected to be held during the test period, by virtue of
easements, leases, or other forms of grants of rights as to
usage;
(3) The original cost of all other kinds and classes of
property projected to be used and useful during the test period,
in the rendition of service to the public. Such original costs
of property, other than land owned in fee, shall be the cost, as
determined to be reasonable by the commission, to the person
that first dedicated or dedicates the property to the public use
and shall be set forth in property accounts and subaccounts as
prescribed by the commission;
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(4) The cost of property constituting all or part of a
project projected to be leased to or used by the utility during
the test period, under Chapter 165., 3706., 6121., or 6123. of
the Revised Code and not included under division (B)(3) of this
section exclusive of any interest directly or indirectly paid by
the utility with respect thereto whether or not capitalized;
(5) In the discretion of the commission, the cost to a
utility, in an amount determined to be reasonable by the
commission, of property constituting all or part of a project
projected to be leased to the utility during the test period,
under a lease purchase agreement or a leaseback and not included
under division (B)(3) of this section exclusive of any interest
directly or indirectly paid by the utility with respect thereto
whether or not capitalized;
(6) The proper and adequate reserve for depreciation, as
determined to be reasonable by the commission;
(7) Any sums of money or property that the utility is
projected to receive during the test period, as total or partial
defrayal of the cost of its property;
(8) The valuation of the property of the utility, which
shall be the sum of the amounts contained in the report pursuant
to divisions (B)(1) to (5) of this section, less the sum of the
amounts contained in the report pursuant to divisions (B)(6) and
(7) of this section.
(C) The report shall show separately the property
projected to be used and useful to or held by the utility during
the test period, and such other items as the commission
considers proper. The commission may require an additional
report showing the extent to which the property is projected to
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be used and useful during the test period. Such reports shall be
filed in the office of the commission for the information of the
governor and the general assembly.
Sec. 4909.05. As used in this section:
(A) A "lease purchase agreement" is an agreement pursuant
to which a public utility leasing property is required to make
rental payments for the term of the agreement and either the
utility is granted the right to purchase the property upon the
completion of the term of the agreement and upon the payment of
an additional fixed sum of money or title to the property vests
in the utility upon the making of the final rental payment.
(B) A "leaseback" is the sale or transfer of property by a
public utility to another person contemporaneously followed by
the leasing of the property to the public utility on a long-term
basis.
(C) The With respect to every public utility, other than
an electric light company that chooses to file a fully
forecasted test period under section 4909.18 of the Revised
Code, the public utilities commission shall prescribe the form
and details of the valuation report of the property of each
public utility or railroad in the state. Such report shall
include all the kinds and classes of property, with the value of
each, owned, held, or, with respect to a natural gas, water-
works, or sewage disposal system company, projected to be owned
or held as of the date certain, by each public utility or
railroad used and useful, or, with respect to a natural gas,
water-works, or sewage disposal system company, projected to be
used and useful as of the date certain, for the service and
convenience of the public. Such
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(B) Such report shall contain the following facts in
detail:
(1) The original cost of each parcel of land owned in fee
and in use, or, with respect to a natural gas, water-works, or
sewage disposal system company, projected to be owned in fee and
in use as of the date certain, determined by the commission; and
also a statement of the conditions of acquisition, whether by
direct purchase, by donation, by exercise of the power of
eminent domain, or otherwise;
(2) The actual acquisition cost, not including periodic
rental fees, of rights-of-way, trailways, or other land rights
held, or, with respect to a natural gas, water-works, or sewage
disposal system company, projected to be held as of the date
certain, by virtue of easements, leases, or other forms of
grants of rights as to usage;
(3) The original cost of all other kinds and classes of
property used and useful, or, with respect to a natural gas,
water-works, or sewage disposal system company, projected to be
used and useful as of the date certain, in the rendition of
service to the public. Subject to section 4909.052 of the
Revised Code, such original costs of property, other than land
owned in fee, shall be the cost, as determined to be reasonable
by the commission, to the person that first dedicated or
dedicates the property to the public use and shall be set forth
in property accounts and subaccounts as prescribed by the
commission. To the extent that the costs of property comprising
a coal research and development facility, as defined in section
1555.01 of the Revised Code, or a coal development project, as
defined in section 1551.30 of the Revised Code, have been
allowed for recovery as Ohio coal research and development costs
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under section 4905.304 of the Revised Code, none of those costs
shall be included as a cost of property under this division.
(4) The cost of property constituting all or part of a
project leased to or used by the utility, or, with respect to a
natural gas, water-works, or sewage disposal system company,
projected to be leased to or used by the utility as of the date
certain, under Chapter 165., 3706., 6121., or 6123. of the
Revised Code and not included under division (C)(3)(B)(3) of
this section exclusive of any interest directly or indirectly
paid by the utility with respect thereto whether or not
capitalized;
(5) In the discretion of the commission, the cost to a
utility, in an amount determined to be reasonable by the
commission, of property constituting all or part of a project
leased to the utility, or, with respect to a natural gas, water-
works, or sewage disposal system company, projected to be leased
to the utility as of the date certain, under a lease purchase
agreement or a leaseback and not included under division (C)(3)
(B)(3) of this section exclusive of any interest directly or
indirectly paid by the utility with respect thereto whether or
not capitalized;
(6) The cost of the replacement of water service lines
incurred by a water-works company under section 4909.173 of the
Revised Code and the water service line replacement
reimbursement amounts provided to customers under section
4909.174 of the Revised Code;
(7) The proper and adequate reserve for depreciation, as
determined to be reasonable by the commission;
(8) Any sums of money or property that the company may
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have received, or, with respect to a natural gas, water-works,
or sewage disposal system company, is projected to receive as of
the date certain, as total or partial defrayal of the cost of
its property;
(9) The valuation of the property of the company, which
shall be the sum of the amounts contained in the report pursuant
to divisions (C)(1)(B)(1) to (6) of this section, less the sum
of the amounts contained in the report pursuant to divisions (C)
(7)(B)(7) and (8) of this section.
(C) The report shall show separately the property used and
useful to such public utility or railroad in the furnishing of
the service to the public, the property held by such public
utility or railroad for other purposes, and the property
projected to be used and useful to or held by a natural gas,
water-works, or sewage disposal system company as of the date
certain, and such other items as the commission considers
proper. The commission may require an additional report showing
the extent to which the property is used and useful, or, with
respect to a natural gas, water-works, or sewage disposal system
company, projected to be used and useful as of the date certain.
Such reports shall be filed in the office of the commission for
the information of the governor and the general assembly.
Sec. 4909.052. Subject to a finding that such costs are
just and reasonable, the public utilities commission in
evaluating a petition submitted under section 4905.481 of the
Revised Code shall accept the original cost, reported under
division (C)(3) (B)(3) of section 4909.05 of the Revised Code,
of the acquisition of a municipal water-works or sewage disposal
system company that is acquired by a large water-works or sewage
disposal system company, provided that the original cost is
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determined according to all of the following requirements:
(A) The acquiring company has three appraisals performed
on the property of the company being acquired.
(B) The three appraisals are performed by three
independent utility-valuation experts mutually selected by the
acquiring company and the company being acquired from the list
maintained under section 4909.054 of the Revised Code.
(C) The average of the three appraisals is used as the
fair market value of the company being acquired.
(D) Each utility-valuation expert does all of the
following:
(1) Determines the fair market value of the company to be
acquired by establishing the amount for which the company would
be sold in a voluntary transaction between a willing buyer and a
willing seller under no obligation to buy or sell;
(2) Determines the fair market value in compliance with
the uniform standards of professional appraisal practice;
(3) Employs the cost, market, and income approach to
independently quantify the future benefits of the company to be
acquired;
(4) Incorporates the assessment described in division (D)
(5) of this section into the appraisal under the cost, market,
and income approach;
(5) Engages one engineer who is licensed to prepare an
assessment of the tangible assets of the company to be acquired.
The original source of funding for any part of the tangible
assets shall not be relevant to the determination of the value
of those assets.
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(E) The lesser of the purchase price or the fair market
value, described in division (C) of this section, is reported as
the original cost under division (C)(3) (B)(3) of section
4909.05 of the Revised Code of the company to be acquired.
Sec. 4909.06. The investigation and report required by
section section 4909.042 or 4909.05 of the Revised Code shall
show, when the public utilities commission deems it necessary,
the amounts, dates, and rates of interest of all bonds
outstanding against each public utility or railroad, the
property upon which such bonds are a lien, the amounts paid for
them, and, the original capital stock and the moneys received by
any such public utility or railroad by reason of any issue of
stock, bonds, or other securities. Such report shall also show
the net and gross receipts of such public utility or railroad
and the method by which moneys were expended or paid out and the
purpose of such payments. The commission may prescribe the
procedure to be followed in making the investigation and
valuation, the form in which the results of the ascertainment of
the value of each public utility or railroad shall be submitted,
and the classifications of the elements that constitute the
ascertained value. Such investigation shall also show the value
of the property of every public utility or railroad as a whole,
and if such property is in more than one county, the value of
its property in each of such counties.
"Valuation" and "value," as used in this section, may
include, with :
(A) With respect to a public utility that is a natural
gas, water-works, or sewage disposal system company, projected
valuation and value as of the date certain, if applicable
because of a future date certain under section 4909.15 of the
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As Pending in the Senate Energy Committee
Revised Code;
(B) With respect to an electric light company that chooses
to file a fully forecasted test period under section 4909.18 of
the Revised Code, the valuation and value during the fully
forecasted test period .
Sec. 4909.07. The public utilities commission, during the
making of the valuation provided for in sections 4909.04 to
4909.13 of the Revised Code, and after its completion, shall in
like manner keep itself informed through its engineers, experts,
and other assistants of all extensions, improvements, or other
changes in the condition and value of the property of all public
utilities or railroads and shall ascertain the value of such
extensions, improvements, and changes. The commission shall, as
is required for the proper regulation of such public utilities
or railroads, revise and correct its valuations of property,
showing such revisions and corrections as a whole and as to each
county. Such revisions and corrections shall be filed in the
same manner as original reports.
"Valuation" and "value," as used in this section, may
include, with :
(A) With respect to a public utility that is a natural
gas, water-works, or sewage disposal system company, projected
valuation and value as of the date certain, if applicable
because of a future date certain under section 4909.15 of the
Revised Code;
(B) With respect to an electric light company that chooses
to file a fully forecasted test period under section 4909.18 of
the Revised Code, the valuation and value during the fully
forecasted test period .
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Sec. 4909.08. When the public utilities commission has
completed the valuation of the property of any public utility or
railroad and before such valuation becomes final, it shall give
notice by registered letter to such public utility or railroad,
and if a substantial portion of said public utility or railroad
is situated in a municipal corporation, then to the mayor of
such municipal corporation, stating the valuations placed upon
the several kinds and classes of property of such public utility
or railroad and upon the property as a whole and give such
further notice by publication or otherwise as it shall deem
necessary to apprise the public of such valuation. If, within
thirty days after such notification, no protest has been filed
with the commission, such valuation becomes final. If notice of
protest has been filed by any public utility or railroad, the
commission shall fix a time for hearing such protest and shall
consider at such hearing any matter material thereto presented
by such public utility, railroad, or municipal corporation, in
support of its protest or by any representative of the public
against such protest. If, after the hearing of any protest of
any valuation so fixed, the commission is of the opinion that
its inventory is incomplete or inaccurate or that its valuation
is incorrect, it shall make such changes as are necessary and
shall issue an order making such corrected valuations final. A
final valuation by the commission and all classifications made
for the ascertainment of such valuations shall be public and are
prima-facie evidence relative to the value of the property.
"Valuation" and "value," as used in this section, may
include, with :
(A) With respect to a public utility that is a natural
gas, water-works, or sewage disposal system company, projected
valuation and value as of the date certain, if applicable
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because of a future date certain under section 4909.15 of the
Revised Code;
(B) With respect to an electric light company that chooses
to file a fully forecasted test period under section 4909.18 of
the Revised Code, the valuation and value during the fully
forecasted test period .
Sec. 4909.15. (A) The public utilities commission, when
fixing and determining just and reasonable rates, cost recovery
mechanisms, fares, tolls, rentals, and charges, shall determine:
(1) The (1)(a) With respect to a public utility that is a
natural gas, water-works, or sewage disposal system company, or
that is an electric light company that chooses not to file a
fully forecasted test period under section 4909.18 of the
Revised Code, the valuation as of the date certain of the
property of the public utility that is used and useful or, with
respect to a natural gas, water-works, or sewage disposal system
company, is projected to be used and useful as of the date
certain, in rendering the public utility service for which rates
are to be fixed and determined. The
(b) With respect to an electric light company that chooses
to file a fully forecasted test period under section 4909.18 of
the Revised Code, the valuation of the property of the utility
that is projected to be used and useful during the fully
forecasted test period in rendering the public utility service
for which rates are to be fixed and determined.
(c) The valuation so determined under division (A)(1) of
this section for any public utility shall be the total value as
set forth in division (C)(9)(B)(8) of section 4909.042 of the
Revised Code and division (B)(9) of section 4909.05 of the
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Revised Code, and a reasonable allowance for materials and
supplies and a reasonable allowance for cash working capital as
determined by the commission.
The commission, in its discretion, may include in the
valuation a reasonable allowance for construction work in
progress but, in no event, may such an allowance be made by the
commission until it has determined that the particular
construction project is at least seventy-five per cent complete.
In determining the percentage completion of a particular
construction project, the commission shall consider, among other
relevant criteria, the per cent of time elapsed in construction;
the per cent of construction funds, excluding allowance for
funds used during construction, expended, or obligated to such
construction funds budgeted where all such funds are adjusted to
reflect current purchasing power; and any physical inspection
performed by or on behalf of any party, including the
commission's staff.
A reasonable allowance for construction work in progress
shall not exceed ten per cent of the total valuation as stated
in this division, not including such allowance for construction
work in progress.
Where the commission permits an allowance for construction
work in progress, the dollar value of the project or portion
thereof included in the valuation as construction work in
progress shall not be included in the valuation as plant in
service until such time as the total revenue effect of the
construction work in progress allowance is offset by the total
revenue effect of the plant in service exclusion. Carrying
charges calculated in a manner similar to allowance for funds
used during construction shall accrue on that portion of the
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project in service but not reflected in rates as plant in
service, and such accrued carrying charges shall be included in
the valuation of the property at the conclusion of the offset
period for purposes of division (C)(9) of section 4909.05 of the
Revised Code.
From and after April 10, 1985, no allowance for
construction work in progress as it relates to a particular
construction project shall be reflected in rates for a period
exceeding forty-eight consecutive months commencing on the date
the initial rates reflecting such allowance become effective,
except as otherwise provided in this division.
The applicable maximum period in rates for an allowance
for construction work in progress as it relates to a particular
construction project shall be tolled if, and to the extent, a
delay in the in-service date of the project is caused by the
action or inaction of any federal, state, county, or municipal
agency having jurisdiction, where such action or inaction
relates to a change in a rule, standard, or approval of such
agency, and where such action or inaction is not the result of
the failure of the utility to reasonably endeavor to comply with
any rule, standard, or approval prior to such change.
In the event that such period expires before the project
goes into service, the commission shall exclude, from the date
of expiration, the allowance for the project as construction
work in progress from rates, except that the commission may
extend the expiration date up to twelve months for good cause
shown.
In the event that a utility has permanently canceled,
abandoned, or terminated construction of a project for which it
was previously permitted a construction work in progress
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allowance, the commission immediately shall exclude the
allowance for the project from the valuation.
In the event that a construction work in progress project
previously included in the valuation is removed from the
valuation pursuant to this division, any revenues collected by
the utility from its customers after April 10, 1985, that
resulted from such prior inclusion shall be offset against
future revenues over the same period of time as the project was
included in the valuation as construction work in progress. The
total revenue effect of such offset shall not exceed the total
revenues previously collected.
In no event shall the total revenue effect of any offset
or offsets provided under division (A)(1) of this section exceed
the total revenue effect of any construction work in progress
allowance.
(2) A fair and reasonable rate of return to the utility on
the valuation as determined in division (A)(1) of this section;
(3) The dollar annual return to which the utility is
entitled by applying the fair and reasonable rate of return as
determined under division (A)(2) of this section to the
valuation of the utility determined under division (A)(1) of
this section;
(4) The cost to the utility of rendering the public
utility service for the test period used for the determination
under division (C)(1) of this section, less the total of any
interest on cash or credit refunds paid, pursuant to section
4909.42 of the Revised Code, by the utility during the test
period.
(a) Federal, state, and local taxes imposed on or measured
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by net income may, in the discretion of the commission, be
computed by the normalization method of accounting, provided the
utility maintains accounting reserves that reflect differences
between taxes actually payable and taxes on a normalized basis,
provided that no determination as to the treatment in the rate-
making process of such taxes shall be made that will result in
loss of any tax depreciation or other tax benefit to which the
utility would otherwise be entitled, and further provided that
such tax benefit as redounds to the utility as a result of such
a computation may not be retained by the company, used to fund
any dividend or distribution, or utilized for any purpose other
than the defrayal of the operating expenses of the utility and
the defrayal of the expenses of the utility in connection with
construction work.
(b) The amount of any tax credits granted to an electric
light company under section 5727.391 of the Revised Code for
Ohio coal burned prior to January 1, 2000, shall not be retained
by the company, used to fund any dividend or distribution, or
utilized for any purposes other than the defrayal of the
allowable operating expenses of the company and the defrayal of
the allowable expenses of the company in connection with the
installation, acquisition, construction, or use of a compliance
facility. The amount of the tax credits granted to an electric
light company under that section for Ohio coal burned prior to
January 1, 2000, shall be returned to its customers within three
years after initially claiming the credit through an offset to
the company's rates or fuel component, as determined by the
commission, as set forth in schedules filed by the company under
section 4905.30 of the Revised Code. As used in division (A)(4)
(b) of this section, "compliance facility" has the same meaning
as in section 5727.391 of the Revised Code.
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(B) The commission shall compute the gross annual revenues
to which the utility is entitled by adding the dollar amount of
return under division (A)(3) of this section to the cost, for
the test period used for the determination under division (C)(1)
of this section, of rendering the public utility service under
division (A)(4) of this section.
(C)(1) Except as provided in division (D) of this section,
the revenues and expenses of the utility shall be determined
during a test period . The utility may as follows:
(a) Electric light companies may propose a fully
forecasted test period utilizing reasonably forecasted rate
base, revenues, and expenses for the first twelve months that
new rates will be in effect. Initially, rates shall be set using
the thirteen-month average rate base ending in the last month of
the test period, based on the end-of-month balance for the
twelve consecutive calendar months of the test period plus the
end-of-month balance for the month immediately prior to the
beginning of the forecasted test period. Final rates for this
thirteen-month average test period shall use the lower of
forecasted plant investment or actual plant investment, actual
revenues, and actual expenses.
Forecasted plant investment, forecasted revenues, and
forecasted expenses versus actual investment, actual revenues,
and actual expenses shall be trued up via a cost recovery
mechanism approved by the commission. As part of the true-up
process, the commission shall exclude any cost components that
have not been found by the commission to be used and useful in
rendering public utility service.
The fully forecasted test period shall commence not later
than the application's filing date.
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(b) All utilities, except for electric light companies
that choose to file under division (C)(1)(a) of this section,
shall propose a test period for this determination that is any
twelve-month period beginning not more than six months prior to
the date the application is filed and ending not more than nine
months subsequent to that date. The test period for determining
revenues and expenses of the utility shall be the test period
proposed by the utility, unless otherwise ordered by the
commission.
(2) The For utilities filing under division (C)(1)(b) of
this section, the date certain shall be not later than the date
of filing, except that it shall be, for a natural gas, water-
works, or sewage disposal system company, not later than the end
of the test period.
(D) A natural gas, water-works, or sewage disposal system
company Utilities filing under division (C)(1)(b) of this
section may propose adjustments to the revenues and expenses to
be determined under division (C)(1) of this section for any
changes that are, during the test period or the twelve-month
period immediately following the test period, reasonably
expected to occur. The natural gas, water-works, or sewage
disposal system company utility shall identify and quantify,
individually, any proposed adjustments. The commission shall
incorporate the proposed adjustments into the determination if
the adjustments are just and reasonable.
(E) When the commission is of the opinion, after hearing
and after making the determinations under divisions (A) and (B)
of this section, that any rate, cost recovery mechanism, fare,
charge, toll, rental, schedule, classification, or service, or
any joint rate, cost recovery mechanism, fare, charge, toll,
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rental, schedule, classification, or service rendered, charged,
demanded, exacted, or proposed to be rendered, charged,
demanded, or exacted, is, or will be, unjust, unreasonable,
unjustly discriminatory, unjustly preferential, or in violation
of law, that the service is, or will be, inadequate, or that the
maximum rates, cost recovery mechanisms, charges, tolls, or
rentals chargeable by any such public utility are insufficient
to yield reasonable compensation for the service rendered, and
are unjust and unreasonable, the commission shall:
(1) With due regard among other things to the value of all
property of the public utility actually used and useful for the
convenience of the public as determined under division (A)(1) of
this section, excluding from such value the value of any
franchise or right to own, operate, or enjoy the same in excess
of the amount, exclusive of any tax or annual charge, actually
paid to any political subdivision of the state or county, as the
consideration for the grant of such franchise or right, and
excluding any value added to such property by reason of a
monopoly or merger, with due regard in determining the dollar
annual return under division (A)(3) of this section to the
necessity of making reservation out of the income for surplus,
depreciation, and contingencies, and;
(2) With due regard to all such other matters as are
proper, according to the facts in each case,
(a) Including a fair and reasonable rate of return
determined by the commission with reference to a cost of debt
equal to the actual embedded cost of debt of such public
utility,
(b) But not including the portion of any periodic rental
or use payments representing that cost of property that is
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As Pending in the Senate Energy Committee
included in the valuation report under divisions (C)(4)(B)(4)
and (5) of section 4909.042 of the Revised Code and divisions
(B)(4) and (5) of section 4909.05 of the Revised Code, fix and
determine the just and reasonable rate, cost recovery mechanism,
fare, charge, toll, rental, or service to be rendered, charged,
demanded, exacted, or collected for the performance or rendition
of the service that will provide the public utility the
allowable gross annual revenues under division (B) of this
section, and order such just and reasonable rate, cost recovery
mechanism, fare, charge, toll, rental, or service to be
substituted for the existing one. After such determination and
order no change in the rate, cost recovery mechanism, fare,
toll, charge, rental, schedule, classification, or service shall
be made, rendered, charged, demanded, exacted, or changed by
such public utility without the order of the commission, and any
other rate, cost recovery mechanism, fare, toll, charge, rental,
classification, or service is prohibited.
(F) Upon application of any person or any public utility,
and after notice to the parties in interest and opportunity to
be heard as provided in Chapters 4901., 4903., 4905., 4907.,
4909., 4921., and 4923. of the Revised Code for other hearings,
has been given, the commission may rescind, alter, or amend an
order fixing any rate, cost recovery mechanism, fare, toll,
charge, rental, classification, or service, or any other order
made by the commission. Certified copies of such orders shall be
served and take effect as provided for original orders.
Sec. 4909.156. In fixing the just, reasonable, and
compensatory rates, cost recovery mechanisms, joint rates,
tolls, classifications, charges, or rentals to be observed and
charged for service by any public utility, the public utilities
commission shall, in action upon an application filed pursuant
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1136 Sub. S. B. No. 2 Page 40
As Pending in the Senate Energy Committee
to section 4909.18 of the Revised Code, require a public utility
to file a report showing the proportionate amounts of the
valuation of the property of the utility, as determined under
section 4909.042 or 4909.05 of the Revised Code, and the
proportionate amounts of the revenues and expenses of the
utility that are proposed to be considered as attributable to
the service area involved in the application.
"Valuation," as used in this section, may include , with :
(A) With respect to a public utility that is a natural
gas, water-works, or sewage disposal system company, projected
valuation as of the date certain, if applicable because of a
future date certain under section 4909.15 of the Revised Code ;
(B) With respect to an electric light company that chooses
to file a fully forecasted test period under section 4909.18 of
the Revised Code, the valuation and value during the fully
forecasted test period .
Sec. 4909.17. No rate, cost recovery mechanism, joint
rate, toll, classification, charge, or rental, no change in any
rate, cost recovery mechanism, joint rate, toll, classification,
charge, or rental, and no regulation or practice affecting any
rate, cost recovery mechanism, joint rate, toll, classification,
charge, or rental of a public utility shall become effective
until the public utilities commission, by order, determines it
to be just and reasonable, except as provided in this section
and sections 4909.18, 4909.19, and 4909.191 of the Revised Code.
Such sections do not apply to any rate, cost recovery mechanism,
joint rate, toll, classification, charge, or rental, or any
regulation or practice affecting the same, of railroads, street
and electric railways, for-hire motor carriers, and pipe line
companies.
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1166 Sub. S. B. No. 2 Page 41
As Pending in the Senate Energy Committee
Sec. 4909.173. (A) As used in this section and section
4909.174 of the Revised Code:
(1) "Customer-owned water service line" means the water
service line connected to the water-works company's water
service line at the curb of a customer's property.
(2) "Water-works company" means an entity defined under
division (G) of section 4905.03 of the Revised Code that is a
public utility under section 4905.02 of the Revised Code.
(B) A water-works company may do any of the following:
(1) Replace lead customer-owned water service lines
concurrently with a scheduled utility main replacement project,
an emergency replacement, or company-initiated lead water
service line replacement program;
(2) Replace lead customer-owned water service lines when
mandated or ordered to replace such lines by law or a state or
federal regulatory agency;
(3) Replace customer-owned water service lines of other
composition when mandated or ordered to replace such lines by
law or a state or federal regulatory agency.
(C) If a water-works company replaces customer-owned water
service lines under this section, then the company shall include
the cost of the replacement of the water service lines,
including the cost of replacement of both company side and
customer-owned water service lines and the cost to evaluate
customer-owned water service lines of unknown composition, in
the valuation report of the property of the company as required
under division (C)(6)(B)(6) of section 4909.05 of the Revised
Code for inclusion in a rate case under this chapter.
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1194 Sub. S. B. No. 2 Page 42
As Pending in the Senate Energy Committee
(D) The water service customer who is responsible for the
customer-owned water service line that was replaced under this
section shall hold legal title to the replaced water service
line.
Sec. 4909.174. (A) A water-works company shall reimburse a
customer who replaces the customer's customer-owned water
service line, if both of the following occur:
(1) The company confirms that the customer-owned water
service line was composed of lead or other composition that was
mandated or ordered to be replaced by law or a state or federal
regulatory agency;
(2) The customer submits the reimbursement request to the
company not later than twelve months after the completion of the
water line replacement.
(B) A water-works company that provides a reimbursement to
a customer under this section shall include the reimbursement
amount in the valuation report of the property of the company as
required under division (C)(6)(B)(6) of section 4909.05 of the
Revised Code for inclusion in a rate case under this chapter.
Sec. 4909.18. Any public utility desiring to establish any
rate, cost recovery mechanism, joint rate, toll, classification,
charge, or rental, or to modify, amend, change, increase, or
reduce any existing rate, cost recovery mechanism, joint rate,
toll, classification, charge, or rental, or any regulation or
practice affecting the same, shall file a written application
with the public utilities commission. Except for actions under
section 4909.16 of the Revised Code, no public utility may issue
the notice of intent to file an application pursuant to division
(B) of section 4909.43 of the Revised Code to increase any
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1223 Sub. S. B. No. 2 Page 43
As Pending in the Senate Energy Committee
existing rate, cost recovery mechanism, joint rate, toll,
classification, charge, or rental, until a final order under
this section has been issued by the commission on any pending
prior application to increase the same rate, cost recovery
mechanism, joint rate, toll, classification, charge, or rental
or until two hundred seventy-five days after filing such
application, whichever is sooner. Such application shall be
verified by the president or a vice-president and the secretary
or treasurer of the applicant. Such application shall contain a
schedule of the existing rate, cost recovery mechanism, joint
rate, toll, classification, charge, or rental, or regulation or
practice affecting the same, a schedule of the modification
amendment, change, increase, or reduction sought to be
established, and a statement of the facts and grounds upon which
such application is based. If such application proposes a new
service or the use of new equipment, or proposes the
establishment or amendment of a regulation, the application
shall fully describe the new service or equipment, or the
regulation proposed to be established or amended, and shall
explain how the proposed service or equipment differs from
services or equipment presently offered or in use, or how the
regulation proposed to be established or amended differs from
regulations presently in effect. The application shall provide
such additional information as the commission may require in its
discretion. If the commission determines that such application
is not for an increase in any rate, cost recovery mechanism,
joint rate, toll, classification, charge, or rental, the
commission may permit the filing of the schedule proposed in the
application and fix the time when such schedule shall take
effect. If it appears to the commission that the proposals in
the application may be unjust or unreasonable, the commission
shall set the matter for hearing and shall give notice of such
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1255 Sub. S. B. No. 2 Page 44
As Pending in the Senate Energy Committee
hearing by sending written notice of the date set for the
hearing to the public utility and publishing notice of the
hearing one time in a newspaper of general circulation in each
county in the service area affected by the application. At such
hearing, the burden of proof to show that the proposals in the
application are just and reasonable shall be upon the public
utility. After such hearing, the commission shall, where
practicable, issue an appropriate order within six months from
the date the application was filed.
If the commission determines that said application is for
an increase in any rate, cost recovery mechanism, joint rate,
toll, classification, charge, or rental there shall also, unless
otherwise ordered by the commission, be filed with the
application in duplicate the following exhibits:
(A) A report of its property used and useful, or, with
respect to a natural gas, water-works, or sewage disposal system
company, projected to be used and useful , as of the date
certain, or during the test period, if the application is filed
under division (C)(1)(a) of section 4909.15 of the Revised Code ,
in rendering the service referred to in such application, as
provided in section sections 4909.042 and 4909.05 of the Revised
Code;
(B) A complete operating statement of its last fiscal
year, showing in detail all its receipts, revenues, and incomes
from all sources, all of its operating costs and other
expenditures, and any analysis such public utility deems
applicable to the matter referred to in said application;
(C) A statement of the income and expense anticipated
under the application filed;
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1284 Sub. S. B. No. 2 Page 45
As Pending in the Senate Energy Committee
(D) A statement of financial condition summarizing assets,
liabilities, and net worth;
(E) Such other information as the commission may require
in its discretion.
Sec. 4909.181. (A) As used in this section, "electric
distribution utility" has the same meaning as in section 4928.01
of the Revised Code.
(B) Not later than December 31, 2029, each electric
distribution utility shall file a rate case application
regarding distribution service under section 4909.18 of the
Revised Code.
Sec. 4909.191. (A) If the public utilities commission,
under division (D) of section 4909.15 of the Revised Code,
incorporated proposed adjustments to revenues and expenses into
the commission's determination under that section, the natural
gas, water-works, or sewage disposal system company public
utility shall, not later than ninety days after actual data for
all of the incorporated adjustments becomes known, submit to the
commission proposed rate or charge adjustments that provide for
the recalculation of rates or charges, reflective of customer-
class responsibility, corresponding to the differences, if any,
between the incorporated adjustments to revenues and expenses
and the actual revenues and expenses associated with the
incorporated adjustments.
(B) If the commission incorporated projected value or
valuation of property into the commission's determination under
division (A)(1)(A)(1)(a) of section 4909.15 of the Revised Code,
the natural gas, water-works, or sewage disposal system company
shall, not later than ninety days after data for the actual
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1313 Sub. S. B. No. 2 Page 46
As Pending in the Senate Energy Committee
value or valuation as of the date certain becomes known, submit
to the commission proposed rate or charge adjustments that
provide for the recalculation of rates or charges, reflective of
customer-class responsibility, corresponding to the differences,
if any, between the projected value or valuation incorporated
into the commission's determination and the actual value or
valuation as of the date certain.
(C) The commission shall review the proposed rate or
charge adjustments submitted under divisions (A) and (B) of this
section. The review shall not include a hearing unless the
commission finds that the proposed rate or charge adjustments
may be unreasonable, in which case the commission may, in its
discretion, schedule the matter for a hearing.
(D) The commission shall issue, not later than one hundred
fifty days after the date that any proposed rate or charge
adjustments are submitted under division (A) or (B) of this
section, a final order on the proposed rate or charge
adjustments. Any rate or charge adjustments authorized under
this division shall be limited to amounts that are not greater
than those consistent with the proposed adjustments to revenues
and expenses that were incorporated into the commission's
determination under division (D) of section 4909.15 of the
Revised Code, and not greater than those consistent with the
incorporated projected value or valuation. In no event shall
rate or charge adjustments authorized under this division be
upward.
After the commission has issued such a final order, the
natural gas, water-works, or sewage disposal system
companypublic utility, if applicable, shall submit to the
commission proposed reconciliation adjustments that refund to
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1343 Sub. S. B. No. 2 Page 47
As Pending in the Senate Energy Committee
customers the difference between the actual revenues collected
by the natural gas, water-works, or sewage disposal system
company,utility under the rates and charges determined by the
commission under section 4909.15 of the Revised Code, and the
rates or charges recalculated under the adjustments authorized
under this division. The reconciliation adjustments shall be
effective for a twelve-month period.
(E) The reconciliation adjustments ordered under division
(D) of this section may be subject to a final reconciliation by
the commission. Any such final reconciliation shall occur after
the twelve-month period described in division (D) of this
section.
Sec. 4909.42. If the proceeding on an application filed
with the The public utilities commission under section 4909.18
of the Revised Code shall issue an order to approve or deny an
application filed under section 4909.18 of the Revised Code by
any public utility requesting an increase on any rate, joint
rate, toll, classification, charge, or rental or requesting a
change in a regulation or practice affecting the same has not
been concluded and an order entered pursuant to section 4909.19
of the Revised Code at the expiration of not later than two
hundred seventy-five days from the date of filing the
application, an increase not to exceed the proposed increase
shall go into effect upon the filing of a bond or a letter of
credit by the public utility . The bond or letter of credit shall
be filed with the commission and shall be payable to the state
for the use and benefit of the customers affected by the
proposed increase or change If the commission does not issue an
order within the time period required by this section, the
application shall be deemed approved by operation of law .
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An affidavit attached to the bond or letter of credit must
be signed by two of the officers of the utility, under oath, and
must contain a promise on behalf of the utility to refund any
amounts collected by the utility over the rate, joint rate,
toll, classification, charge, or rental, as determined in the
final order of the commission. All refunds shall include
interest at the rate stated in section 1343.03 of the Revised
Code. The refund shall be in the form of a temporary reduction
in rates following the final order of the commission, and shall
be accomplished in such manner as shall be prescribed by the
commission in its final order. The commission shall exercise
continuing and exclusive jurisdiction over such refunds.
If the public utilities commission has not entered a final
order within five hundred forty-five days from the date of the
filing of an application for an increase in rates under section
4909.18 of the Revised Code, a public utility shall have no
obligation to make a refund of amounts collected after the five
hundred forty-fifth day which exceed the amounts authorized by
the commission's final order.
Nothing in this section shall be construed to mitigate any
duty of the commission to issue a final order under section
4909.19 of the Revised Code.
Sec. 4909.47. (A) As used in this section, "electric
distribution utility" has the same meaning as in section 4928.01
of the Revised Code.
(B) An electric distribution utility may file an
application with the public utilities commission for a mini rate
case, as determined in accordance with this section.
(C) A mini rate case proceeding shall be available solely
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As Pending in the Senate Energy Committee
to collect capital expenditures of the electric distribution
utility for economic development purposes that were not included
in an approved application submitted under section 4909.18 of
the Revised Code.
(D) The public utilities commission shall adopt rules
consistent with this section to create a mini rate case
proceeding, including prescribing filing requirements.
Sec. 4911.15. The consumers' counsel, at the request of
one or more residential consumers residing in, or municipal
corporations located in, an area served by a public utility or
whenever in his counsel's opinion the public interest is served,
may represent those consumers or corporations whenever an
application is made to the public utilities commission by any
public utility desiring to establish, modify, amend, change,
increase, or reduce any rate, cost recovery mechanism, joint
rate, toll, fare, classification, charge, or rental.
The consumers' counsel may appear before the public
utilities commission as a representative of the residential
consumers of any public utility when a complaint has been filed
with the commission that a rate, cost recovery mechanism, joint
rate, fare, toll, charge, classification, or rental for
commodities or services rendered, charged, demanded, exacted, or
proposed to be rendered, charged, demanded, or exacted by the
utility is in any respect unjust, unreasonable, unjustly
discriminatory, unjustly preferential, or in violation of the
law.
Nothing in Chapter 4911. of the Revised Code shall be
construed to restrict or limit in any manner the right of a
municipal corporation to represent the residential consumers of
such municipal corporation in all proceedings before the public
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As Pending in the Senate Energy Committee
utilities commission, and in both state and federal courts and
administrative agencies on behalf of such residential consumers
concerning review of decisions rendered by, or failure to act
by, the public utilities commission.
Sec. 4928.01. (A) As used in this chapter:
(1) "Ancillary service" means any function necessary to
the provision of electric transmission or distribution service
to a retail customer and includes, but is not limited to,
scheduling, system control, and dispatch services; reactive
supply from generation resources and voltage control service;
reactive supply from transmission resources service; regulation
service; frequency response service; energy imbalance service;
operating reserve-spinning reserve service; operating reserve-
supplemental reserve service; load following; back-up supply
service; real-power loss replacement service; dynamic
scheduling; system black start capability; and network stability
service.
(2) "Billing and collection agent" means a fully
independent agent, not affiliated with or otherwise controlled
by an electric utility, electric services company, electric
cooperative, or governmental aggregator subject to certification
under section 4928.08 of the Revised Code, to the extent that
the agent is under contract with such utility, company,
cooperative, or aggregator solely to provide billing and
collection for retail electric service on behalf of the utility
company, cooperative, or aggregator.
(3) "Certified territory" means the certified territory
established for an electric supplier under sections 4933.81 to
4933.90 of the Revised Code.
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(4) "Competitive retail electric service" means a
component of retail electric service that is competitive as
provided under division (B) of this section.
(5) "Electric cooperative" means a not-for-profit electric
light company that both is or has been financed in whole or in
part under the "Rural Electrification Act of 1936," 49 Stat.
1363, 7 U.S.C. 901, and owns or operates facilities in this
state to generate, transmit, or distribute electricity, or a
not-for-profit successor of such company.
(6) "Electric distribution utility" means an electric
utility that supplies at least retail electric distribution
service and does not own or operate an electric generating
facility.
(7) "Electric light company" has the same meaning as in
section 4905.03 of the Revised Code and includes an electric
services company, but excludes any self-generator to the extent
that it consumes electricity it so produces, sells that
electricity for resale, or obtains electricity from a generating
facility it hosts on its premises .
(8) "Electric load center" has the same meaning as in
section 4933.81 of the Revised Code.
(9) "Electric services company" means an electric light
company that is engaged on a for-profit or not-for-profit basis
in the business of supplying or arranging for the supply of only
a competitive retail electric service in this state. "Electric
services company" includes a power marketer, power broker,
aggregator, or independent power producer but excludes an
electric cooperative, municipal electric utility, governmental
aggregator, or billing and collection agent.
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(10) "Electric supplier" has the same meaning as in
section 4933.81 of the Revised Code.
(11) "Electric utility" means an electric light company
that has a certified territory and is engaged on a for-profit
basis either in the business of supplying at least a
noncompetitive retail electric service in this state or in the
businesses of supplying both a noncompetitive and a competitive
retail electric service in this state . "Electric utility"
excludes a municipal electric utility or a billing and
collection agent.
(12) "Firm electric service" means electric service other
than nonfirm electric service.
(13) "Governmental aggregator" means a legislative
authority of a municipal corporation, a board of township
trustees, or a board of county commissioners acting as an
aggregator for the provision of a competitive retail electric
service under authority conferred under section 4928.20 of the
Revised Code.
(14) A person acts "knowingly," regardless of the person's
purpose, when the person is aware that the person's conduct will
probably cause a certain result or will probably be of a certain
nature. A person has knowledge of circumstances when the person
is aware that such circumstances probably exist.
(15) "Level of funding for low-income customer energy
efficiency programs provided through electric utility rates"
means the level of funds specifically included in an electric
utility's rates on October 5, 1999, pursuant to an order of the
public utilities commission issued under Chapter 4905. or 4909.
of the Revised Code and in effect on October 4, 1999, for the
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1519 Sub. S. B. No. 2 Page 53
As Pending in the Senate Energy Committee
purpose of improving the energy efficiency of housing for the
utility's low-income customers. The term excludes the level of
any such funds committed to a specific nonprofit organization or
organizations pursuant to a stipulation or contract.
(16) "Low-income customer assistance programs" means the
percentage of income payment plan program, the home energy
assistance program, the home weatherization assistance program,
and the targeted energy efficiency and weatherization program.
(17) "Market development period" for an electric utility
means the period of time beginning on the starting date of
competitive retail electric service and ending on the applicable
date for that utility as specified in section 4928.40 of the
Revised Code, irrespective of whether the utility applies to
receive transition revenues under this chapter.
(18) "Market power" means the ability to impose on
customers a sustained price for a product or service above the
price that would prevail in a competitive market.
(19) "Mercantile customer" means a commercial or
industrial customer if the electricity consumed is for
nonresidential use and the customer consumes more than seven
hundred thousand kilowatt hours per year or is part of a
national account involving multiple facilities in one or more
states.
(20) "Municipal electric utility" means a municipal
corporation that owns or operates facilities to generate,
transmit, or distribute electricity.
(21) "Noncompetitive retail electric service" means a
component of retail electric service that is noncompetitive as
provided under division (B) of this section.
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1548 Sub. S. B. No. 2 Page 54
As Pending in the Senate Energy Committee
(22) "Nonfirm electric service" means electric service
provided pursuant to a schedule filed under section 4905.30 of
the Revised Code or pursuant to an arrangement under section
4905.31 of the Revised Code, which schedule or arrangement
includes conditions that may require the customer to curtail or
interrupt electric usage during nonemergency circumstances upon
notification by an electric utility.
(23) "Percentage of income payment plan arrears" means
funds eligible for collection through the percentage of income
payment plan rider, but uncollected as of July 1, 2000.
(24) "Person" has the same meaning as in section 1.59 of
the Revised Code.
(25) "Advanced energy project" means any technologies,
products, activities, or management practices or strategies that
facilitate the generation or use of electricity or energy and
that reduce or support the reduction of energy consumption or
support the production of clean, renewable energy for
industrial, distribution, commercial, institutional,
governmental, research, not-for-profit, or residential energy
users, including, but not limited to, advanced energy resources
and renewable energy resources. "Advanced energy project" also
includes any project described in division (A), (B), or (C) of
section 4928.621 of the Revised Code.
(26) "Regulatory assets" means the unamortized net
regulatory assets that are capitalized or deferred on the
regulatory books of the electric utility, pursuant to an order
or practice of the public utilities commission or pursuant to
generally accepted accounting principles as a result of a prior
commission rate-making decision, and that would otherwise have
been charged to expense as incurred or would not have been
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1578 Sub. S. B. No. 2 Page 55
As Pending in the Senate Energy Committee
capitalized or otherwise deferred for future regulatory
consideration absent commission action. "Regulatory assets"
includes, but is not limited to, all deferred demand-side
management costs; all deferred percentage of income payment plan
arrears; post-in-service capitalized charges and assets
recognized in connection with statement of financial accounting
standards no. 109 (receivables from customers for income taxes);
future nuclear decommissioning costs and fuel disposal costs as
those costs have been determined by the commission in the
electric utility's most recent rate or accounting application
proceeding addressing such costs; the undepreciated costs of
safety and radiation control equipment on nuclear generating
plants owned or leased by an electric utility; and fuel costs
currently deferred pursuant to the terms of one or more
settlement agreements approved by the commission.
(27) "Retail electric service" means any service involved
in supplying or arranging for the supply of electricity to
ultimate consumers in this state, from the point of generation
to the point of consumption. For the purposes of this chapter,
retail electric service includes one or more of the following
"service components": generation service, aggregation service,
power marketing service, power brokerage service, transmission
service, distribution service, ancillary service, metering
service, and billing and collection service.
(28) "Starting date of competitive retail electric
service" means January 1, 2001.
(29) "Customer-generator" means a user of a net metering
system.
(30) "Net metering" means measuring the difference in an
applicable billing period between the electricity supplied by an
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1608 Sub. S. B. No. 2 Page 56
As Pending in the Senate Energy Committee
electric service provider and the electricity generated by a
customer-generator that is fed back to the electric service
provider.
(31) "Net metering system" means a facility for the
production of electrical energy that does all of the following:
(a) Uses as its fuel either solar, wind, biomass, landfill
gas, or hydropower, or uses a microturbine or a fuel cell;
(b) Is located on a customer-generator's premises;
(c) Operates in parallel with the electric utility's
transmission and distribution facilities;
(d) Is intended primarily to offset part or all of the
customer-generator's requirements for electricity. For an
industrial customer-generator with a net metering system that
has a capacity of less than twenty megawatts and uses wind as
energy, this means the net metering system was sized so as to
not exceed one hundred per cent of the customer-generator's
annual requirements for electric energy at the time of
interconnection.
(32) "Self-generator" means an entity in this state that
owns or hosts on its premises property the entity controls an
electric generation facility that produces electricity primarily
for the owner's consumption and that may provide any such excess
electricity to another entity, whether the facility is installed
or operated by the owner or by an agent a third party under a
contract, including a lease, purchase power agreement, or other
service contract.
(33) "Rate plan" means the standard service offer in
effect on the effective date of the amendment of this section by
S.B. 221 of the 127th general assembly, July 31, 2008.
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1637 Sub. S. B. No. 2 Page 57
As Pending in the Senate Energy Committee
(34) "Advanced energy resource" means any of the
following:
(a) Any method or any modification or replacement of any
property, process, device, structure, or equipment that
increases the generation output of an electric generating
facility to the extent such efficiency is achieved without
additional carbon dioxide emissions by that facility;
(b) Any distributed generation system consisting of
customer cogeneration technology;
(c) Clean coal technology that includes a carbon-based
product that is chemically altered before combustion to
demonstrate a reduction, as expressed as ash, in emissions of
nitrous oxide, mercury, arsenic, chlorine, sulfur dioxide, or
sulfur trioxide in accordance with the American society of
testing and materials standard D1757A or a reduction of metal
oxide emissions in accordance with standard D5142 of that
society, or clean coal technology that includes the design
capability to control or prevent the emission of carbon dioxide,
which design capability the commission shall adopt by rule and
shall be based on economically feasible best available
technology or, in the absence of a determined best available
technology, shall be of the highest level of economically
feasible design capability for which there exists generally
accepted scientific opinion;
(d) Advanced nuclear energy technology consisting of
generation III technology as defined by the nuclear regulatory
commission; other, later technology; or significant improvements
to existing facilities;
(e) Any fuel cell used in the generation of electricity,
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1666 Sub. S. B. No. 2 Page 58
As Pending in the Senate Energy Committee
including, but not limited to, a proton exchange membrane fuel
cell, phosphoric acid fuel cell, molten carbonate fuel cell, or
solid oxide fuel cell;
(f) Advanced solid waste or construction and demolition
debris conversion technology, including, but not limited to,
advanced stoker technology, and advanced fluidized bed
gasification technology, that results in measurable greenhouse
gas emissions reductions as calculated pursuant to the United
States environmental protection agency's waste reduction model
(WARM);
(g) Demand-side management and any energy efficiency
improvement;
(h) Any new, retrofitted, refueled, or repowered
generating facility located in Ohio, including a simple or
combined-cycle natural gas generating facility or a generating
facility that uses biomass, coal, modular nuclear, or any other
fuel as its input;
(i) Any uprated capacity of an existing electric
generating facility if the uprated capacity results from the
deployment of advanced technology.
"Advanced energy resource" does not include a waste energy
recovery system that is, or has been, included in an energy
efficiency program of an electric distribution utility pursuant
to requirements under section 4928.66 of the Revised Code.
(35) "Air contaminant source" has the same meaning as in
section 3704.01 of the Revised Code.
(36) "Cogeneration technology" means technology that
produces electricity and useful thermal output simultaneously.
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1694 Sub. S. B. No. 2 Page 59
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(37)(a) "Renewable energy resource" means any of the
following:
(i) Solar photovoltaic or solar thermal energy;
(ii) Wind energy;
(iii) Power produced by a hydroelectric facility;
(iv) Power produced by a small hydroelectric facility,
which is a facility that operates, or is rated to operate, at an
aggregate capacity of less than six megawatts;
(v) Power produced by a run-of-the-river hydroelectric
facility placed in service on or after January 1, 1980, that is
located within this state, relies upon the Ohio river, and
operates, or is rated to operate, at an aggregate capacity of
forty or more megawatts;
(vi) Geothermal energy;
(vii) Fuel derived from solid wastes, as defined in
section 3734.01 of the Revised Code, through fractionation,
biological decomposition, or other process that does not
principally involve combustion;
(viii) Biomass energy;
(ix) Energy produced by cogeneration technology that is
placed into service on or before December 31, 2015, and for
which more than ninety per cent of the total annual energy input
is from combustion of a waste or byproduct gas from an air
contaminant source in this state, which source has been in
operation since on or before January 1, 1985, provided that the
cogeneration technology is a part of a facility located in a
county having a population of more than three hundred sixty-five
thousand but less than three hundred seventy thousand according
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1722 Sub. S. B. No. 2 Page 60
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to the most recent federal decennial census;
(x) Biologically derived methane gas;
(xi) Heat captured from a generator of electricity,
boiler, or heat exchanger fueled by biologically derived methane
gas;
(xii) Energy derived from nontreated by-products of the
pulping process or wood manufacturing process, including bark,
wood chips, sawdust, and lignin in spent pulping liquors.
"Renewable energy resource" includes, but is not limited
to, any fuel cell used in the generation of electricity,
including, but not limited to, a proton exchange membrane fuel
cell, phosphoric acid fuel cell, molten carbonate fuel cell, or
solid oxide fuel cell; wind turbine located in the state's
territorial waters of Lake Erie; methane gas emitted from an
abandoned coal mine; waste energy recovery system placed into
service or retrofitted on or after the effective date of the
amendment of this section by S.B. 315 of the 129th general
assembly, September 10, 2012, except that a waste energy
recovery system described in division (A)(38)(b) of this section
may be included only if it was placed into service between
January 1, 2002, and December 31, 2004; storage facility that
will promote the better utilization of a renewable energy
resource; or distributed generation system used by a customer to
generate electricity from any such energy.
"Renewable energy resource" does not include a waste
energy recovery system that is, or was, on or after January 1,
2012, included in an energy efficiency program of an electric
distribution utility pursuant to requirements under section
4928.66 of the Revised Code.
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1751 Sub. S. B. No. 2 Page 61
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(b) As used in division (A)(37) of this section,
"hydroelectric facility" means a hydroelectric generating
facility that is located at a dam on a river, or on any water
discharged to a river, that is within or bordering this state or
within or bordering an adjoining state and meets all of the
following standards:
(i) The facility provides for river flows that are not
detrimental for fish, wildlife, and water quality, including
seasonal flow fluctuations as defined by the applicable
licensing agency for the facility.
(ii) The facility demonstrates that it complies with the
water quality standards of this state, which compliance may
consist of certification under Section 401 of the "Clean Water
Act of 1977," 91 Stat. 1598, 1599, 33 U.S.C. 1341, and
demonstrates that it has not contributed to a finding by this
state that the river has impaired water quality under Section
303(d) of the "Clean Water Act of 1977," 114 Stat. 870, 33
U.S.C. 1313.
(iii) The facility complies with mandatory prescriptions
regarding fish passage as required by the federal energy
regulatory commission license issued for the project, regarding
fish protection for riverine, anadromous, and catadromous fish.
(iv) The facility complies with the recommendations of the
Ohio environmental protection agency and with the terms of its
federal energy regulatory commission license regarding watershed
protection, mitigation, or enhancement, to the extent of each
agency's respective jurisdiction over the facility.
(v) The facility complies with provisions of the
"Endangered Species Act of 1973," 87 Stat. 884, 16 U.S.C. 1531
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As Pending in the Senate Energy Committee
to 1544, as amended.
(vi) The facility does not harm cultural resources of the
area. This can be shown through compliance with the terms of its
federal energy regulatory commission license or, if the facility
is not regulated by that commission, through development of a
plan approved by the Ohio historic preservation office, to the
extent it has jurisdiction over the facility.
(vii) The facility complies with the terms of its federal
energy regulatory commission license or exemption that are
related to recreational access, accommodation, and facilities
or, if the facility is not regulated by that commission, the
facility complies with similar requirements as are recommended
by resource agencies, to the extent they have jurisdiction over
the facility; and the facility provides access to water to the
public without fee or charge.
(viii) The facility is not recommended for removal by any
federal agency or agency of any state, to the extent the
particular agency has jurisdiction over the facility.
(c) The standards in divisions (A)(37)(b)(i) to (viii) of
this section do not apply to a small hydroelectric facility
under division (A)(37)(a)(iv) of this section.
(38) "Waste energy recovery system" means any of the
following:
(a) A facility that generates electricity through the
conversion of energy from either of the following:
(i) Exhaust heat from engines or manufacturing,
industrial, commercial, or institutional sites, except for
exhaust heat from a facility whose primary purpose is the
generation of electricity;
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1809 Sub. S. B. No. 2 Page 63
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(ii) Reduction of pressure in gas pipelines before gas is
distributed through the pipeline, provided that the conversion
of energy to electricity is achieved without using additional
fossil fuels.
(b) A facility at a state institution of higher education
as defined in section 3345.011 of the Revised Code that recovers
waste heat from electricity-producing engines or combustion
turbines and that simultaneously uses the recovered heat to
produce steam, provided that the facility was placed into
service between January 1, 2002, and December 31, 2004;
(c) A facility that produces steam from recovered waste
heat from a manufacturing process and uses that steam, or
transfers that steam to another facility, to provide heat to
another manufacturing process or to generate electricity.
(39) "Smart grid" means capital improvements to an
electric distribution utility's distribution infrastructure that
improve reliability, efficiency, resiliency, or reduce energy
demand or use, including, but not limited to, advanced metering
and automation of system functions.
(40) "Combined heat and power system" means the
coproduction of electricity and useful thermal energy from the
same fuel source designed to achieve thermal-efficiency levels
of at least sixty per cent, with at least twenty per cent of the
system's total useful energy in the form of thermal energy.
(41) "Legacy generation resource" means all generating
facilities owned directly or indirectly by a corporation that
was formed prior to 1960 by investor-owned utilities for the
original purpose of providing power to the federal government
for use in the nation's defense or in furtherance of national
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1838 Sub. S. B. No. 2 Page 64
As Pending in the Senate Energy Committee
interests, including the Ohio valley electric corporation.
(42) "Prudently incurred costs related to a legacy
generation resource" means costs, including deferred costs,
allocated pursuant to a power agreement approved by the federal
energy regulatory commission that relates to a legacy generation
resource, less any revenues realized from offering the
contractual commitment for the power agreement into the
wholesale markets, provided that where the net revenues exceed
net costs, those excess revenues shall be credited to customers.
Such costs shall exclude any return on investment in common
equity and, in the event of a premature retirement of a legacy
generation resource, shall exclude any recovery of remaining
debt. Such costs shall include any incremental costs resulting
from the bankruptcy of a current or former sponsor under such
power agreement or co-owner of the legacy generation resource if
not otherwise recovered through a utility rate cost recovery
mechanism.
(43)(a) (41)(a) "Green energy" means any energy generated
by using an energy resource that does one or more of the
following:
(i) Releases reduced air pollutants, thereby reducing
cumulative air emissions;
(ii) Is more sustainable and reliable relative to some
fossil fuels.
(b) "Green energy" includes energy generated using the
following:
(i) Natural gas as a resource;
(ii) Nuclear reaction.
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(B) For the purposes of this chapter, a retail electric
service component shall be deemed a competitive retail electric
service if the service component is competitive pursuant to a
declaration by a provision of the Revised Code or pursuant to an
order of the public utilities commission authorized under
division (A) of section 4928.04 of the Revised Code. Otherwise,
the service component shall be deemed a noncompetitive retail
electric service.
Sec. 4928.041. (A) Except as provided in sections 4928.141
and 4928.142 of the Revised Code, no electric utility shall
provide a competitive retail electric service in this state if
that service was deemed competitive or otherwise legally
classified as competitive prior to the effective date of this
section.
(B) The standard service offer under section 4928.141 of
the Revised Code shall continue to be provided to consumers in
this state by electric utilities.
Sec. 4928.05. (A)(1) On and after the starting date of
competitive retail electric service, a A competitive retail
electric service supplied by an electric utility or electric
services company, or by an electric utility consistent with
section 4928.141 of the Revised Code, shall not be subject to
supervision and regulation by a municipal corporation under
Chapter 743. of the Revised Code or by the public utilities
commission under Chapters 4901. to 4909., 4933., 4935., and
4963. of the Revised Code, except sections 4905.10 and 4905.31,
division (B) of section 4905.33, and sections 4905.35 and
4933.81 to 4933.90; except sections 4905.06, 4935.03, 4963.40,
and 4963.41 of the Revised Code only to the extent related to
service reliability and public safety; and except as otherwise
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1896 Sub. S. B. No. 2 Page 66
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provided in this chapter. The commission's authority to enforce
those excepted provisions with respect to a competitive retail
electric service shall be such authority as is provided for
their enforcement under Chapters 4901. to 4909., 4933., 4935.,
and 4963. of the Revised Code and this chapter. Nothing in this
division shall be construed to limit the commission's authority
under sections 4928.141 to , 4928.142, and 4928.144 of the
Revised Code.
On and after the starting date of competitive retail
electric service, a (2) A competitive retail electric service
supplied by an electric cooperative shall not be subject to
supervision and regulation by the commission under Chapters
4901. to 4909., 4933., 4935., and 4963. of the Revised Code,
except as otherwise expressly provided in sections 4928.01 to
4928.10 and 4928.16 of the Revised Code.
(2) On and after the starting date of competitive retail
electric service, a (B)(1) A noncompetitive retail electric
service supplied by an electric utility shall be subject to
supervision and regulation by the commission under Chapters
4901. to 4909., 4933., 4935., and 4963. of the Revised Code and
this chapter, to the extent that authority is not preempted by
federal law. The commission's authority to enforce those
provisions with respect to a noncompetitive retail electric
service shall be the authority provided under those chapters and
this chapter, to the extent the authority is not preempted by
federal law. Notwithstanding Chapters 4905. and 4909. of the
Revised Code, commission authority under this chapter shall
include the authority to provide for the recovery, through a
reconcilable rider on an electric distribution utility's
distribution rates, of all transmission and transmission-related
costs, including ancillary and congestion costs, imposed on or
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1927 Sub. S. B. No. 2 Page 67
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charged to the utility by the federal energy regulatory
commission or a regional transmission organization, independent
transmission operator, or similar organization approved by the
federal energy regulatory commission.
(2) The commission shall exercise its jurisdiction with
respect to the delivery of electricity by an electric utility in
this state on or after the starting date of competitive retail
electric service so as to ensure that no aspect of the delivery
of electricity by the utility to consumers in this state that
consists of a noncompetitive retail electric service is
unregulated.
On and after that starting date, a (3) A noncompetitive
retail electric service supplied by an electric cooperative
shall not be subject to supervision and regulation by the
commission under Chapters 4901. to 4909., 4933., 4935., and
4963. of the Revised Code, except sections 4933.81 to 4933.90
and 4935.03 of the Revised Code. The commission's authority to
enforce those excepted sections with respect to a noncompetitive
retail electric service of an electric cooperative shall be such
authority as is provided for their enforcement under Chapters
4933. and 4935. of the Revised Code.
(B) Nothing in this chapter affects the authority of the
commission under Title XLIX of the Revised Code to regulate an
electric light company in this state or an electric service
supplied in this state prior to the starting date of competitive
retail electric service.
Sec. 4928.08. (A) This section applies to an electric
cooperative, or to a governmental aggregator that is a municipal
electric utility, only to the extent of a competitive retail
electric service it provides to a customer to whom it does not
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1957 Sub. S. B. No. 2 Page 68
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provide a noncompetitive retail electric service through
transmission or distribution facilities it singly or jointly
owns or operates.
(B) (B)(1) No electric utility, electric services company,
electric cooperative, or governmental aggregator shall provide a
competitive retail electric service to a consumer in this state
on and after the starting date of competitive retail electric
service without first being certified by the public utilities
commission regarding its managerial, technical, and financial
capability to provide that service and providing a financial
guarantee sufficient to protect customers and electric
distribution utilities from default. Certification shall be
granted pursuant to procedures and standards the commission
shall prescribe in accordance with division (C) of this section,
except that certification or certification renewal shall be
deemed approved thirty days after the filing of an application
with the commission unless the commission suspends that approval
for good cause shown. In the case of such a suspension, the
commission shall act to approve or deny certification or
certification renewal to the applicant not later than ninety
days after the date of the suspension.
(2) The public utilities commission shall establish rules
to require an electric services company to maintain financial
assurances sufficient to protect customers and electric
distribution utilities from default. Such rules also shall
specifically allow an electric distribution utility to set
reasonable standards for its security and the security of its
customers through financial requirements set in its tariffs.
(3) As used in division (B)(2) of this section, an
"electric services company" has the same meaning as in section
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1987 Sub. S. B. No. 2 Page 69
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4928.01 of the Revised Code, but excludes a power broker or
aggregator.
(C) Capability standards adopted in rules under division
(B) of this section shall be sufficient to ensure compliance
with the minimum service requirements established under section
4928.10 of the Revised Code and with section 4928.09 of the
Revised Code. The standards shall allow flexibility for
voluntary aggregation, to encourage market creativity in
responding to consumer needs and demands, and shall allow
flexibility for electric services companies that exclusively
provide installation of small electric generation facilities, to
provide ease of market access. The rules shall include
procedures for biennially renewing certification.
(D) The commission may suspend, rescind, or conditionally
rescind the certification of any electric utility, electric
services company, electric cooperative, or governmental
aggregator issued under this section if the commission
determines, after reasonable notice and opportunity for hearing,
that the utility, company, cooperative, or aggregator has failed
to comply with any applicable certification standards or has
engaged in anticompetitive or unfair, deceptive, or
unconscionable acts or practices in this state.
(E) No electric distribution utility on and after the
starting date of competitive retail electric service shall
knowingly distribute electricity, to a retail consumer in this
state, for any supplier of electricity that has not been
certified by the commission pursuant to this section.
(F) Notwithstanding any provision of section 121.95 of the
Revised Code to the contrary, a regulatory restriction contained
in a rule adopted under section 4928.08 of the Revised Code is
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2017 Sub. S. B. No. 2 Page 70
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not subject to sections 121.95 to 121.953 of the Revised Code.
Sec. 4928.081. The public utilities commission and the
electric distribution utilities and competitive retail electric
service suppliers that elect to participate in the consumer
choice billing program are subject to the requirements
established for that program under sections 4933.51 to 4933.59
of the Revised Code.
Sec. 4928.101. (A) As used in this section and section
4928.102 of the Revised Code:
(1) "Small commercial customer" means any customer that
receives electric service pursuant to a nonresidential tariff if
the customer's demand for electricity does not exceed twenty-
five kilowatts within the last twelve months.
(2) "Small commercial customer" excludes any customer that
does one or both of the following:
(a) Manages multiple electric meters and, within the last
twelve months, the electricity demand for at least one of the
meters is twenty-five kilowatts or more;
(b) Has, at the customer's discretion, aggregated the
demand for the customer-managed meters.
(B) The consumer protections described in section 4928.10
of the Revised Code and the rules adopted pursuant to that
section apply to small commercial customers and to all other
customers as set forth in the rules.
Sec. 4928.102. (A) If a competitive retail electric
service supplier offers a residential or small commercial
customer a contract for a fixed introductory rate that converts
to a variable rate upon the expiration of the fixed rate, the
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2045 Sub. S. B. No. 2 Page 71
As Pending in the Senate Energy Committee
supplier shall send two notices to each residential and small
commercial customer that enters into such a contract. Each
notice shall provide all of the following information to the
customer:
(1) The fixed rate that is expiring under the contract;
(2) The expiration date of the contract's fixed rate;
(3) The rate to be charged upon the contract's conversion
to a variable rate;
(4) The public utilities commission web site that, as a
comparison tool, lists rates offered by competitive retail
electric service suppliers;
(5) A statement explaining that appearing on each
customer's bill is a price-to-compare notice that lists the
utility's standard service offer price.
(B) The notices shall be sent by standard United States
mail as follows:
(1) The supplier shall send the first notice not earlier
than ninety days, and not later than sixty days, prior to the
expiration of the fixed rate.
(2) The supplier shall send the second notice not earlier
than forty-five days, and not later than thirty days, prior to
the expiration of the fixed rate.
(C) A competitive retail electric service supplier shall
provide an annual notice, by standard United States mail, to
each residential and small commercial customer that has entered
into a contract with the supplier that has converted to a
variable rate upon the expiration of the contract's fixed
introductory rate. The notice shall inform the customer that the
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2073 Sub. S. B. No. 2 Page 72
As Pending in the Senate Energy Committee
customer is currently subject to a variable rate and that other
fixed rate contracts are available.
(D) Not later than one hundred fifty days after the
effective date of this section, the commission shall adopt rules
in order to implement divisions (A) to (C) of this section. The
rules, at a minimum, shall include the following requirements
regarding the notices required under divisions (A) to (C) of
this section:
(1) To use clear and unambiguous language in order to
enable the customer to make an informed decision;
(2) To design the notices in a way to ensure that they
cannot be confused with marketing materials.
(E) Notwithstanding any provision of section 121.95 of the
Revised Code to the contrary, a regulatory restriction contained
in a rule adopted under section 4928.102 of the Revised Code is
not subject to sections 121.95 to 121.953 of the Revised Code.
Sec. 4928.103. (A) As used in this section, "customer
account information" means a unique electric distribution
utility number or other customer identification number used by
the utility to identify a customer and the customer's account
record.
(B) The public utilities commission shall adopt rules to
ensure that an electric distribution utility processes a
customer's change in competitive retail electric supplier by
using customer account information. A customer who consents to a
change of supplier shall not be required to provide customer
account information to the supplier if the customer provides a
valid form of government-issued identification issued to the
customer or a sufficient alternative form of identification that
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2102 Sub. S. B. No. 2 Page 73
As Pending in the Senate Energy Committee
allows the supplier to establish the customer's identity
accurately.
(C) Notwithstanding any provision of section 121.95 of the
Revised Code to the contrary, a regulatory restriction contained
in a rule adopted under this section is not subject to sections
121.95 to 121.953 of the Revised Code.
Sec. 4928.14. The (A) Except as provided in division (C)
of this section, the failure of a supplier to provide retail
electric generation service to customers within the certified
territory of an electric distribution utility shall result in
the supplier's customers, after reasonable notice, defaulting to
the utility's standard service offer under sections 4928.141 ,
and 4928.142, and 4928.143 of the Revised Code until the
customer chooses an alternative supplier. A
(B) A supplier is deemed under this section to have failed
to provide such retail electric generation service if the
commission finds, after reasonable notice and opportunity for
hearing, that any of the following conditions are met:
(A) (1) The supplier has defaulted on its contracts with
customers, is in receivership, or has filed for bankruptcy.
(B) (2) The supplier is no longer capable of providing the
service.
(C) (3) The supplier is unable to provide delivery to
transmission or distribution facilities for such period of time
as may be reasonably specified by commission rule adopted under
division (A) of section 4928.06 of the Revised Code.
(D) (4) The supplier's certification has been suspended,
conditionally rescinded, or rescinded under division (D) of
section 4928.08 of the Revised Code.
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2131 Sub. S. B. No. 2 Page 74
As Pending in the Senate Energy Committee
(C) If an electric distribution utility has an electric
security plan that was approved under section 4928.143 of the
Revised Code as that section existed prior to the amendments to
this section by this act, the failure of a supplier to provide
retail electric generation service to customers within the
certified territory of that utility shall result in the
supplier's customers, after reasonable notice, defaulting to the
utility's standard service offer under that electric security
plan until the customer chooses an alternative supplier or until
the utility's standard service offer is authorized under section
4928.142 of the Revised Code.
Sec. 4928.141. (A) Beginning January 1, 2009, an (A)(1) An
electric distribution utility shall provide consumers, on a
comparable and nondiscriminatory basis within its certified
territory, a standard service offer of all competitive retail
electric services necessary to maintain essential electric
service to consumers, including a firm supply of electric
generation service. To that end, the electric distribution
utility shall apply to the public utilities commission to
establish the standard service offer in accordance with section
4928.142 or 4928.143 of the Revised Code and, at its discretion,
may apply simultaneously under both sections, except that the
utility's first standard service offer application at minimum
shall include a filing under section 4928.143 of the Revised
Code. Only Except as provided in division (A)(2) of this
section, a standard service offer authorized in accordance with
section 4928.142 or 4928.143 of the Revised Code, shall serve as
the utility's standard service offer for the purpose of
compliance with this section ;, and that standard service offer
shall serve as the utility's default standard service offer for
the purpose of section 4928.14 of the Revised Code.
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As Pending in the Senate Energy Committee
Notwithstanding the foregoing provision, the rate
(2) An electric distribution utility's electric security
plan of an electric distribution utility that was approved under
section 4928.143 of the Revised Code as that section existed
prior to the amendments to this section by this act shall
continue for the purpose of the utility's compliance with this
division (A)(1) of this section until a standard service offer
is first authorized under section 4928.142 or 4928.143 of the
Revised Code, and, as applicable, pursuant to division (D) of
section 4928.143 of the Revised Code, any rate . No electric
security plan that extends approved before the effective date of
the amendments to this section by this act shall extend beyond
December 31, 2008, shall continue to be in effect for the
subject electric distribution utility for the duration the
termination date of the plan's term.
(3) A standard service offer under section 4928.142 or
4928.143 of the Revised Code shall exclude any previously
authorized allowances for transition costs, with such exclusion
being effective on and after the date that the allowance is
scheduled to end under the utility's rate electric security
plan.
(B) The commission shall set the time for hearing of a
filing under section 4928.142 or 4928.143 of the Revised Code,
send written notice of the hearing to the electric distribution
utility, and publish notice in a newspaper of general
circulation in each county in the utility's certified territory.
The commission shall adopt rules regarding filings under those
sections the section.
Sec. 4928.142. (A) For the purpose of complying with
section 4928.141 of the Revised Code and subject to division (D)
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2192 Sub. S. B. No. 2 Page 76
As Pending in the Senate Energy Committee
of this section and, as applicable, subject to the rate plan
requirement requirements of division (A) of section 4928.141 of
the Revised Code, an electric distribution utility may shall
establish a standard service offer price for retail electric
generation service that is delivered to the utility under a
market-rate offer.
(1) The market-rate offer shall be determined through a
competitive bidding process that provides for all of the
following:
(a) Open, fair, and transparent competitive solicitation;
(b) Clear product definition;
(c) Standardized bid evaluation criteria;
(d) Oversight by an independent third party that shall
design the solicitation, administer the bidding, and ensure that
the criteria specified in division divisions (A)(1)(a) to (c) of
this section are met;
(e) Evaluation of the submitted bids prior to the
selection of the least-cost bid winner or winners.
No generation supplier shall be prohibited from
participating in the bidding process.
(2) The public utilities commission shall modify rules, or
adopt new rules as necessary, concerning the conduct of the
competitive bidding process and the qualifications of bidders,
which rules shall foster supplier participation in the bidding
process and shall be consistent with the requirements of
division (A)(1) of this section.
(B) Prior to initiating a competitive bidding process for
a market-rate offer under division (A) of this section, the
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2220 Sub. S. B. No. 2 Page 77
As Pending in the Senate Energy Committee
electric distribution utility shall file an application with the
commission. An electric distribution utility may file its
application with the commission prior to the effective date of
the commission rules required under division (A)(2) of this
section, and, as the commission determines necessary, the
utility shall immediately conform its filing to the rules upon
their taking effect.
An application under this division shall detail the
electric distribution utility's proposed compliance with the
requirements of division (A)(1) of this section and with
commission rules under division (A)(2) of this section and
demonstrate that all of the following requirements are met:
(1) The electric distribution utility or its transmission
service affiliate belongs to at least one regional transmission
organization that has been approved by the federal energy
regulatory commission; or there otherwise is comparable and
nondiscriminatory access to the electric transmission grid.
(2) Any such regional transmission organization has a
market-monitor function and the ability to take actions to
identify and mitigate market power or the electric distribution
utility's market conduct; or a similar market monitoring
function exists with commensurate ability to identify and
monitor market conditions and mitigate conduct associated with
the exercise of market power.
(3) A published source of information is available
publicly or through subscription that identifies pricing
information for traded electricity on- and off-peak energy
products that are contracts for delivery beginning at least two
years from the date of the publication and is updated on a
regular basis.
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The commission shall initiate a proceeding and, within
ninety days after the application's filing date, shall determine
by order whether the electric distribution utility and its
market-rate offer meet all of the foregoing requirements. If the
finding is positive, the electric distribution utility may shall
initiate its competitive bidding process. If the finding is
negative as to one or more requirements, the commission in the
order shall direct the electric distribution utility regarding
how any deficiency may shall be timely remedied in a timely
manner to the commission's satisfaction ; otherwise, the electric
distribution utility shall withdraw the application. However, if
such remedy is made and the subsequent finding is positive and
also if the electric distribution utility made a simultaneous
filing under this section and section 4928.143 of the Revised
Code, the utility shall not initiate its competitive bid until
at least one hundred fifty days after the filing date of those
applications.
(C) Upon the completion of the competitive bidding process
authorized by divisions (A) and (B) of this section , including
for the purpose of division (D) of this section , the commission
shall select the least-cost bid winner or winners of that
process, and such selected bid or bids, as prescribed as retail
rates by the commission, shall be the electric distribution
utility's standard service offer unless the commission, by order
issued before the third calendar day following the conclusion of
the competitive bidding process for the market rate offer,
determines that one or more of the following criteria were not
met:
(1) Each portion of the bidding process was
oversubscribed, such that the amount of supply bid upon was
greater than the amount of the load bid out.
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2281 Sub. S. B. No. 2 Page 79
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(2) There were four or more bidders.
(3) At least twenty-five per cent of the load is bid upon
by one or more persons other than the electric distribution
utility.
All costs incurred by the electric distribution utility as
a result of or related to the competitive bidding process or to
procuring generation service to provide the standard service
offer, including the costs of energy and capacity and the costs
of all other products and services procured as a result of the
competitive bidding process, shall be timely recovered through
the standard service offer price, and, for that purpose, the
commission shall approve a reconciliation mechanism, other
recovery mechanism, or a combination of such mechanisms for the
utility.
(D) The first application filed under this section by an
electric distribution utility that, as of July 31, 2008,
directly owns, in whole or in part, operating electric
generating facilities that had been used and useful in this
state shall require that a portion of that the utility's
standard service offer load for the first five years of the
market rate offer be competitively bid under division (A) of
this section as follows: ten per cent of the load in year one,
not more than twenty per cent in year two, thirty per cent in
year three, forty per cent in year four, and fifty per cent in
year five. Consistent with those percentages, the commission
shall determine the actual percentages for each year of years
one through five. The standard service offer price for retail
electric generation service under this first application shall
be a proportionate blend of the bid price and the generation
service price for the remaining standard service offer load,
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2311 Sub. S. B. No. 2 Page 80
As Pending in the Senate Energy Committee
which latter price shall be equal to the electric distribution
utility's most recent standard service offer price, adjusted
upward or downward as the commission determines reasonable,
relative to the jurisdictional portion of any known and
measurable changes from the level of any one or more of the
following costs as reflected in that most recent standard
service offer price:
(1) The electric distribution utility's prudently incurred
cost of fuel used to produce electricity;
(2) Its prudently incurred purchased power costs;
(3) Its prudently incurred costs of satisfying the supply
and demand portfolio requirements of this state, including, but
not limited to, renewable energy resource and energy efficiency
requirements;
(4) Its costs prudently incurred to comply with
environmental laws and regulations, with consideration of the
derating of any facility associated with those costs.
In making any adjustment to the most recent standard
service offer price on the basis of costs described in division
(D) of this section, the commission shall include the benefits
that may become available to the electric distribution utility
as a result of or in connection with the costs included in the
adjustment, including, but not limited to, the utility's receipt
of emissions credits or its receipt of tax benefits or of other
benefits, and, accordingly, the commission may impose such
conditions on the adjustment to ensure that any such benefits
are properly aligned with the associated cost responsibility.
The commission shall also determine how such adjustments will
affect the electric distribution utility's return on common
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2340 Sub. S. B. No. 2 Page 81
As Pending in the Senate Energy Committee
equity that may be achieved by those adjustments. The commission
shall not apply its consideration of the return on common equity
to reduce any adjustments authorized under this division unless
the adjustments will cause the electric distribution utility to
earn a return on common equity that is significantly in excess
of the return on common equity that is earned by publicly traded
companies, including utilities, that face comparable business
and financial risk, with such adjustments for capital structure
as may be appropriate. The burden of proof for demonstrating
that significantly excessive earnings will not occur shall be on
the electric distribution utility.
Additionally, the commission may adjust the electric
distribution utility's most recent standard service offer price
by such just and reasonable amount that the commission
determines necessary to address any emergency that threatens the
utility's financial integrity or to ensure that the resulting
revenue available to the utility for providing the standard
service offer is not so inadequate as to result, directly or
indirectly, in a taking of property without compensation
pursuant to Section 19 of Article I, Ohio Constitution. The
electric distribution utility has the burden of demonstrating
that any adjustment to its most recent standard service offer
price is proper in accordance with this division.
(E) Beginning in the second year of a blended price under
division (D) of this section and notwithstanding any other
requirement of this section, the commission may alter
prospectively the proportions specified in that division to
mitigate any effect of an abrupt or significant change in the
electric distribution utility's standard service offer price
that would otherwise result in general or with respect to any
rate group or rate schedule but for such alteration. Any such
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2371 Sub. S. B. No. 2 Page 82
As Pending in the Senate Energy Committee
alteration shall be made not more often than annually, and the
commission shall not, by altering those proportions and in any
event, including because of the length of time, as authorized
under division (C) of this section, taken to approve the market
rate offer, cause the duration of the blending period to exceed
ten years as counted from the effective date of the approved
market rate offer. Additionally, any such alteration shall be
limited to an alteration affecting the prospective proportions
used during the blending period and shall not affect any
blending proportion previously approved and applied by the
commission under this division.
(F) An electric distribution utility that has received
commission approval of its first application under division (C)
of this section shall not, nor ever shall be authorized or
required by the commission to, file an application under section
4928.143 of the Revised Code .
Sec. 4928.144. The public utilities commission by order
may authorize any just and reasonable phase-in of any electric
distribution utility rate or price established under sections
4928.141 to 4928.143 and 4928.142 of the Revised Code, and
inclusive of carrying charges, as the commission considers
necessary to ensure rate or price stability for consumers. If
the commission's order includes such a phase-in, the order also
shall provide for the creation of regulatory assets pursuant to
generally accepted accounting principles, by authorizing the
deferral of incurred costs equal to the amount not collected,
plus carrying charges on that amount. Further, the order shall
authorize the collection of those deferrals through a
nonbypassable surcharge on any such rate or price so established
for the electric distribution utility by the commission.
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2401 Sub. S. B. No. 2 Page 83
As Pending in the Senate Energy Committee
Sec. 4928.149. No electric distribution utility may use
any electric energy storage system to participate in the
wholesale market, if the utility purchased or acquired that
system for distribution service.
Sec. 4928.1410. If an electric distribution utility has an
existing electric security plan under which the commission had
authorized the creation or continuation of riders, then, to the
extent those riders will cease to exist after termination of the
electric security plan, the electric distribution utility is
authorized to create necessary regulatory assets or liabilities,
along with carrying costs at the utility's weighted average cost
of debt, for the resolution of any outstanding under-collection
or over-collection of funds under such riders. The resolution of
such regulatory assets or liabilities shall be addressed in the
first distribution rate case under section 4909.18 of the
Revised Code that occurs after the plan's expiration.
Sec. 4928.17. (A) Except as otherwise provided in sections
4928.141 or 4928.142 or 4928.143 or 4928.31 to 4928.40 of the
Revised Code and beginning on the starting date of competitive
retail electric service , no electric utility shall engage in
this state, either directly or through an affiliate, in the
businesses of supplying a noncompetitive retail electric service
and supplying a competitive retail electric service, or in the
businesses of supplying a noncompetitive retail electric service
and supplying a product or service other than retail electric
service, unless the utility implements and operates under a
corporate separation plan that is approved by the public
utilities commission under this section, is consistent with the
policy specified in section 4928.02 of the Revised Code, and
achieves all of the following:
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2431 Sub. S. B. No. 2 Page 84
As Pending in the Senate Energy Committee
(1) The plan provides, at minimum, for the provision of
the competitive retail electric service or the nonelectric
product or service through a fully separated affiliate of the
utility, and the plan includes separate accounting requirements,
the code of conduct as ordered by the commission pursuant to a
rule it shall adopt under division (A) of section 4928.06 of the
Revised Code, and such other measures as are necessary to
effectuate the policy specified in section 4928.02 of the
Revised Code.
(2) The plan satisfies the public interest in preventing
unfair competitive advantage and preventing the abuse of market
power.
(3) The plan is sufficient to ensure that the utility will
not extend any undue preference or advantage to any affiliate,
division, or part of its own business engaged in the business of
supplying the competitive retail electric service or nonelectric
product or service, including, but not limited to, utility
resources such as trucks, tools, office equipment, office space,
supplies, customer and marketing information, advertising,
billing and mailing systems, personnel, and training, without
compensation based upon fully loaded embedded costs charged to
the affiliate; and to ensure that any such affiliate, division,
or part will not receive undue preference or advantage from any
affiliate, division, or part of the business engaged in business
of supplying the noncompetitive retail electric service. No such
utility, affiliate, division, or part shall extend such undue
preference. Notwithstanding any other division of this section,
a utility's obligation under division (A)(3) of this section
shall be effective January 1, 2000.
(B) The commission may approve, modify and approve, or
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2461 Sub. S. B. No. 2 Page 85
As Pending in the Senate Energy Committee
disapprove a corporate separation plan filed with the commission
under division (A) of this section. As part of the code of
conduct required under division (A)(1) of this section, the
commission shall adopt rules pursuant to division (A) of section
4928.06 of the Revised Code regarding corporate separation and
procedures for plan filing and approval. The rules shall include
limitations on affiliate practices solely for the purpose of
maintaining a separation of the affiliate's business from the
business of the utility to prevent unfair competitive advantage
abuse of market power by virtue of that relationship. The rules
also shall include an opportunity for any person having a real
and substantial interest in the corporate separation plan to
file specific objections to the plan and propose specific
responses to issues raised in the objections, which objections
and responses the commission shall address in its final order.
Prior to commission approval of the plan, the commission shall
afford a hearing upon those aspects of the plan that the
commission determines reasonably require a hearing. The
commission may reject and require refiling of a substantially
inadequate plan under this section.
(C) The commission shall issue an order approving or
modifying and approving a corporate separation plan under this
section, to be effective on the date specified in the order,
only upon findings that the plan reasonably complies with the
requirements of division (A) of this section and will provide
for ongoing compliance with the policy specified in section
4928.02 of the Revised Code. However, for good cause shown, the
commission may issue an order approving or modifying and
approving a corporate separation plan under this section that
does not comply with division (A)(1) of this section but
complies with such functional separation requirements as the
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2492 Sub. S. B. No. 2 Page 86
As Pending in the Senate Energy Committee
commission authorizes to apply for an interim period prescribed
in the order, upon a finding that such alternative plan will
provide for ongoing compliance with the policy specified in
section 4928.02 of the Revised Code.
(D) Any party may seek an amendment to a corporate
separation plan approved under this section, and the commission,
pursuant to a request from any party or on its own initiative,
may order as it considers necessary the filing of an amended
corporate separation plan to reflect changed circumstances.
(E) No electric distribution utility shall sell or
transfer any generating asset it wholly or partly owns at any
time without obtaining prior commission approval.
Sec. 4928.20. (A) The legislative authority of a municipal
corporation may adopt an ordinance, or the board of township
trustees of a township or the board of county commissioners of a
county may adopt a resolution, under which , on or after the
starting date of competitive retail electric service, it may
aggregate in accordance with this section the retail electrical
loads located, respectively, within the municipal corporation,
township, or unincorporated area of the county and, for that
purpose, may enter into service agreements to facilitate for
those loads the sale and purchase of electricity. The
legislative authority or board also may exercise such authority
jointly with any other such legislative authority or board. For
customers that are not mercantile customers, an ordinance or
resolution under this division shall specify whether the
aggregation will occur only with the prior, affirmative consent
of each person owning, occupying, controlling, or using an
electric load center proposed to be aggregated or will occur
automatically for all such persons pursuant to the opt-out
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2522 Sub. S. B. No. 2 Page 87
As Pending in the Senate Energy Committee
requirements of division (D) of this section. The aggregation of
mercantile customers shall occur only with the prior,
affirmative consent of each such person owning, occupying,
controlling, or using an electric load center proposed to be
aggregated. Nothing in this division, however, authorizes the
aggregation of the retail electric loads of an electric load
center, as defined in section 4933.81 of the Revised Code, that
is located in the certified territory of a nonprofit electric
supplier under sections 4933.81 to 4933.90 of the Revised Code
or an electric load center served by transmission or
distribution facilities of a municipal electric utility.
(B) If an ordinance or resolution adopted under division
(A) of this section specifies that aggregation of customers that
are not mercantile customers will occur automatically as
described in that division, the ordinance or resolution shall
direct the board of elections to submit the question of the
authority to aggregate to the electors of the respective
municipal corporation, township, or unincorporated area of a
county at a special election on the day of the next primary or
general election in the municipal corporation, township, or
county. The legislative authority or board shall certify a copy
of the ordinance or resolution to the board of elections not
less than ninety days before the day of the special election. No
ordinance or resolution adopted under division (A) of this
section that provides for an election under this division shall
take effect unless approved by a majority of the electors voting
upon the ordinance or resolution at the election held pursuant
to this division.
(C) Upon the applicable requisite authority under
divisions (A) and (B) of this section, the legislative authority
or board shall develop a plan of operation and governance for
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2553 Sub. S. B. No. 2 Page 88
As Pending in the Senate Energy Committee
the aggregation program so authorized. Before adopting a plan
under this division, the legislative authority or board shall
hold at least two public hearings on the plan. Before the first
hearing, the legislative authority or board shall publish notice
of the hearings once a week for two consecutive weeks in a
newspaper of general circulation in the jurisdiction or as
provided in section 7.16 of the Revised Code. The notice shall
summarize the plan and state the date, time, and location of
each hearing.
(D) No legislative authority or board, pursuant to an
ordinance or resolution under divisions (A) and (B) of this
section that provides for automatic aggregation of customers
that are not mercantile customers as described in division (A)
of this section, shall aggregate the electrical load of any
electric load center located within its jurisdiction unless it
in advance clearly discloses to the person owning, occupying,
controlling, or using the load center that the person will be
enrolled automatically in the aggregation program and will
remain so enrolled unless the person affirmatively elects by a
stated procedure not to be so enrolled. The disclosure shall
state prominently the rates, charges, and other terms and
conditions of enrollment. The stated procedure shall allow any
person enrolled in the aggregation program the opportunity to
opt out of the program every three years, without paying a
switching fee. Any such person that opts out before the
commencement of the aggregation program pursuant to the stated
procedure shall default to the standard service offer provided
under section 4928.14 or division (D) of section 4928.35 of the
Revised Code until the person chooses an alternative supplier.
(E)(1) With respect to a governmental aggregation for a
municipal corporation that is authorized pursuant to divisions
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2584 Sub. S. B. No. 2 Page 89
As Pending in the Senate Energy Committee
(A) to (D) of this section, resolutions may be proposed by
initiative or referendum petitions in accordance with sections
731.28 to 731.41 of the Revised Code.
(2) With respect to a governmental aggregation for a
township or the unincorporated area of a county, which
aggregation is authorized pursuant to divisions (A) to (D) of
this section, resolutions may be proposed by initiative or
referendum petitions in accordance with sections 731.28 to
731.40 of the Revised Code, except that:
(a) The petitions shall be filed, respectively, with the
township fiscal officer or the board of county commissioners,
who shall perform those duties imposed under those sections upon
the city auditor or village clerk.
(b) The petitions shall contain the signatures of not less
than ten per cent of the total number of electors in,
respectively, the township or the unincorporated area of the
county who voted for the office of governor at the preceding
general election for that office in that area.
(F) A governmental aggregator under division (A) of this
section is not a public utility engaging in the wholesale
purchase and resale of electricity, and provision of the
aggregated service is not a wholesale utility transaction. A
governmental aggregator shall be subject to supervision and
regulation by the public utilities commission only to the extent
of any competitive retail electric service it provides and
commission authority under this chapter.
(G) This section does not apply in the case of a municipal
corporation that supplies such aggregated service to electric
load centers to which its municipal electric utility also
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2613 Sub. S. B. No. 2 Page 90
As Pending in the Senate Energy Committee
supplies a noncompetitive retail electric service through
transmission or distribution facilities the utility singly or
jointly owns or operates.
(H) A governmental aggregator shall not include in its
aggregation the accounts of any of the following:
(1) A customer that has opted out of the aggregation;
(2) A customer in contract with a certified electric
services company;
(3) A customer that has a special contract with an
electric distribution utility;
(4) A customer that is not located within the governmental
aggregator's governmental boundaries;
(5) Subject to division (C) of section 4928.21 of the
Revised Code, a customer who appears on the "do not aggregate"
list maintained under that section.
(I) Customers that are part of a governmental aggregation
under this section shall be responsible only for such portion of
a surcharge under section 4928.144 of the Revised Code that is
proportionate to the benefits, as determined by the commission,
that electric load centers within the jurisdiction of the
governmental aggregation as a group receive. The proportionate
surcharge so established shall apply to each customer of the
governmental aggregation while the customer is part of that
aggregation. If a customer ceases being such a customer, the
otherwise applicable surcharge shall apply. Nothing in this
section shall result in less than full recovery by an electric
distribution utility of any surcharge authorized under section
4928.144 of the Revised Code. Nothing in this section shall
result in less than the full and timely imposition, charging,
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2642 Sub. S. B. No. 2 Page 91
As Pending in the Senate Energy Committee
collection, and adjustment by an electric distribution utility,
its assignee, or any collection agent, of the phase-in-recovery
charges authorized pursuant to a final financing order issued
pursuant to sections 4928.23 to 4928.2318 of the Revised Code.
(J) On behalf of the customers that are part of a
governmental aggregation under this section and by filing
written notice with the public utilities commission, the
legislative authority that formed or is forming that
governmental aggregation may elect not to receive standby
service within the meaning of division (B)(2)(d) of section
4928.143 of the Revised Code from an electric distribution
utility in whose certified territory the governmental
aggregation is located and that operates under an approved
electric security plan under that section. Upon the filing of
that notice, the electric distribution utility shall not charge
any such customer to whom competitive retail electric generation
service is provided by another supplier under the governmental
aggregation for the standby service. Any such consumer that
returns to the utility for competitive retail electric service
shall pay the market price of power incurred by the utility to
serve that consumer plus any amount attributable to the
utility's cost of compliance with the renewable energy resource
provisions of section 4928.64 of the Revised Code to serve the
consumer. Such market price shall include, but not be limited
to, capacity and energy charges; all charges associated with the
provision of that power supply through the regional transmission
organization, including, but not limited to, transmission,
ancillary services, congestion, and settlement and
administrative charges; and all other costs incurred by the
utility that are associated with the procurement, provision, and
administration of that power supply, as such costs may be
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2673 Sub. S. B. No. 2 Page 92
As Pending in the Senate Energy Committee
approved by the commission. The period of time during which the
market price and renewable energy resource amount shall be so
assessed on the consumer shall be from the time the consumer so
returns to the electric distribution utility until the
expiration of the electric security plan. However, if that
period of time is expected to be more than two years, the
commission may reduce the time period to a period of not less
than two years.
(K) The commission shall adopt rules and issue orders in
proceedings under sections 4928.141 and 4928.142 of the Revised
Code to encourage and promote large-scale governmental
aggregation in this state. For that purpose, the commission
shall conduct an immediate review of any rules it has adopted
for the purpose of this section that are in effect on the
effective date of the amendment of this section by S.B. 221 of
the 127th general assembly, July 31, 2008. Further, within the
context of an electric security plan under section 4928.143 of
the Revised Code, the The commission shall consider the effect
on large-scale governmental aggregation of any nonbypassable
generation charges, however collected, that would be established
under that plan, except any nonbypassable generation charges
that relate to any cost incurred by the review each application
filed under section 4928.142 of the Revised Code by an electric
distribution utility , to ensure that the deferral of which has
been authorized by the commission prior to the effective date of
application and the amendment of this section by S.B. 221 of the
127th general assembly, July 31, 2008 resulting market rate
offer shall not contain any rate, price, term, condition, or
provision that would have an adverse effect on large-scale
governmental aggregation in this state .
Sec. 4928.23. As used in sections 4928.23 to 4928.2318 of
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2704 Sub. S. B. No. 2 Page 93
As Pending in the Senate Energy Committee
the Revised Code:
(A) "Ancillary agreement" means any bond insurance policy,
letter of credit, reserve account, surety bond, swap
arrangement, hedging arrangement, liquidity or credit support
arrangement, or other similar agreement or arrangement entered
into in connection with the issuance of phase-in-recovery bonds
that is designed to promote the credit quality and marketability
of the bonds or to mitigate the risk of an increase in interest
rates.
(B) "Assignee" means any person or entity to which an
interest in phase-in-recovery property is sold, assigned,
transferred, or conveyed, other than as security, and any
successor to or subsequent assignee of such a person or entity.
(C) "Bond" includes debentures, notes, certificates of
participation, certificates of beneficial interest, certificates
of ownership or other evidences of indebtedness or ownership
that are issued by an electric distribution utility or an
assignee under a final financing order, the proceeds of which
are used directly or indirectly to recover, finance, or
refinance phase-in costs and financing costs, and that are
secured by or payable from revenues from phase-in-recovery
charges.
(D) "Bondholder" means any holder or owner of a phase-in-
recovery bond.
(E) "Financing costs" means any of the following:
(1) Principal, interest, and redemption premiums that are
payable on phase-in-recovery bonds;
(2) Any payment required under an ancillary agreement;
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2732 Sub. S. B. No. 2 Page 94
As Pending in the Senate Energy Committee
(3) Any amount required to fund or replenish a reserve
account or another account established under any indenture,
ancillary agreement, or other financing document relating to
phase-in-recovery bonds;
(4) Any costs of retiring or refunding any existing debt
and equity securities of an electric distribution utility in
connection with either the issuance of, or the use of proceeds
from, phase-in-recovery bonds;
(5) Any costs incurred by an electric distribution utility
to obtain modifications of or amendments to any indenture,
financing agreement, security agreement, or similar agreement or
instrument relating to any existing secured or unsecured
obligation of the electric distribution utility in connection
with the issuance of phase-in-recovery bonds;
(6) Any costs incurred by an electric distribution utility
to obtain any consent, release, waiver, or approval from any
holder of an obligation described in division (E)(5) of this
section that are necessary to be incurred for the electric
distribution utility to issue or cause the issuance of phase-in-
recovery bonds;
(7) Any taxes, franchise fees, or license fees imposed on
phase-in-recovery revenues;
(8) Any costs related to issuing or servicing phase-in-
recovery bonds or related to obtaining a financing order,
including servicing fees and expenses, trustee fees and
expenses, legal, accounting, or other professional fees and
expenses, administrative fees, placement fees, underwriting
fees, capitalized interest and equity, and rating-agency fees;
(9) Any other similar costs that the public utilities
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2761 Sub. S. B. No. 2 Page 95
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commission finds appropriate.
(F) "Financing order" means an order issued by the public
utilities commission under section 4928.232 of the Revised Code
that authorizes an electric distribution utility or an assignee
to issue phase-in-recovery bonds and recover phase-in-recovery
charges.
(G) "Final financing order" means a financing order that
has become final and has taken effect as provided in section
4928.233 of the Revised Code.
(H) "Financing party" means either of the following:
(1) Any trustee, collateral agent, or other person acting
for the benefit of any bondholder;
(2) Any party to an ancillary agreement, the rights and
obligations of which relate to or depend upon the existence of
phase-in-recovery property, the enforcement and priority of a
security interest in phase-in-recovery property, the timely
collection and payment of phase-in-recovery revenues, or a
combination of these factors.
(I) "Financing statement" has the same meaning as in
section 1309.102 of the Revised Code.
(J) "Phase-in costs" means costs, inclusive of carrying
charges incurred before, on, or after the effective date of this
section March 22, 2012, authorized by the commission before, on,
or after the effective date of this section March 22, 2012, to
be securitized or deferred as regulatory assets in proceedings
under section 4909.18 of the Revised Code , sections 4928.141 to
4928.143, 4928.142, or 4928.144 of the Revised Code, or section
4928.14 of the Revised Code as it existed prior to July 31,
2008, or section 4928.143 of the Revised Code as it existed
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prior to the effective date of the amendments to this section by
this act pursuant to a final order for which appeals have been
exhausted. "Phase-in costs" excludes the following:
(1) With respect to any electric generating facility that,
on and after the effective date of this section March 22, 2012,
is owned, in whole or in part, by an electric distribution
utility applying for a financing order under section 4928.231 of
the Revised Code, costs that are authorized under division (B)
(2)(b) or (c) of section 4928.143 of the Revised Code as that
section existed prior to the effective date of the amendments to
this section by this act ;
(2) Costs incurred after the effective date of this
section March 22, 2012, related to the ongoing operation of an
electric generating facility, but not environmental clean-up or
remediation costs incurred by an electric distribution utility
because of its ownership or operation of an electric generating
facility prior to the effective date of this section March 22,
2012, which such clean-up or remediation costs are imposed or
incurred pursuant to federal or state law , rules, or regulations
and for which the commission approves or approved recovery in
accordance with section 4909.18 of the Revised Code , sections
4928.141 to 4928.143, 4928.142, or 4928.144 of the Revised Code,
or section 4928.14 of the Revised Code as it existed prior to
July 31, 2008, or section 4928.143 of the Revised Code as it
existed prior to the effective date of the amendments to this
section by this act.
(K) "Phase-in-recovery property" means the property,
rights, and interests of an electric distribution utility or an
assignee under a final financing order, including the right to
impose, charge, and collect the phase-in-recovery charges that
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2820 Sub. S. B. No. 2 Page 97
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shall be used to pay and secure the payment of phase-in-recovery
bonds and financing costs, and including the right to obtain
adjustments to those charges, and any revenues, receipts,
collections, rights to payment, payments, moneys, claims, or
other proceeds arising from the rights and interests created
under the final financing order.
(L) "Phase-in-recovery revenues" means all revenues,
receipts, collections, payments, moneys, claims, or other
proceeds arising from phase-in-recovery property.
(M) "Successor" means, with respect to any entity, another
entity that succeeds by operation of law to the rights and
obligations of the first legal entity pursuant to any
bankruptcy, reorganization, restructuring, or other insolvency
proceeding, any merger, acquisition, or consolidation, or any
sale or transfer of assets, regardless of whether any of these
occur as a result of a restructuring of the electric power
industry or otherwise.
Sec. 4928.231. (A) An electric distribution utility may
apply to the public utilities commission for a financing order
that authorizes the following:
(1) The issuance of phase-in-recovery bonds, in one or
more series, to recover uncollected phase-in costs;
(2) The imposition, charging, and collection of phase-in-
recovery charges, in accordance with the adjustment mechanism
approved by the commission under section 4928.232 of the Revised
Code, and consistent with the commission's authority regarding
governmental aggregation as provided in division (I) of section
4928.20 of the Revised Code, to recover both of the following:
(a) Uncollected phase-in costs;
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2849 Sub. S. B. No. 2 Page 98
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(b) Financing costs.
(3) The creation of phase-in-recovery property under the
financing order.
(B) The application shall include all of the following:
(1) A description of the uncollected phase-in costs that
the electric distribution utility seeks to recover through the
issuance of phase-in-recovery bonds;
(2) An estimate of the date each series of phase-in-
recovery bonds are expected to be issued;
(3) The expected term during which the phase-in costs
associated with the issuance of each series of phase-in-recovery
bonds are expected to be recovered;
(4) An estimate of the financing costs, as described in
section 4928.23 of the Revised Code, associated with the
issuance of each series of phase-in-recovery bonds;
(5) An estimate of the amount of phase-in-recovery charges
necessary to recover the phase-in costs and financing costs set
forth in the application and the calculation for that estimate,
which calculation shall take into account the estimated date or
dates of issuance and the estimated principal amount of each
series of phase-in-recovery bonds;
(6) For phase-in-recovery charges not subject to
allocation according to an existing order, a proposed
methodology for allocating phase-in-recovery charges among
customer classes, including a proposed methodology for
allocating such charges to governmental aggregation customers
based upon the proportionate benefit determination made under
division (I) of section 4928.20 of the Revised Code;
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2877 Sub. S. B. No. 2 Page 99
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(7) A description of a proposed adjustment mechanism for
use as described in division (A)(2) of this section;
(8) A description and valuation of how the issuance of the
phase-in-recovery bonds, including financing costs, will both
result in cost savings to customers and mitigate rate impacts to
customers when compared to the use of other financing mechanisms
or cost-recovery methods available to the electric distribution
utility;
(9) Any other information required by the commission.
(C) The electric distribution utility may restate or
incorporate by reference in the application any information
required under division (B)(9) of this section that the electric
distribution utility filed with the commission under section
4909.18 or sections 4928.141 to 4928.144 of the Revised Code or
, section 4928.14 of the Revised Code as it existed prior to
July 31, 2008, or section 4928.143 of the Revised Code as it
existed prior to the amendments to this section by this act .
Sec. 4928.232. (A) Proceedings before the public utilities
commission on an application submitted by an electric
distribution utility under section 4928.231 of the Revised Code
shall be governed by Chapter 4903. of the Revised Code, but only
to the extent that chapter is not inconsistent with this section
or section 4928.233 of the Revised Code. Any party that
participated in the proceeding in which phase-in costs were
approved under section 4909.18 or sections 4928.141 to 4928.144
of the Revised Code or , section 4928.14 of the Revised Code as
it existed prior to July 31, 2008, or section 4928.143 of the
Revised Code as it existed prior to the amendments to this
section by this act shall have standing to participate in
proceedings under sections 4928.23 to 4928.2318 of the Revised
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2907 Sub. S. B. No. 2 Page 100
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Code.
(B) When reviewing an application for a financing order
pursuant to sections 4928.23 to 4928.2318 of the Revised Code,
the commission may hold such hearings, make such inquiries or
investigations, and examine such witnesses, books, papers,
documents, and contracts as the commission considers proper to
carry out these sections. Within thirty days after the filing of
an application under section 4928.231 of the Revised Code, the
commission shall publish a schedule of the proceeding.
(C)(1) Not later than one hundred thirty-five days after
the date the application is filed, the commission shall issue
either a financing order, granting the application in whole or
with modifications, or an order suspending or rejecting the
application.
(2) If the commission suspends an application for a
financing order, the commission shall notify the electric
distribution utility of the suspension and may direct the
electric distribution utility to provide additional information
as the commission considers necessary to evaluate the
application. Not later than ninety days after the suspension,
the commission shall issue either a financing order, granting
the application in whole or with modifications, or an order
rejecting the application.
(D)(1) The commission shall not issue a financing order
under division (C) of this section unless the commission
determines that the financing order is consistent with section
4928.02 of the Revised Code.
(2) Except as provided in division (D)(1) of this section,
the commission shall issue a financing order under division (C)
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2936 Sub. S. B. No. 2 Page 101
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of this section if, at the time the financing order is issued,
the commission finds that the issuance of the phase-in-recovery
bonds and the phase-in-recovery charges authorized by the order
results in, consistent with market conditions, both measurably
enhancing cost savings to customers and mitigating rate impacts
to customers as compared with traditional financing mechanisms
or traditional cost-recovery methods available to the electric
distribution utility or, if the commission previously approved a
recovery method, as compared with that recovery method.
(E) The commission shall include all of the following in a
financing order issued under division (C) of this section:
(1) A determination of the maximum amount and a
description of the phase-in costs that may be recovered through
phase-in-recovery bonds issued under the financing order;
(2) A description of phase-in-recovery property, the
creation of which is authorized by the financing order;
(3) A description of the financing costs that may be
recovered through phase-in-recovery charges and the period over
which those costs may be recovered;
(4) For phase-in-recovery charges not subject to
allocation according to an existing order, a description of the
methodology and calculation for allocating phase-in-recovery
charges among customer classes, including the allocation of such
charges, if any, to governmental aggregation customers based
upon the proportionate benefit determination made under division
(I) of section 4928.20 of the Revised Code;
(5) A description of the adjustment mechanism for use in
the imposition, charging, and collection of the phase-in-
recovery charges;
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2965 Sub. S. B. No. 2 Page 102
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(6) The maximum term of the phase-in-recovery bonds;
(7) Any other provision the commission considers
appropriate to ensure the full and timely imposition, charging,
collection, and adjustment, pursuant to an approved adjustment
mechanism, of the phase-in-recovery charges described in
divisions (E)(3) to (5) of this section.
(F) The commission may, in a financing order, afford the
electric distribution utility flexibility in establishing the
terms and conditions for the phase-in-recovery bonds to
accommodate changes in market conditions, including repayment
schedules, interest rates, financing costs, collateral
requirements, required debt service and other reserves, and the
ability of the electric distribution utility, at its option, to
effect a series of issuances of phase-in-recovery bonds and
correlated assignments, sales, pledges, or other transfers of
phase-in-recovery property. Any changes made under this section
to terms and conditions for the phase-in-recovery bonds shall be
in conformance with the financing order.
(G) A financing order may provide that the creation of
phase-in-recovery property shall be simultaneous with the sale
of that property to an assignee as provided in the application
and the pledge of the property to secure phase-in-recovery
bonds.
(H) The commission shall, in a financing order, require
that after the final terms of each issuance of phase-in-recovery
bonds have been established, and prior to the issuance of those
bonds, the electric distribution utility shall determine the
resulting phase-in-recovery charges in accordance with the
adjustment mechanism described in the financing order. These
phase-in-recovery charges shall be final and effective upon the
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2995 Sub. S. B. No. 2 Page 103
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issuance of the phase-in-recovery bonds, without further
commission action.
Sec. 4928.34. (A) The public utilities commission shall
not approve or prescribe a transition plan under division (A) or
(B) of section 4928.33 of the Revised Code unless the commission
first makes all of the following determinations:
(1) The unbundled components for the electric transmission
component of retail electric service, as specified in the
utility's rate unbundling plan required by division (A)(1) of
section 4928.31 of the Revised Code, equal the tariff rates
determined by the federal energy regulatory commission that are
in effect on the date of the approval of the transition plan
under sections 4928.31 to 4928.40 of the Revised Code, as each
such rate is determined applicable to each particular customer
class and rate schedule by the commission. The unbundled
transmission component shall include a sliding scale of charges
under division (B) of section 4905.31 of the Revised Code to
ensure that refunds determined or approved by the federal energy
regulatory commission are flowed through to retail electric
customers.
(2) The unbundled components for retail electric
distribution service in the rate unbundling plan equal the
difference between the costs attributable to the utility's
transmission and distribution rates and charges under its
schedule of rates and charges in effect on the effective date of
this section, based upon the record in the most recent rate
proceeding of the utility for which the utility's schedule was
established, and the tariff rates for electric transmission
service determined by the federal energy regulatory commission
as described in division (A)(1) of this section.
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3025 Sub. S. B. No. 2 Page 104
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(3) All other unbundled components required by the
commission in the rate unbundling plan equal the costs
attributable to the particular service as reflected in the
utility's schedule of rates and charges in effect on the
effective date of this section.
(4) The unbundled components for retail electric
generation service in the rate unbundling plan equal the
residual amount remaining after the determination of the
transmission, distribution, and other unbundled components, and
after any adjustments necessary to reflect the effects of the
amendment of section 5727.111 of the Revised Code by Sub. S.B.
No. 3 of the 123rd general assembly.
(5) All unbundled components in the rate unbundling plan
have been adjusted to reflect any base rate reductions on file
with the commission and as scheduled to be in effect by December
31, 2005, under rate settlements in effect on the effective date
of this section. However, all earnings obligations,
restrictions, or caps imposed on an electric utility in a
commission order prior to the effective date of this section are
void.
(6) Subject to division (A)(5) of this section, the total
of all unbundled components in the rate unbundling plan are
capped and shall equal during the market development period,
except as specifically provided in this chapter, the total of
all rates and charges in effect under the applicable bundled
schedule of the electric utility pursuant to section 4905.30 of
the Revised Code in effect on the day before the effective date
of this section, including the transition charge determined
under section 4928.40 of the Revised Code, adjusted for any
changes in the taxation of electric utilities and retail
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3055 Sub. S. B. No. 2 Page 105
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electric service under Sub. S.B. No. 3 of the 123rd General
Assembly, the universal service rider authorized by section
4928.51 of the Revised Code, and the temporary rider authorized
by section 4928.61 of the Revised Code. For the purpose of this
division, the rate cap applicable to a customer receiving
electric service pursuant to an arrangement approved by the
commission under section 4905.31 of the Revised Code is, for the
term of the arrangement, the total of all rates and charges in
effect under the arrangement. For any rate schedule filed
pursuant to section 4905.30 of the Revised Code or any
arrangement subject to approval pursuant to section 4905.31 of
the Revised Code, the initial tax-related adjustment to the rate
cap required by this division shall be equal to the rate of
taxation specified in section 5727.81 of the Revised Code and
applicable to the schedule or arrangement. To the extent such
total annual amount of the tax-related adjustment is greater
than or less than the comparable amount of the total annual tax
reduction experienced by the electric utility as a result of the
provisions of Sub. S.B. No. 3 of the 123rd general assembly,
such difference shall be addressed by the commission through
accounting procedures, refunds, or an annual surcharge or credit
to customers, or through other appropriate means, to avoid
placing the financial responsibility for the difference upon the
electric utility or its shareholders. Any adjustments in the
rate of taxation specified in section 5727.81 of the Revised
Code section shall not occur without a corresponding adjustment
to the rate cap for each such rate schedule or arrangement. The
department of taxation shall advise the commission and self-
assessors under section 5727.81 of the Revised Code prior to the
effective date of any change in the rate of taxation specified
under that section, and the commission shall modify the rate cap
to reflect that adjustment so that the rate cap adjustment is
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3087 Sub. S. B. No. 2 Page 106
As Pending in the Senate Energy Committee
effective as of the effective date of the change in the rate of
taxation. This division shall be applied, to the extent
possible, to eliminate any increase in the price of electricity
for customers that otherwise may occur as a result of
establishing the taxes contemplated in section 5727.81 of the
Revised Code.
(7) The rate unbundling plan complies with any rules
adopted by the commission under division (A) of section 4928.06
of the Revised Code.
(8) The corporate separation plan required by division (A)
(2) of section 4928.31 of the Revised Code complies with section
4928.17 of the Revised Code and any rules adopted by the
commission under division (A) of section 4928.06 of the Revised
Code.
(9) Any plan or plans the commission requires to address
operational support systems and any other technical
implementation issues pertaining to competitive retail electric
service comply with any rules adopted by the commission under
division (A) of section 4928.06 of the Revised Code.
(10) The employee assistance plan required by division (A)
(4) of section 4928.31 of the Revised Code sufficiently provides
severance, retraining, early retirement, retention,
outplacement, and other assistance for the utility's employees
whose employment is affected by electric industry restructuring
under this chapter.
(11) The consumer education plan required under division
(A)(5) of section 4928.31 of the Revised Code complies with
former section 4928.42 of the Revised Code and any rules adopted
by the commission under division (A) of section 4928.06 of the
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3116 Sub. S. B. No. 2 Page 107
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Revised Code.
(12) The transition revenues for which an electric utility
is authorized a revenue opportunity under sections 4928.31 to
4928.40 of the Revised Code are the allowable transition costs
of the utility as such costs are determined by the commission
pursuant to section 4928.39 of the Revised Code, and the
transition charges for the customer classes and rate schedules
of the utility are the charges determined pursuant to section
4928.40 of the Revised Code.
(13) Any independent transmission plan included in the
transition plan filed under section 4928.31 of the Revised Code
reasonably complies with section 4928.12 of the Revised Code and
any rules adopted by the commission under division (A) of
section 4928.06 of the Revised Code, unless the commission, for
good cause shown, authorizes the utility to defer compliance
until an order is issued under division (G) of section 4928.35
of the Revised Code.
(14) The utility is in compliance with sections 4928.01 to
4928.11 of the Revised Code and any rules or orders of the
commission adopted or issued under those sections.
(15) All unbundled components in the rate unbundling plan
have been adjusted to reflect the elimination of the tax on
gross receipts imposed by section 5727.30 of the Revised Code.
In addition, a transition plan approved by the commission
under section 4928.33 of the Revised Code but not containing an
approved independent transmission plan shall contain the express
conditions that the utility will comply with an order issued
under division (G) of section 4928.35 of the Revised Code.
(B) Subject to division (E) of section 4928.17 of the
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Revised Code, if If the commission finds that any part of the
transition plan would constitute an abandonment under sections
4905.20 and 4905.21 of the Revised Code, the commission shall
not approve that part of the transition plan unless it makes the
finding required for approval of an abandonment application
under section 4905.21 of the Revised Code. Sections 4905.20 and
4905.21 of the Revised Code otherwise shall not apply to a
transition plan under sections 4928.31 to 4928.40 of the Revised
Code.
Sec. 4928.542. The winning bid or bids selected through
the competitive procurement process established under section
4928.54 of the Revised Code shall meet all of the following
requirements:
(A) Be designed to provide reliable competitive retail
electric service to percentage of income payment plan program
customers;
(B) Reduce the cost of the percentage of income payment
plan program relative to the otherwise applicable standard
service offer established under sections 4928.141 , and 4928.142,
and 4928.143 of the Revised Code;
(C) Result in the best value for persons paying the
universal service rider under section 4928.52 of the Revised
Code.
Sec. 4928.64. (A)(1) As used in this section, "qualifying
renewable energy resource" means a renewable energy resource, as
defined in section 4928.01 of the Revised Code that:
(a) Has a placed-in-service date on or after January 1,
1998;
(b) Is any run-of-the-river hydroelectric facility that
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has an in-service date on or after January 1, 1980;
(c) Is a small hydroelectric facility;
(d) Is created on or after January 1, 1998, by the
modification or retrofit of any facility placed in service prior
to January 1, 1998; or
(e) Is a mercantile customer-sited renewable energy
resource, whether new or existing, that the mercantile customer
commits for integration into the electric distribution utility's
demand-response, energy efficiency, or peak demand reduction
programs as provided under division (A)(2)(c) of section 4928.66
of the Revised Code, including, but not limited to, any of the
following:
(i) A resource that has the effect of improving the
relationship between real and reactive power;
(ii) A resource that makes efficient use of waste heat or
other thermal capabilities owned or controlled by a mercantile
customer;
(iii) Storage technology that allows a mercantile customer
more flexibility to modify its demand or load and usage
characteristics;
(iv) Electric generation equipment owned or controlled by
a mercantile customer that uses a renewable energy resource.
(2) For the purpose of this section and as it considers
appropriate, the public utilities commission may classify any
new technology as such a qualifying renewable energy resource.
(B)(1) By the end of 2026, an electric distribution
utility shall have provided from qualifying renewable energy
resources, including, at its discretion, qualifying renewable
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3202 Sub. S. B. No. 2 Page 110
As Pending in the Senate Energy Committee
energy resources obtained pursuant to an electricity supply
contract, a portion of the electricity supply required for its
standard service offer under section sections 4928.141 and
4928.142 of the Revised Code, and an electric services company
shall have provided a portion of its electricity supply for
retail consumers in this state from qualifying renewable energy
resources, including, at its discretion, qualifying renewable
energy resources obtained pursuant to an electricity supply
contract. That portion shall equal eight and one-half per cent
of the total number of kilowatt hours of electricity sold by the
subject utility or company to any and all retail electric
consumers whose electric load centers are served by that utility
and are located within the utility's certified territory or, in
the case of an electric services company, are served by the
company and are located within this state. However, nothing in
this section precludes a utility or company from providing a
greater percentage.
(2) Subject to section 4928.642 of the Revised Code, the
The portion required under division (B)(1) of this section shall
be generated from renewable energy resources in accordance with
the following benchmarks:
1 2 3
ABy end of year Renewable energy resources Solar energy resources
B 2009 0.25% 0.004%
C 2010 0.50% 0.010%
D 2011 1% 0.030%
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3224 Sub. S. B. No. 2 Page 111
As Pending in the Senate Energy Committee
E 2012 1.5% 0.060%
F 2013 2% 0.090%
G 2014 2.5% 0.12%
H 2015 2.5% 0.12%
I 2016 2.5% 0.12%
J 2017 3.5% 0.15%
K 2018 4.5% 0.18%
L 2019 5.5% 0.22%
M 2020 5.5% 0%
N 2021 6% 0%
O 2022 6.5% 0%
P 2023 7% 0%
Q 2024 7.5% 0%
R 2025 8% 0%
S 2026 8.5% 0%
(3) The qualifying renewable energy resources implemented
by the utility or company shall be met either:
(a) Through facilities located in this state; or
(b) With resources that can be shown to be deliverable
into this state.
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3229 Sub. S. B. No. 2 Page 112
As Pending in the Senate Energy Committee
(C)(1) The commission annually shall review an electric
distribution utility's or electric services company's compliance
with the most recent applicable benchmark under division (B)(2)
of this section and, in the course of that review, shall
identify any undercompliance or noncompliance of the utility or
company that it determines is weather-related, related to
equipment or resource shortages for qualifying renewable energy
resources as applicable, or is otherwise outside the utility's
or company's control.
(2) Subject to the cost cap provisions of division (C)(3)
of this section, if the commission determines, after notice and
opportunity for hearing, and based upon its findings in that
review regarding avoidable undercompliance or noncompliance, but
subject to division (C)(4) of this section, that the utility or
company has failed to comply with any such benchmark, the
commission shall impose a renewable energy compliance payment on
the utility or company.
(a) The compliance payment pertaining to the solar energy
resource benchmarks under division (B)(2) of this section shall
be an amount per megawatt hour of undercompliance or
noncompliance in the period under review, as follows:
(i) Three hundred dollars for 2014, 2015, and 2016;
(ii) Two hundred fifty dollars for 2017 and 2018;
(iii) Two hundred dollars for 2019.
(b) The compliance payment pertaining to the renewable
energy resource benchmarks under division (B)(2) of this section
shall equal the number of additional renewable energy credits
that the electric distribution utility or electric services
company would have needed to comply with the applicable
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3258 Sub. S. B. No. 2 Page 113
As Pending in the Senate Energy Committee
benchmark in the period under review times an amount that shall
begin at forty-five dollars and shall be adjusted annually by
the commission to reflect any change in the consumer price index
as defined in section 101.27 of the Revised Code , but shall not
be less than forty-five dollars. As used in this division,
"consumer price index" means the consumer price index prepared
by the United States bureau of labor statistics (U.S. city
average for urban wage earners and clerical workers: all items,
1982-1984=100), or, if that index is no longer published, a
generally available comparable index.
(c) The compliance payment shall not be passed through by
the electric distribution utility or electric services company
to consumers. The compliance payment shall be remitted to the
commission, for deposit to the credit of the advanced energy
fund created under section 4928.61 of the Revised Code. Payment
of the compliance payment shall be subject to such collection
and enforcement procedures as apply to the collection of a
forfeiture under sections 4905.55 to 4905.60 and 4905.64 of the
Revised Code.
(3) An electric distribution utility or an electric
services company need not comply with a benchmark under division
(B)(2) of this section to the extent that its reasonably
expected cost of that compliance exceeds its reasonably expected
cost of otherwise producing or acquiring the requisite
electricity by three per cent or more. The cost of compliance
shall be calculated as though any exemption from taxes and
assessments had not been granted under section 5727.75 of the
Revised Code.
(4)(a) An electric distribution utility or electric
services company may request the commission to make a force
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3288 Sub. S. B. No. 2 Page 114
As Pending in the Senate Energy Committee
majeure determination pursuant to this division regarding all or
part of the utility's or company's compliance with any minimum
benchmark under division (B)(2) of this section during the
period of review occurring pursuant to division (C)(2) of this
section. The commission may require the electric distribution
utility or electric services company to make solicitations for
renewable energy resource credits as part of its default service
before the utility's or company's request of force majeure under
this division can be made.
(b) Within ninety days after the filing of a request by an
electric distribution utility or electric services company under
division (C)(4)(a) of this section, the commission shall
determine if qualifying renewable energy resources are
reasonably available in the marketplace in sufficient quantities
for the utility or company to comply with the subject minimum
benchmark during the review period. In making this
determination, the commission shall consider whether the
electric distribution utility or electric services company has
made a good faith effort to acquire sufficient qualifying
renewable energy or, as applicable, solar energy resources to so
comply, including, but not limited to, by banking or seeking
renewable energy resource credits or by seeking the resources
through long-term contracts. Additionally, the commission shall
consider the availability of qualifying renewable energy or
solar energy resources in this state and other jurisdictions in
the PJM interconnection regional transmission organization,
L.L.C., or its successor and the midcontinent independent system
operator or its successor.
(c) If, pursuant to division (C)(4)(b) of this section,
the commission determines that qualifying renewable energy or
solar energy resources are not reasonably available to permit
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3319 Sub. S. B. No. 2 Page 115
As Pending in the Senate Energy Committee
the electric distribution utility or electric services company
to comply, during the period of review, with the subject minimum
benchmark prescribed under division (B)(2) of this section, the
commission shall modify that compliance obligation of the
utility or company as it determines appropriate to accommodate
the finding. Commission modification shall not automatically
reduce the obligation for the electric distribution utility's or
electric services company's compliance in subsequent years. If
it modifies the electric distribution utility or electric
services company obligation under division (C)(4)(c) of this
section, the commission may require the utility or company, if
sufficient renewable energy resource credits exist in the
marketplace, to acquire additional renewable energy resource
credits in subsequent years equivalent to the utility's or
company's modified obligation under division (C)(4)(c) of this
section.
(5) The commission shall establish a process to provide
for at least an annual review of the renewable energy resource
market in this state and in the service territories of the
regional transmission organizations that manage transmission
systems located in this state. The commission shall use the
results of this study to identify any needed changes to the
amount of the renewable energy compliance payment specified
under divisions (C)(2)(a) and (b) of this section. Specifically,
the commission may increase the amount to ensure that payment of
compliance payments is not used to achieve compliance with this
section in lieu of actually acquiring or realizing energy
derived from qualifying renewable energy resources. However, if
the commission finds that the amount of the compliance payment
should be otherwise changed, the commission shall present this
finding to the general assembly for legislative enactment.
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3350 Sub. S. B. No. 2 Page 116
As Pending in the Senate Energy Committee
(D) The commission annually shall submit to the general
assembly in accordance with section 101.68 of the Revised Code a
report describing all of the following:
(1) The compliance of electric distribution utilities and
electric services companies with division (B) of this section;
(2) The average annual cost of renewable energy credits
purchased by utilities and companies for the year covered in the
report;
(3) Any strategy for utility and company compliance or for
encouraging the use of qualifying renewable energy resources in
supplying this state's electricity needs in a manner that
considers available technology, costs, job creation, and
economic impacts.
The commission shall begin providing the information
described in division (D)(2) of this section in each report
submitted after September 10, 2012. The commission shall allow
and consider public comments on the report prior to its
submission to the general assembly. Nothing in the report shall
be binding on any person, including any utility or company for
the purpose of its compliance with any benchmark under division
(B) of this section, or the enforcement of that provision under
division (C) of this section.
(E) All costs incurred by an electric distribution utility
in complying with the requirements of this section shall be
bypassable by any consumer that has exercised choice of supplier
under section 4928.03 of the Revised Code.
Sec. 4928.645. (A) An electric distribution utility or
electric services company may use, for the purpose of complying
with the requirements under divisions (B)(1) and (2) of section
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3379 Sub. S. B. No. 2 Page 117
As Pending in the Senate Energy Committee
4928.64 of the Revised Code, renewable energy credits any time
in the five calendar years following the date of their purchase
or acquisition from any entity, including, but not limited to,
the following:
(1) A mercantile customer;
(2) An owner or operator of a hydroelectric generating
facility that is located at a dam on a river, or on any water
discharged to a river, that is within or bordering this state or
within or bordering an adjoining state, or that produces power
that can be shown to be deliverable into this state;
(3) A seller of compressed natural gas that has been
produced from biologically derived methane gas, provided that
the seller may only provide renewable energy credits for metered
amounts of gas.
(B)(1) The public utilities commission shall adopt rules
specifying that one unit of credit shall equal one megawatt hour
of electricity derived from renewable energy resources, except
that, for a generating facility of seventy-five megawatts or
greater that is situated within this state and has committed by
December 31, 2009, to modify or retrofit its generating unit or
units to enable the facility to generate principally from
biomass energy by June 30, 2013, each megawatt hour of
electricity generated principally from that biomass energy shall
equal, in units of credit, the product obtained by multiplying
the actual percentage of biomass feedstock heat input used to
generate such megawatt hour by the quotient obtained by dividing
the then existing unit dollar amount used to determine a
renewable energy compliance payment as provided under division
(C)(2)(b) of section 4928.64 of the Revised Code by the then
existing market value of one renewable energy credit, but such
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3409 Sub. S. B. No. 2 Page 118
As Pending in the Senate Energy Committee
megawatt hour shall not equal less than one unit of credit.
Renewable energy resources do not have to be converted to
electricity in order to be eligible to receive renewable energy
credits. The rules shall specify that, for purposes of
converting the quantity of energy derived from biologically
derived methane gas to an electricity equivalent, one megawatt
hour equals 3,412,142 British thermal units.
(2) The rules also shall provide for this state a system
of registering renewable energy credits by specifying which of
any generally available registries shall be used for that
purpose and not by creating a registry. That selected system of
registering renewable energy credits shall allow a hydroelectric
generating facility to be eligible for obtaining renewable
energy credits and shall allow customer-sited projects or
actions the broadest opportunities to be eligible for obtaining
renewable energy credits.
(C) Beginning January 1, 2020, a qualifying solar resource
as defined in section 3706.40 of the Revised Code is not
eligible to obtain a renewable energy credit under this section
for any megawatt hour for which the resource has been issued a
solar energy credit under section 3706.45 of the Revised Code.
(D) Except for compressed natural gas that has been
produced from biologically derived methane gas, energy generated
by using natural gas as a resource is not eligible to obtain a
renewable energy credit under this section.
Sec. 4928.73. (A) As used in this section:
(1) "Mercantile customer member" means a mercantile
customer connected to a mercantile customer self-power system.
(2) "Mercantile customer self-power system" means one or
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3438 Sub. S. B. No. 2 Page 119
As Pending in the Senate Energy Committee
more electric generation facilities, electric storage
facilities, or both, along with any associated facilities, that
meet all of the following:
(a) Produce electricity primarily for the consumption of a
mercantile customer member or a group of mercantile customer
members;
(b) Connect directly to the mercantile customer member's
side of the electric meter;
(c) Deliver electricity to the mercantile customer
member's side of the electric meter without the use of an
electric distribution utility's distribution system or
transmission system;
(d) Is located on a property owned or controlled by a
mercantile customer member or the entity that owns or operates
the mercantile customer self-power system.
(B) The mercantile customer self-power system may be owned
or operated by a mercantile customer member, group of mercantile
customer members, or an entity that is not a mercantile customer
member.
(C) A mercantile customer self-power system may provide
electric generation service to one or more mercantile customers.
(D) The public utilities commission shall adopt rules to
implement this section.
Sec. 4929.20. (A)(A)(1) No governmental aggregator as
defined in division (K)(1) of section 4929.01 of the Revised
Code or no retail natural gas supplier shall provide a
competitive retail natural gas service on or after thirteen
months following the effective date of this section June 26,
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3466 Sub. S. B. No. 2 Page 120
As Pending in the Senate Energy Committee
2001, to a consumer in this state without first being certified
by the public utilities commission regarding its managerial,
technical, and financial capability to provide that service and
providing reasonable financial assurances sufficient to protect
customers and natural gas companies from default. In addition, a
retail natural gas supplier may be required to provide a
performance bond sufficient to protect customers and natural gas
companies from default. Certification shall be granted pursuant
to procedures and standards the commission shall prescribe in
accordance with rules adopted under section 4929.10 of the
Revised Code. However, certification or certification renewal
shall be deemed approved thirty days after the filing of an
application with the commission unless the commission suspends
that approval for good cause shown. In the case of such a
suspension, the commission shall act to approve or deny
certification or certification renewal to the applicant not
later than ninety days after the date of the suspension.
(2) The commission shall establish rules to require a
competitive retail natural gas supplier to maintain financial
assurances sufficient to protect customers and natural gas
companies from default. Such rules also shall specifically allow
a natural gas company to set reasonable standards for its
security and the security of its customers through financial
requirements set in its tariffs.
(3) As used in division (A)(2) of this section, "retail
natural gas supplier" has the same meaning as in section 4929.01
of the Revised Code, but excludes a broker or aggregator.
(B) Capability standards adopted in rules pursuant to
division (A) of this section shall be sufficient to ensure
compliance with section 4929.22 of the Revised Code and with the
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3496 Sub. S. B. No. 2 Page 121
As Pending in the Senate Energy Committee
minimum service requirements established under section 4929.23
of the Revised Code. The standards shall allow flexibility for
voluntary aggregation, to encourage market creativity in
responding to consumer needs and demands. The rules shall
include procedures for biennially renewing certification.
(C)(1) The commission may suspend, rescind, or
conditionally rescind the certification of any retail natural
gas supplier or governmental aggregator issued under this
section if the commission determines, after reasonable notice
and opportunity for hearing, that the retail natural gas
supplier or governmental aggregator has failed to comply with
any applicable certification standards prescribed in rules
adopted pursuant to this section or section 4929.22 of the
Revised Code.
(2) An affected natural gas company may file an
application with the commission for approval of authority to
recover in accordance with division (C)(2) of this section
incremental costs reasonably and prudently incurred by the
company in connection with the commission's continuation,
suspension, rescission, or conditional rescission of a
particular retail natural gas supplier's certification under
division (C)(1) of this section. Upon the filing of such an
application, the commission shall conduct an audit of such
incremental costs as are specified in the application. Cost
recovery shall be through a rider on the base rates of customers
of the company for which there is a choice of supplier of
commodity sales service as a result of revised schedules
approved under division (C) of section 4929.29 of the Revised
Code, a rule or order adopted or issued by the commission under
Chapter 4905. of the Revised Code, or an exemption granted by
the commission under sections 4929.04 to 4929.08 of the Revised
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3527 Sub. S. B. No. 2 Page 122
As Pending in the Senate Energy Committee
Code. The rider shall take effect ninety days after the date of
the application's filing unless the commission, based on the
audit results and for good cause shown, sets the matter for
hearing. After the hearing, the commission shall approve the
application, and authorize such cost recovery rider effective on
the date specified in the order, only for such incremental costs
as the commission determines were reasonably and prudently
incurred by the company in connection with the continuation,
suspension, rescission, or conditional rescission of a retail
natural gas supplier's certification under division (C)(1) of
this section. Any proceeding under division (C)(2) of this
section shall be governed by Chapter 4903. of the Revised Code.
(D) No natural gas company, on and after thirteen months
following the effective date of this section June 26, 2001,
shall knowingly distribute natural gas, to a retail consumer in
this state, for any governmental aggregator, as defined in
division (K)(1) of section 4929.01 of the Revised Code, or
retail natural gas supplier, that has not been certified by the
commission pursuant to this section.
(E) Notwithstanding any provision of section 121.95 of the
Revised Code to the contrary, a regulatory restriction contained
in a rule adopted under section 4929.20 of the Revised Code is
not subject to sections 121.95 to 121.953 of the Revised Code.
Sec. 4929.201. The public utilities commission and the
natural gas companies and competitive retail natural gas
suppliers that elect to participate in the consumer choice
billing program are subject to the requirements established for
that program under sections 4933.51 to 4933.59 of the Revised
Code.
Sec. 4929.221. (A) If a competitive retail natural gas
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3557 Sub. S. B. No. 2 Page 123
As Pending in the Senate Energy Committee
service supplier offers a residential customer or non-mercantile
commercial customer a contract for a fixed introductory rate
that converts to a variable rate upon the expiration of the
fixed rate, the supplier shall send two notices to each
residential customer and non-mercantile commercial customer that
enters into such a contract. Each notice shall provide all of
the following information to the customer:
(1) The fixed rate that is expiring under the contract;
(2) The expiration date of the contract's fixed rate;
(3) The rate to be charged upon the contract's conversion
to a variable rate;
(4) The public utilities commission web site that, as a
comparison tool, lists rates offered by competitive retail
natural gas service suppliers;
(5) A statement explaining that appearing on each
customer's bill is a price-to-compare notice that lists the
natural gas company's default rate for natural gas charged to
customers who decide not to shop for a competitive supplier.
(B) The notices shall be sent by standard United States
mail as follows:
(1) The supplier shall send the first notice not earlier
than ninety days and not later than sixty days prior to the
expiration of the fixed rate.
(2) The supplier shall send the second notice not earlier
than forty-five days and not later than thirty days prior to the
expiration of the fixed rate.
(C) A competitive retail natural gas service supplier
shall provide an annual notice, by standard United States mail,
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3585 Sub. S. B. No. 2 Page 124
As Pending in the Senate Energy Committee
to each residential customer and non-mercantile commercial
customer that has entered into a contract with the supplier that
has converted to a variable rate upon the expiration of the
contract's fixed introductory rate. The notice shall inform the
customer that the customer is currently subject to a variable
rate and that other fixed rate contracts are available.
(D) Not later than one hundred fifty days after the
effective date of this section, the commission shall adopt rules
in order to implement divisions (A) to (C) of this section. The
rules, at a minimum, shall include the following requirements
regarding the notices required under divisions (A) to (C) of
this section:
(1) To use clear and unambiguous language in order to
enable the customer to make an informed decision;
(2) To design the notices in a way to ensure that they
cannot be confused with marketing materials.
(E) Notwithstanding any provision of section 121.95 of the
Revised Code to the contrary, a regulatory restriction contained
in a rule adopted under section 4929.221 of the Revised Code is
not subject to sections 121.95 to 121.953 of the Revised Code.
Sec. 4929.222. (A) As used in this section, "customer
account information" means a unique natural gas company number
or other customer identification number used by the company to
identify a customer and the customer's account record.
(B) The public utilities commission shall adopt rules to
ensure that a natural gas company processes a customer's change
in competitive retail natural gas supplier by using customer
account information. A customer who consents to a change of
supplier shall not be required to provide customer account
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3614 Sub. S. B. No. 2 Page 125
As Pending in the Senate Energy Committee
information to the supplier if the customer provides a valid
form of government-issued identification issued to the customer
or a sufficient alternative form of identification that allows
the supplier to establish the customer's identity accurately.
(C) Notwithstanding any provision of section 121.95 of the
Revised Code to the contrary, a regulatory restriction contained
in a rule adopted under this section is not subject to sections
121.95 to 121.953 of the Revised Code.
Sec. 4933.51. As used in sections 4933.51 to 4933.59 of
the Revised Code:
(A) "Applicant" means a supplier that has applied for
certification under the consumer choice billing program
established under sections 4933.51 to 4933.59 of the Revised
Code.
(B) "Consumer" means a residential, commercial, or
industrial customer of retail electric service or retail natural
gas service.
(C) "Competitive retail electric service" and "electric
distribution utility" have the same meanings as in section
4928.01 of the Revised Code.
(D) "Competitive retail natural gas supplier" and "natural
gas company" have the same meanings as in section 4929.01 of the
Revised Code.
(E) "Supplier" means a supplier of competitive retail
electric service or a competitive retail natural gas supplier.
Sec. 4933.52. (A) There is created the consumer choice
billing program, which shall be administered by the public
utilities commission. The purpose of the program is to do the
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3642 Sub. S. B. No. 2 Page 126
As Pending in the Senate Energy Committee
following:
(1) Permit suppliers to offer consumers consolidated
billing of retail electric services or retail natural gas
services for all electric or natural gas charges, including an
electric distribution utility's or natural gas company's
distribution and transmission charges;
(2) Enhance consumer protections for consumers who select
a supplier and elect to be billed by that supplier for all
charges for electric service or natural gas service;
(3) Increase competition in supplier marketplaces;
(4) Develop direct and transparent relationships between
consumers and suppliers.
(B) The commission shall adopt rules to authorize consumer
choice billing and accomplish the purposes described in division
(A) of this section.
Sec. 4933.54. (A) The public utilities commission shall
adopt rules to implement the consumer choice billing program
created under section 4933.52 of the Revised Code. The rules
shall require a supplier to do the following:
(1) Apply for a new or amended certification under section
4928.08 or 4929.20 of the Revised Code, as applicable, that also
authorizes the supplier's participation in the consumer choice
billing program;
(2) If the applicant is applying for an amended
certification, maintain a current, valid certification under
section 4928.08 or 4929.20 of the Revised Code and, prior to
offering or providing consumer choice billing, submit to the
commission a statement affirming that the applicant will not
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3670 Sub. S. B. No. 2 Page 127
As Pending in the Senate Energy Committee
offer or provide consumer choice billing without such
certification and commission authorization to provide such
billing under the program;
(3) Maintain the following, in addition to meeting
applicable financial assurances required under section 4928.08
or 4929.20 of the Revised Code:
(a) If the applicant is a competitive retail electric
supplier, bonding or financial assurances with the commission
for sales of electricity in the amount of two hundred fifty
thousand dollars or ten per cent of the applicant's annual gross
receipts, whichever is greater;
(b) If the applicant is a competitive retail natural gas
supplier, bonding or financial assurances with each natural gas
company in the service territory where the applicant provides
service;
(c) Bonding or financial assurances with each electric
distribution utility and natural gas company where the applicant
plans to offer consumer choice billing in an amount equal to the
sum of the two highest months of utility receivables in the
previous twelve months.
(4)(a) Certify that the applicant has not had its
certification under section 4928.08 or 4929.20 revoked during
the previous five-year period;
(b) Certify that, for bills that include supplier charges
and electric distribution utility or natural gas company
charges, the applicant will comply with the standards for
billing practices and minimum service requirements under
sections 4928.10 and 4929.22 of the Revised Code, as applicable;
(c) Demonstrate that the applicant is able to meet the
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3699 Sub. S. B. No. 2 Page 128
As Pending in the Senate Energy Committee
demands of increased consumer service and dispute resolution
functions, including the operation of call centers, support of
complex billing requirements, responsible execution of
collections functions, quality assurance, and recordkeeping
necessary to handle electric distribution utility and natural
gas company charges that contribute to potential electric or
natural gas service disconnections;
(d) Attest to the applicant's ability to comply with
applicable requirements related to payment plans for utility
service and to assist consumers with other payment plan options
by employing new or existing consumer assistance programs prior
to initiating the process for service termination;
(e) Agree to purchase the receivables for regulated
charges of an electric distribution utility or natural gas
distribution company, as applicable;
(f) Agree to timely inform the commission of any material
change or the cancellation of the bonding or assurances required
under division (A)(3) of this section;
(g) Agree to comply with Ohio administrative rules
regarding standards of conduct for suppliers and disclosures,
marketing, and sales practice requirements for suppliers.
(B) The commission also shall adopt rules that do the
following:
(1) Establish a process for an applicant to petition the
commission for authorization to provide consumer choice billing
through a third party if the applicant meets the qualifications
under divisions (A)(3) and (4) of this section;
(2) Authorize a mechanism to create a bypassable billing
service charge that:
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3728 Sub. S. B. No. 2 Page 129
As Pending in the Senate Energy Committee
(a) Is wholly based on the fully unbundled direct and
indirect costs of an electric distribution utility's or a
natural gas company's billing system;
(b) Guarantees the recovery of all prudent investments in
billing infrastructure;
(c) May be imposed only after a commission-imposed
prudency review that occurs prior to the implementation of
consumer choice billing.
(3) Require an electric distribution utility and a natural
gas company to timely furnish necessary billing data to
suppliers participating in the consumer choice billing program;
(4) Create a standardized form of consumer notice to be
used when a supplier ceases to provide a particular type of
billing or other service;
(5) Establish a consumer choice billing working group for
stakeholders to draft tariff provisions, collect data, design
business processes, configure electronic transactions, review
similar consumer choice billing programs in other states, define
a comprehensive consumer choice billing education program to
support the launch of consumer choice billing in the state, and
consider any other relevant matters, including the process for
disconnection or termination of utility service;
(6) Establish an electronic data exchange working group to
develop proposed electronic transactions for an electric
distribution utility, natural gas company, or supplier to
exchange necessary consumption, billing, payment, and related
data;
(7) Prohibit an electric distribution utility or natural
gas company from requiring a supplier to purchase a consumer's
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3757 Sub. S. B. No. 2 Page 130
As Pending in the Senate Energy Committee
arrears from the electric distribution utility or natural gas
company;
(8) Prohibit an electric distribution utility or natural
gas company from utilizing consumer information to do the
following:
(a) Market the standard service offer for electric service
or the standard choice offer for natural gas service;
(b) Research or market other electric distribution utility
or natural gas company services;
(c) Share information the electric distribution utility or
natural gas company acquires through electronic transactions
that facilitate consumer choice billing with unregulated
affiliates of the electric distribution utility, natural gas
company, or any other nongovernmental entity.
(9) Establish the terms and conditions for the following:
(a) A supplier to change a consumer's billing method to or
from consumer choice billing and the corresponding content and
timing of notifications to consumers;
(b) For a consumer that is on budget billing with an
electric distribution utility or natural gas company at the time
of the switch to consumer choice billing;
(c) A supplier's purchase of an electric distribution
utility's or natural gas company's receivables, including
prioritization for partial payments and a dispute resolution
process;
(d) Nonpayment by a consumer choice billing consumer,
including the content of collection notices, purchase of
arrears, unpaid charges, and limitations.
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3785 Sub. S. B. No. 2 Page 131
As Pending in the Senate Energy Committee
(10) A consumer choice billing consumer's participation in
the percentage of income assistance program under section
4928.53 of the Revised Code.
(C) In addition to the penalties described in divisions
(A)(1) and (2) of section 4933.59 of the Revised Code, the
commission shall adopt rules to establish fines or other
penalties for violations of requirements established under
sections 4933.52 to 4933.58 of the Revised Code.
(D) Notwithstanding any provision of section 121.95 of the
Revised Code to the contrary, a regulatory restriction contained
in a rule adopted under section 4933.54 of the Revised Code is
not subject to sections 121.95 to 121.953 of the Revised Code.
Sec. 4933.56. (A) Not later than forty-five days after the
effective date of this section, the public utilities commission
shall issue an order requiring electric distribution utilities
and natural gas companies to prepare a consumer choice billing
implementation plan, which shall be subject to commission
approval. Each electric distribution utility and natural gas
company shall submit its implementation plan to the commission
not later than one hundred eighty days after the commission has
adopted the consumer choice billing rules pursuant to section
4933.54 of the Revised Code.
The implementation plan shall demonstrate how the electric
distribution utility or natural gas company will meet the
consumer choice billing requirements established by rule
pursuant to section 4933.54 of the Revised Code and shall
include all tariffs, agreements, processes, proposed cost
recovery mechanisms, and other components that will require
commission approval in accordance with the commission's consumer
choice billing order.
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3815 Sub. S. B. No. 2 Page 132
As Pending in the Senate Energy Committee
If necessary, the commission may approve an implementation
plan on an expedited basis.
(B) An electric distribution utility or natural gas
company shall maintain a record of recoverable consumer choice
billing costs as regulatory assets. Such regulatory assets shall
be recovered in the utility's or company's next rate case
application under section 4909.18 of the Revised Code.
Sec. 4933.58. Not later than one year after the effective
date of the consumer choice billing rules adopted pursuant to
section 4933.54 of the Revised Code, the public utilities
commission shall issue a consumer choice billing report to the
standing committees of the house of representatives and the
senate with primary responsibility for utility legislation. The
report shall detail the status of the consumer choice billing
program in the state and shall include the following information
regarding the program:
(A) Statistics for the number of consumers who shop for
retail electric and natural gas service;
(B) The number and description of consumer complaints;
(C) The number of billing disputes;
(D) The number of service terminations;
(E) Any other information needed to determine whether
modifications to consumer choice billing qualifications or
requirements are necessary to improve shopping for retail
electric and natural gas service in the state.
Sec. 4933.59. (A) If a supplier violates a provision of
the consumer choice billing program under sections 4933.51 to
4933.58 of the Revised Code, the public utilities commission may
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3843 Sub. S. B. No. 2 Page 133
As Pending in the Senate Energy Committee
impose any of the following penalties, subject to notice and a
hearing:
(1) A suspension or revocation of the supplier's
participation in the consumer choice billing program;
(2) A suspension or revocation of the supplier's
certification under section 4928.08 or 4928.20 of the Revised
Code, as applicable;
(3) A fine in an amount determined and imposed by the
commission, on a supplier for marketing practices that are
fraudulent, deceptive, or otherwise unlawful.
(B) A supplier shall be responsible for fraudulent,
deceptive, or other unlawful marketing acts performed by an
agent of the supplier. The commission may impose on the supplier
the penalties described in division (A) of this section if the
agent of a supplier violates a provision of the consumer choice
billing program under sections 4933.51 to 4933.58 of the Revised
Code.
(C) The commission may impose penalties on an electric
distribution utility or a natural gas company that violates
requirements adopted pursuant to section 4933.54 of the Revised
Code.
Sec. 5727.01. As used in this chapter:
(A) "Public utility" means each person referred to as a
telephone company, telegraph company, electric company, natural
gas company, pipe-line company, water-works company, water
transportation company, heating company, rural electric company,
railroad company, combined company, or energy company.
(B) "Gross receipts" means the entire receipts for
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3871 Sub. S. B. No. 2 Page 134
As Pending in the Senate Energy Committee
business done by any person from operations as a public utility,
or incidental thereto, or in connection therewith, including any
receipts received under Chapter 4928. of the Revised Code. The
gross receipts for business done by an incorporated company
engaged in operation as a public utility includes the entire
receipts for business done by such company under the exercise of
its corporate powers, whether from the operation as a public
utility or from any other business.
(C) "Rural electric company" means any nonprofit
corporation, organization, association, or cooperative engaged
in the business of supplying electricity to its members or
persons owning an interest therein in an area the major portion
of which is rural. "Rural electric company" excludes an energy
company.
(D) Any person:
(1) Is a telegraph company when engaged in the business of
transmitting telegraphic messages to, from, through, or in this
state;
(2) Is a telephone company when primarily engaged in the
business of providing local exchange telephone service,
excluding cellular radio service, in this state;
(3) Is an electric company when engaged in the business of
generating, transmitting, or distributing electricity within
this state for use by others, but excludes a rural electric
company or an energy company;
(4) Is a natural gas company when engaged in the business
of supplying or distributing natural gas for lighting, power, or
heating purposes to consumers within this state, excluding a
person that is a governmental aggregator or retail natural gas
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3900 Sub. S. B. No. 2 Page 135
As Pending in the Senate Energy Committee
supplier as defined in section 4929.01 of the Revised Code;
(5) Is a pipe-line company when engaged in the business of
transporting natural gas, oil, or coal or its derivatives
through pipes or tubing, either wholly or partially within this
state;
(6) Is a water-works company when engaged in the business
of supplying water through pipes or tubing, or in a similar
manner, to consumers within this state;
(7) Is a water transportation company when engaged in the
transportation of passengers or property, by boat or other
watercraft, over any waterway, whether natural or artificial,
from one point within this state to another point within this
state, or between points within this state and points without
this state;
(8) Is a heating company when engaged in the business of
supplying water, steam, or air through pipes or tubing to
consumers within this state for heating purposes;
(9) Is a railroad company when engaged in the business of
owning or operating a railroad either wholly or partially within
this state on rights-of-way acquired and held exclusively by
such company, or otherwise, and includes a passenger, street,
suburban, or interurban railroad company;
(10) Is an energy company when engaged in the business of
generating, transmitting, or distributing electricity within
this state for use by others solely from an energy facility with
an aggregate nameplate capacity in excess of two hundred fifty
kilowatts.
As used in division (D)(2) of this section, "local
exchange telephone service" means making available or furnishing
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3929 Sub. S. B. No. 2 Page 136
As Pending in the Senate Energy Committee
access and a dial tone to all persons within a local calling
area for use in originating and receiving voice grade
communications over a switched network operated by the provider
of the service within the area and for gaining access to other
telecommunication services.
(E) "Taxable property" means the property required by
section 5727.06 of the Revised Code to be assessed by the tax
commissioner, but does not include either of the following:
(1) An item of tangible personal property that for the
period subsequent to the effective date of an air, water, or
noise pollution control certificate and continuing so long as
the certificate is in force, has been certified as part of the
pollution control facility with respect to which the certificate
has been issued;
(2) An item of tangible personal property that during the
construction of a plant or facility and until the item is first
capable of operation, whether actually used in operation or not,
is incorporated in or being held exclusively for incorporation
in that plant or facility.
Notwithstanding section 5701.03 of the Revised Code, for
tax year 2006 and thereafter, "taxable property" includes
patterns, jigs, dies, and drawings of an electric company or a
combined company for use in the activity of an electric company.
(F) "Taxing district" means a municipal corporation or
township, or part thereof, in which the aggregate rate of
taxation is uniform.
(G) "Telecommunications service" has the same meaning as
in division (AA) of section 5739.01 of the Revised Code.
(H) "Interexchange telecommunications company" means a
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3958 Sub. S. B. No. 2 Page 137
As Pending in the Senate Energy Committee
person that is engaged in the business of transmitting
telephonic messages to, from, through, or in this state, but
that is not a telephone company.
(I) "Sale and leaseback transaction" means a transaction
in which a public utility or interexchange telecommunications
company sells any tangible personal property to a person other
than a public utility or interexchange telecommunications
company and leases that property back from the buyer.
(J) "Production equipment" means all taxable steam,
nuclear, hydraulic, renewable resource, clean coal technology,
and other production plant equipment used to generate
electricity. For tax years prior to 2001, "production equipment"
includes taxable station equipment that is located at a
production plant.
(K) "Tax year" means the year for which property or gross
receipts are subject to assessment under this chapter. This
division does not limit the tax commissioner's ability to assess
and value property or gross receipts outside the tax year.
(L) "Combined company" means any person engaged in the
activity of an electric company or rural electric company that
is also engaged in the activity of a heating company or a
natural gas company, or any combination thereof.
(M) "Public utility property lessor" means any person,
other than a public utility or an interexchange
telecommunications company, that leases personal property, other
than in a sale and leaseback transaction, to a public utility,
other than a railroad, water transportation, telephone, or
telegraph company if the property would be taxable property if
owned by the public utility. A public utility property lessor is
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3987 Sub. S. B. No. 2 Page 138
As Pending in the Senate Energy Committee
subject to this chapter only for the purposes of reporting and
paying tax on taxable property it leases to a public utility
other than a telephone or telegraph company. A public utility
property lessor that leases property to a public utility other
than a telephone or telegraph company is not a public utility,
but it shall report its property and be assessed in the same
manner as the utility to which it leases the property.
(N) "Energy resource" means any of the following:
(1) "Renewable energy resource" as defined in section
4928.01 of the Revised Code;
(2) "Clean coal technology" as described in division (A)
(34)(c) of section 4928.01 of the Revised Code;
(3) "Advanced nuclear technology" as described in division
(A)(34)(d) of section 4928.01 of the Revised Code;
(4) "Cogeneration technology" as described in division (A)
(34)(b) of section 4928.01 of the Revised Code.
(O) "Energy conversion equipment" means tangible personal
property connected to a wind turbine tower, connected to and
behind solar radiation collector areas and designed to convert
the radiant energy of the sun into electricity or heat, or
connected to any other property used to generate electricity
from an energy resource, through which electricity is
transferred to controls, transformers, or power electronics and
to the transmission interconnection point.
"Energy conversion equipment" includes, but is not limited
to, inverters, batteries, switch gears, wiring, collection
lines, substations, ancillary tangible personal property, or any
lines and associated tangible personal property located between
substations and the transmission interconnection point.
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4016 Sub. S. B. No. 2 Page 139
As Pending in the Senate Energy Committee
(P) "Energy facility" means one or more interconnected
wind turbines, solar panels, or other tangible personal property
used to generate electricity from an energy resource owned by
the same person, including:
(1) All interconnection equipment, devices, and related
apparatus connected to such tangible personal property;
(2) All cables, equipment, devices, and related apparatus
that connect the generators to an electricity grid or to a
building or facility that directly consumes the electricity
produced, that facilitate the transmission of electrical energy
from the generators to the grid, building, or facility, and,
where applicable, that transform voltage before ultimate
delivery of electricity to the grid, building, or facility.
"Energy facility" includes buildings, structures,
improvements, or fixtures exclusively used to house, support, or
stabilize tangible personal property constituting the facility
or that are otherwise necessary for the operation of that
property; and so much of the land on which such tangible
personal property is situated as is required for operation of
the facility and is not devoted to some other use, not to
exceed, in the case of wind turbines, one-half acre for each
wind turbine, and regardless of whether the land is owned by the
owner or lessee of the tangible personal property or by another
person.
(Q) "Nameplate capacity" means the original interconnected
maximum rated alternating current output of a generator or other
electric production equipment under specific conditions
designated by the manufacturer, expressed in the number of
kilowatts or megawatts.
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4045 Sub. S. B. No. 2 Page 140
As Pending in the Senate Energy Committee
(R) "Qualifying production equipment" means production
equipment that is placed into service on or after the last day
of the year that includes the effective date of this amendment.
Sec. 5727.031. (A) A person that is engaged in some other
primary business to which the supplying of electricity to others
is incidental shall file a report under section 5727.08 of the
Revised Code as an electric company but shall only report
therein as taxable property the amounts required in divisions
(B) and (C) of this section. All time limits and other
procedural requirements of this chapter for the reporting and
assessment of property of electric companies apply to persons
required to file a report under this section. For the purposes
of this section, "the supplying of electricity to others" shall
not include donating all of the electricity a person generates
to a political subdivision of the state.
(B) A person subject to this section shall report the true
value of the boilers, machinery, equipment, and any personal
property used to supply electricity to others, which shall be
the sum of the following:
(1) The true value of the property that is taxable
production equipment , as such true value it would be determined
for an electric company under section 5727.11 of the Revised
Code, multiplied by the per cent of the electricity generated in
the preceding calendar year that was not used by the person who
generated it; plus
(2) The true value of the property that is not production
equipment, as it such true value would be determined for an
electric company under section 5727.11 of the Revised Code ,
multiplied by the per cent of the electricity generated in the
preceding calendar year that was not used by the person who
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4075 Sub. S. B. No. 2 Page 141
As Pending in the Senate Energy Committee
generated it.
(C) The property reported under division (B) of this
section shall be listed and assessed at an amount equal to the
sum of the products determined under divisions (C)(1) and (2) of
this section.
(1) Multiply the portion of the true value determined
under division (B)(1) of this section by the assessment rate in
section 5727.111 of the Revised Code that is applicable to the
taxable production equipment of an electric company;
(2) Multiply the portion of the true value determined
under division (B)(2) of this section by the assessment rate in
section 5727.111 of the Revised Code that is applicable to the
taxable property of an electric company that is not production
equipment.
Sec. 5727.06. (A) Except as otherwise provided by law, the
following constitutes the taxable property of a public utility,
interexchange telecommunications company, or public utility
property lessor that shall be assessed by the tax commissioner:
(1) For tax years before tax year 2006:
(a) In the case of a railroad company, all real property
and tangible personal property owned or operated by the railroad
company in this state on the thirty-first day of December of the
preceding year;
(b) In the case of a water transportation company, all
tangible personal property, except watercraft, owned or operated
by the water transportation company in this state on the thirty-
first day of December of the preceding year and all watercraft
owned or operated by the water transportation company in this
state during the preceding calendar year;
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4104 Sub. S. B. No. 2 Page 142
As Pending in the Senate Energy Committee
(c) In the case of all other public utilities and
interexchange telecommunications companies, all tangible
personal property that on the thirty-first day of December of
the preceding year was both located in this state and:
(i) Owned by the public utility or interexchange
telecommunications company; or
(ii) Leased by the public utility or interexchange
telecommunications company under a sale and leaseback
transaction.
(2) For tax years 2006, 2007, and 2008:
(a) In the case of a railroad company, all real property
used in railroad operations and tangible personal property owned
or operated by the railroad company in this state on the thirty-
first day of December of the preceding year;
(b) In the case of a water transportation company, all
tangible personal property, except watercraft, owned or operated
by the water transportation company in this state on the thirty-
first day of December of the preceding year and all watercraft
owned or operated by the water transportation company in this
state during the preceding calendar year;
(c) In the case of all other public utilities except
telephone and telegraph companies, all tangible personal
property that on the thirty-first day of December of the
preceding year was both located in this state and either owned
by the public utility or leased by the public utility under a
sale and leaseback transaction.
(3) For tax year 2009 and each tax year thereafter:
(a) In the case of a railroad company, all real property
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used in railroad operations and tangible personal property owned
or operated by the railroad company in this state on the thirty-
first day of December of the preceding year;
(b) In the case of a water transportation company, all
tangible personal property, except watercraft, owned or operated
by the water transportation company in this state on the thirty-
first day of December of the preceding year and all watercraft
owned or operated by the water transportation company in this
state during the preceding calendar year;
(c) In the case of all other public utilities except
telephone and telegraph companies, all tangible personal
property except qualifying production equipment that on the
thirty-first day of December of the preceding year was both
located in this state and either owned by the public utility or
leased by the public utility under a sale and leaseback
transaction, and that is not exempted from taxation under
section 5727.75 of the Revised Code;
(d) In the case of a public utility property lessor, all
personal property except qualifying production equipment that on
the thirty-first day of December of the preceding year was both
located in this state and leased, in other than a sale and
leaseback transaction, to a public utility other than a
railroad, telephone, telegraph, or water transportation company.
The assessment rate used under section 5727.111 of the Revised
Code shall be based on the assessment rate that would apply if
the public utility owned the property, and that is not exempted
from taxation under section 5727.75 of the Revised Code.
(4) For tax years 2005 and 2006, in the case of telephone,
telegraph, or interexchange telecommunications companies, all
tangible personal property that on the thirty-first day of
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December of the preceding year was both located in this state
and either owned by the telephone, telegraph, or interexchange
telecommunications company or leased by the telephone,
telegraph, or interexchange telecommunications company under a
sale and leaseback transaction.
(5)(a) For tax year 2007 and thereafter, in the case of
telephone, telegraph, or interexchange telecommunications
companies, all tangible personal property shall be listed and
assessed for taxation under Chapter 5711. of the Revised Code,
but the tangible personal property shall be valued in accordance
with this chapter using the composite annual allowances and
other valuation procedures prescribed under section 5727.11 of
the Revised Code by the tax commissioner for such property for
tax year 2006, notwithstanding any section of Chapter 5711. of
the Revised Code to the contrary.
(b) A telephone, telegraph, or interexchange
telecommunications company subject to division (A)(5)(a) of this
section shall file a combined return with the tax commissioner
in accordance with section 5711.13 of the Revised Code even if
the company has tangible personal property in only one county.
Such a company also is subject to the issuance of a preliminary
assessment certificate by the tax commissioner under section
5711.25 of the Revised Code. Such a company is not required to
file a county supplemental return under section 5711.131 of the
Revised Code.
(6) In the case of an energy company, for tax year 2011
and each tax year thereafter, all tangible personal property
except qualifying production equipment that on the thirty-first
day of December of the preceding year was both located in this
state and either owned by the company or leased by the company
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4192 Sub. S. B. No. 2 Page 145
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under a sale and leaseback transaction, and that is not exempted
from taxation under section 5727.75 of the Revised Code.
(B) This division applies to tax years before tax year
2007.
In the case of an interexchange telecommunications
company, all taxable property shall be subject to the provisions
of this chapter and shall be valued by the commissioner in
accordance with division (A) of section 5727.11 of the Revised
Code. A person described by this division shall file the report
required by section 5727.08 of the Revised Code. Persons
described in this division shall not be considered taxpayers, as
defined in division (B) of section 5711.01 of the Revised Code,
and shall not be required to file a return and list their
taxable property under any provision of Chapter 5711. of the
Revised Code.
(C) The lien of the state for taxes levied each year on
the real and personal property of public utilities and
interexchange telecommunications companies and on the personal
property of public utility property lessors shall attach thereto
on the thirty-first day of December of the preceding year.
(D) Property that is required by division (A)(3)(b) of
this section to be assessed by the tax commissioner under this
chapter shall not be listed by the owner of the property under
Chapter 5711. of the Revised Code.
(E) The ten-thousand-dollar exemption provided for in
division (C)(3) of section 5709.01 of the Revised Code does not
apply to any personal property that is valued under this
chapter.
(F) The tax commissioner may adopt rules governing the
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4221 Sub. S. B. No. 2 Page 146
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listing of the taxable property of public utilities and
interexchange telecommunications companies and the determination
of true value.
Sec. 5727.11. (A) Except as otherwise provided in this
section, the true value of all taxable property, except property
of a railroad company, required by section 5727.06 of the
Revised Code to be assessed by the tax commissioner shall be
determined by a method of valuation using cost as capitalized on
the public utility's books and records less composite annual
allowances as prescribed by the commissioner. If the
commissioner finds that application of this method will not
result in the determination of true value of the public
utility's taxable property, the commissioner may use another
method of valuation.
(B)(1) Except as provided in division (B)(2) of this
section, the true value of current gas stored underground is the
cost of that gas shown on the books and records of the public
utility on the thirty-first day of December of the preceding
year.
(2) For tax year 2001 and thereafter, the true value of
current gas stored underground is the quotient obtained by
dividing (a) the average value of the current gas stored
underground, which shall be determined by adding the value of
the gas on hand at the end of each calendar month in the
calendar year preceding the tax year, or, if applicable, the
last day of business of each month for a partial month, divided
by (b) the total number of months the natural gas company was in
business during the calendar year prior to the beginning of the
tax year. With the approval of the tax commissioner, a natural
gas company may use a date other than the end of a calendar
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4251 Sub. S. B. No. 2 Page 147
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month to value its current gas stored underground.
(C) The true value of noncurrent gas stored underground is
thirty-five per cent of the cost of that gas shown on the books
and records of the public utility on the thirty-first day of
December of the preceding year.
(D)(1) Except as provided in division (D)(2) of this
section, the true value of the taxable production equipment of
an electric company and the true value of all taxable property
of a rural electric company is the equipment's or property's
cost as capitalized on the company's books and records less
fifty per cent of that cost as an allowance for depreciation and
obsolescence.
(2) The true value of the taxable production equipment or
energy conversion equipment of an electric company, rural
electric company, or energy company purchased, transferred, or
placed into service after October 5, 1999, is the purchase price
of the equipment as capitalized on the company's books and
records less composite annual allowances as prescribed by the
tax commissioner.
(E) The true value of taxable property, except property of
a railroad company, required by section 5727.06 of the Revised
Code to be assessed by the tax commissioner shall not include
the allowance for funds used during construction or interest
during construction that has been capitalized on the public
utility's books and records as part of the total cost of the
taxable property. This division shall not apply to the taxable
property of an electric company or a rural electric company,
excluding transmission and distribution property, first placed
into service after December 31, 2000, or to the taxable property
a person purchases, which includes transfers, if that property
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4281 Sub. S. B. No. 2 Page 148
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was used in business by the seller prior to the purchase.
(F) The true value of watercraft owned or operated by a
water transportation company shall be determined by multiplying
the true value of the watercraft as determined under division
(A) of this section by a fraction, the numerator of which is the
number of revenue-earning miles traveled by the watercraft in
the waters of this state and the denominator of which is the
number of revenue-earning miles traveled by the watercraft in
all waters.
(G) The cost of property subject to a sale and leaseback
transaction is the cost of the property as capitalized on the
books and records of the public utility owning the property
immediately prior to the sale and leaseback transaction.
(H) The cost as capitalized on the books and records of a
public utility includes amounts capitalized that represent
regulatory assets, if such amounts previously were included on
the company's books and records as capitalized costs of taxable
personal property.
(I) Any change in the composite annual allowances as
prescribed by the commissioner on a prospective basis shall not
be admissible in any judicial or administrative action or
proceeding as evidence of value with regard to prior years'
taxes. Information about the business, property, or transactions
of any taxpayer obtained by the commissioner for the purpose of
adopting or modifying the composite annual allowances shall not
be subject to discovery or disclosure.
Sec. 5727.76. (A) As used in this section:
(1) "Qualifying property" means property that is dedicated
to transporting or transmitting electricity or natural gas and
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4310 Sub. S. B. No. 2 Page 149
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that is placed into service in a priority investment area
designated under section 122.161 of the Revised Code during a
time when that designation is in effect.
(2) "Authorizing ordinance or resolution" means an
ordinance or resolution adopted under division (B) of section
122.161 of the Revised Code.
(B) Qualifying property shall be exempt from taxation for
the tax year following the year in which the property is placed
into service and for the ensuing four tax years.
Section 2. That existing sections 4905.03, 4906.01,
4906.03, 4906.04, 4906.07, 4906.10, 4909.04, 4909.05, 4909.052,
4909.06, 4909.07, 4909.08, 4909.15, 4909.156, 4909.17, 4909.173,
4909.174, 4909.18, 4909.191, 4909.42, 4911.15 , 4928.01, 4928.05,
4928.08, 4928.14, 4928.141, 4928.142, 4928.144, 4928.17,
4928.20, 4928.23, 4928.231, 4928.232, 4928.34, 4928.542,
4928.64, 4928.645, 4929.20, 5727.01, 5727.031, 5727.06, and
5727.11 of the Revised Code are hereby repealed.
Section 3. That sections 3706.40, 3706.41, 3706.43,
3706.431, 3706.45, 3706.46, 3706.49, 3706.491, 3706.55,
3706.551, 3706.59, 3706.63, 3706.65, 4928.143, 4928.148, and
4928.642 of the Revised Code are hereby repealed.
Section 4. (A) Notwithstanding the repeal by this act of
section 4928.148 of the Revised Code, a rider or cost recovery
mechanism for a legacy generation resource authorized under an
electric distribution utility's electric security plan in effect
on the effective date of this section shall remain in effect
until the termination date of the electric security plan. After
the termination date of the electric security plan, the electric
distribution utility shall not apply for, and the public
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4339 Sub. S. B. No. 2 Page 150
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utilities commission shall not authorize, any rider or cost
recovery mechanism for a legacy generation resource.
(B) Beginning on the effective date of this section, no
electric distribution utility shall collect from its retail
customers in the state any charge that was authorized under
section 3706.46 of the Revised Code to meet the revenue
requirement for disbursements from the Solar Generation Fund to
owners or operators of qualifying solar resources that was
required under section 3706.55 of the Revised Code before the
repeal of these sections by this act.
Beginning on the effective date of this section, the Ohio
Air Quality Development Authority is prohibited from directing
the Treasurer of State to remit, and the Treasurer is prohibited
from remitting, any money from the Solar Generation Fund to
owners or operators of qualifying solar resources, which
remittance was permitted under section 3706.55 of the Revised
Code prior to the repeal of that section by this act.
Section 5. Section 4928.01 of the Revised Code is
presented in this act as a composite of the section as amended
by both H.B. 308 and H.B. 315 of the 135th General Assembly. The
General Assembly, applying the principle stated in division (B)
of section 1.52 of the Revised Code that amendments are to be
harmonized if reasonably capable of simultaneous operation,
finds that the composite is the resulting version of the section
in effect prior to the effective date of the section as
presented in this act.
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