COLUMBUS, Ohio (CN) - FirstEnergy does not need to refund customers $43 million for money it collected as part of a green-energy initiative to use renewable sources, the Ohio Supreme Court ruled Wednesday, because state law prohibits regulators from ordering a refund of charges that were set out in a rate schedule.
The Ohio Public Utilities Commission hit Akron-based FirstEnergy with the refund demand after auditing the company in late 2011. The order stemmed from what the agency said was the company's noncompliance with a green-energy law that required the company to prudently acquire renewable energy sources, including solar and wind, for electricity it supplies to nearly 2 million customers in the Buckeye State.
Energy companies in Ohio must buy clean energy from in-state and out-of-state suppliers. FirstEnergy bought green credits, or renewable energy certificates, between 2009 and 2011, and passed the costs on to consumers to meet clean-energy benchmarks.
The Ohio Public Utilities Commission deemed the rate hike on customers unfair and ordered the energy company to pay back the $43.4 million to customers within 60 days. FirstEnergy appealed to the state’s high court.
In an opinion penned by Justice William O’Neill, the Ohio Supreme Court ruled Wednesday that the utilities commission cannot retroactively demand FirstEnergy repay charges that have already been passed on to its customers because the company had charged consumers consistent with a rate schedule that was included in its quarterly filings.
The commission never objected to that filed rate schedule, O'Neill noted.
“Because FirstEnergy recovered [renewable energy certificates] costs under a 'filed' rate schedule, the commission was prohibited from later ordering a disallowance or refund of those costs,” the judge wrote.
As such, the commission had engaged in "unlawful retroactive ratemaking," according to the ruling.
O’Neill said that although Ohio's "no-refund" rule might seem unfair and bequest enormous benefits to energy companies, it’s up to state lawmakers to change the rules, not the court.
The Consumers’ Counsel and Environmental Law Policy Center had objected when the utilities commission allowed FirstEnergy to keep secret the identity of renewable energy suppliers, as well as details about the bidding process.
FirstEnergy said it had correctly shielded the information under trade-secrets law. But the Ohio Supreme Court ruled that the commission needs to make clear why the information should remain sealed or release it to the public.
In a prepared statement, Public Utilities Commission chairman Asim Haque said he was concerned that the ruling would impact the ability of the agency to protect consumers.
"Our ability to effectively audit utility expenses is one of our most important regulatory responsibilities," Haque said.
FirstEnergy spokesman Douglas Colafella said in an emailed statement that the company agrees with the court’s decision on the refund.
Chief Justice Maureen O’Connor and Justice Patrick Fischer joined O’Neill’s opinion. Justice Sharon Kennedy concurred separately.
Justice Judith French dissented in part, saying the Ohio Public Utilities Commission did not act unlawfully by asking FirstEnergy to return the money to its customers.
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