AEP Ohio, submetering company trade barbs as PUCO decides what’s next

By Nick Evans
Ohio Capital Journal

The Public Utilities Commission of Ohio is weighing what do with Nationwide Energy Partners, an electricity reseller serving apartment complexes around Ohio. In May, the state Supreme Court ruled the company is operating as a utility under state law and sent the case back to the PUCO.

Now, commissioners are wrestling with how to regulate submetering companies, as AEP Ohio and Nationwide Energy Partners spar over whether state law has a good answer for the practice. Meanwhile, the Ohio Consumers’ Counsel insists the ratepayers caught in the middle shouldn’t become “collateral damage.”

“The residents of the apartments neither created nor control the issues raised in the AEP Ohio’s complaint against NEP,” the OCC wrote in a commission filing, “and they should not bear its costs or consequences.”

How we got here
The nature of submetering is at the heart of this ongoing conflict. Companies like Nationwide Energy Partners buy energy wholesale and then sell it on to residents living in multi-unity complexes at retail rates. The PUCO initially determined the company was not operating as a utility because it was the landlords who were providing power.

The state supreme court soundly rejected that interpretation.

“Regardless of whether the landlords are in the ‘business of supplying electricity,’ there can be no question that NEP is in that business,” Justice Patrick DeWine wrote for a unanimous court.

The court noted it’s not the first time the PUCO has struggled with how to classify submetering companies. Back in 2020, the commission decided they simply fell outside its jurisdiction. In that case, the Ohio Supreme Court said no, the submetering companies are in fact your problem, and returned the matter to the commission.

In its 2020 decision the court itself noted large-scale submetering companies didn’t really exist when the underlying state laws were drafted. Lawmakers have been working on a fix for years and in June, they sent legislation to Gov. DeWine’s desk.

He vetoed it, calling the submetering business model “flawed.”

So it’s a utility, right?
The latest supreme court decision puts the ball back in the PUCO’s court, with a mandate to treat NEP as a utility while considering two other complaints. In addition to operating as a utility, AEP Ohio objected to NEP doing business within its territory and providing retail electric service without proper permitting.

To AEP Ohio, this is an open and shut case. An Ohio law known as the Certified Territories Act grants utilities like AEP the exclusive right to deliver power within a given region. It’s undisputed that NEP was operating within AEP’s territory. Another Ohio law prohibits companies from providing power without prior approval from the PUCO — something NEP didn’t have.

Not so fast, NEP insists. Even if the state supreme court says it’s a utility, that doesn’t mean it fits within the Certifies Territories Act’s definitions.

“The (Certified Territories Act) applies only to entities supplying ‘electric service’ to ‘electric load centers’ through ‘distribution lines.’ That is not NEP,” the company wrote.

NEP claims an “electric load center” under state law is the apartment complex — not the individual apartments. Because NEP provides service behind the complex’s master meter, the theory goes, the law doesn’t apply to them. Similarly, NEP doesn’t own the lines so it falls outside the law.

In its reply, AEP urged the commission to “follow the Governor’s lead,” and “end the predatory anti-consumer practices that constitute unlawful resale and violate the Certified Territory Act.”

The utility argued NEP is “rewriting” the statute to include ownership of distribution lines and attempting to upend the idea of exclusive jurisdictions underpinning Ohio’s electric distribution system.

The fact that NEP doesn’t fit neatly into existing statute is not an excuse to not regulate them.

“In the tax context, for example, the fact that a taxpayer has invented a novel form of tax shelter does not place it beyond the reach of the tax laws,” AEP wrote. “Likewise, the fact that NEP developed a novel business model for delivering electric service does not place it beyond the reach of a statute directed at electric suppliers.”

In its initial filing, AEP described first rejecting NEP’s bid to convert five apartment complexes to submetered service. The PUCO’s eventually ordered AEP to go ahead with the conversions.

In all, the change affected some 1,171 residences. AEP noted 510 of them had selected an alternative competitive power provider, 56 were using an AEP-run budget billing program, and three were using Ohio’s Percent of Income Payment Plan.

By switching to a submetered arrangement, the residents lost out on those options.

The Ohio Consumers’ Counsel insists that shouldn’t have happened.

In its filing, the Consumers’ Counsel is blunt: NEP shouldn’t be allowed to continue operating. But if it does, providing it must provide the same legal rights and protections that other utility customers get. At minimum, every resident deserves PUCO-approved rates, access to payment plans, protections against discrimination or unlawful shutoffs, and the ability to bring complaints before the commission.

“The residents of the Apartments are residential utility consumers,” the Consumers’ Counsel wrote. “They deserve the protections provided for them by law, regardless of which public utility is providing their electricity.”