Ohio Supreme Court Recognizes Submetering Firms as Public Utilities
The Ohio Supreme Court delivered a significant ruling on Wednesday, identifying submetering companies as public utilities. This decision alters the regulatory framework, imposing consumer protections and cost controls on submetering entities, which have traditionally operated outside the oversight of the Public Utilities Commission of Ohio (PUCO).
Previously, PUCO had maintained that submeterers were not public utilities, a stance backed by industry representatives, landlords, and organizations like the Ohio Manufacturers’ Association. However, the court’s unanimous decision sided with American Electric Power, a conventional utility company, in a case against Nationwide Energy Partners, a leader in the submetering sector.
Justice Pat DeWine noted in his opinion that Nationwide Energy Partners functions similarly to utility companies by sourcing electricity, installing equipment, and managing distribution networks. “It directly bills tenants for their use of electricity and may disconnect service if a tenant fails to pay. It earns a profit based on the difference between the price it pays for electricity and the price it resells electricity,” DeWine stated. “In short, NEP is in the business of supplying electricity to consumers.”
This ruling is considered a substantial triumph for consumers, as highlighted by Maureen Willis, director of the Ohio Consumers’ Counsel, who remarked, “No company gets to sell essential electric service in Ohio without playing by the rules.” Although the decision was unanimous, Justice Jennifer Brunner expressed her agreement solely with the outcome, not the reasoning.
Understanding Submetering
Submetering companies have emerged over the last two decades in Ohio, disrupting longstanding arrangements between states and utility companies. These firms purchase electricity at commercial rates and sell it to residential customers, often claiming their rates are competitive with traditional utilities. Nevertheless, records indicate that Nationwide Energy Partners pays landlords significant fees and has a large customer base across numerous complexes.
Critics argue that submetering results in inflated electric bills for tenants, unrelated to their consumption. Numerous complaints have been lodged with the Ohio Attorney General and PUCO, but regulatory limitations have impeded resolution. This new ruling could primarily impact areas like Columbus and Cincinnati, where submetering is prevalent, and prevent its expansion into other major cities.
Next Steps
Following the ruling, the case returns to PUCO to assess whether Nationwide Energy Partners has been improperly operating within American Electric Power’s service area and whether it has been acting as an unregistered electric supplier. Possible repercussions include fines.
Legislative interest in this case is high, with Nationwide Energy Partners lobbying to maintain its non-utility status while others advocate for stronger consumer protections. The company has disclosed employing eight lobbyists to pursue its interests.
Rep. Sean Brennan, a Democrat from Parma, expressed his satisfaction, stating, “What have I been saying all along? If it looks like, sounds like, and smells like a utility, it is one, and needs to be regulated accordingly.”
This article is based on reporting from Signal Ohio, in partnership with The Associated Press.
