Strickland to Fill PUCO Post; Remains Silent on Duke Energy Rate Hike OCC Opposes
ONB COLUMBUS: Ohio Governor Ted Strickland will soon be sent names of candidates to fill the Public Utilities Commission of Ohio (PUCO) post set to expire in April.
If Strickland chooses a candidate who is more oriented to the needs of consumers by being less reticent to challenge utilities rate increases, as now being proposed by Duke Energy that wants to triple customer base rates, the balance of the body could level out or even tilt slightly left of center, with the swing vote being PUCO Chairman Alan Schriber, who some say could be the Anthony Kennedy of the five-member board.
Any tilt away from lying down before big utilities, as some contend this PUCO has done in recent memory, would represent a stark shift from the line of decisions in recent years that have generally favored the needs of shareholders over the pinched pocketbooks of Ohio’s approximately 4.5 million residential utility users.
While the Ohio Consumers’ Counsel (OCC) opposes the drastic Duke Energy rate increase on the grounds that it is unreasonable and would harm consumers, Strickland, who is looking at a worsening economy and who is expected to provide more guidance in his State of the State speech Wednesday about how he plans to avoid a potentially massive budget deficit without further layoffs or curtailment of state services, has chosen for the time being to remain silent on the merits of the Duke Energy proposal.
IS MASON BUILT OF BRICKS OR POLITICS?
The commissioner seat scheduled to expire April 10th has been held by Donald Mason, a Republican, who is nearing the end of a 10 year stint on the state’s utility regulatory body. With a new Democratic governor picking who will fill his seat, does his party affiliation work against him, or will his experience be enough to re-enlist him for a third five-year term?
As we see with the national debate over whether experience is all it is cracked up to be or whether fresh faces with fresh views is what change is all about, Strickland will have to choose wisely from the diversity of candidates who have thrown their hats into the ring, hoping to bring an end to the rule of the House of Mason.
The PUCO, comprised of five commissioners appointed to rotating, five-year terms by the governor, regulates utilities including natural gas, electricity, telephone, trucks, rail and water and wastewater facilities, thereby affecting nearly all Ohioans in one way or another.
Commissioner terms typically begin in April, with one seat becoming available each year. Eligible candidates are any Ohioan who is not employed by a public utility and does not have a financial interest in a public utility.
MEET THE PUCO CANDIDATES
Cheryl Roberto – An attorney with 20 years of experience in economics, law, finance, engineering, natural resources and environmental compliance; six of which were as a public utilities executive with the City of Columbus. Accomplishments include Columbus’ first low income discount for utility rate payers and membership in the Ohio Utility Protection Service.
“I bring to every job an unquenchable hunger to address intellectually challenging and complex problems, a drive to turn theories into action, and a desire to serve the public good. The issues facing the PUCO of re-regulation, energy conservation and climate change could not be more complex or critical for the public good.” [Roberto]
Howard Petricoff – An attorney and partner at the Columbus law firm of Vorys, Sater, Seymour and Pease LLP with law expertise in public utilities, natural resources and environment. He has served from 1983 to the present as a part-time Special Assistant Ohio Attorney General primarily assisting State Universities with environmental and regulatory concerns arising from operation of their power plants.
“In sum, a good commissioner is one who keeps the public interest in focus and exercises good judgment. Having represented all sides in utility disputes for three decades I believe I have the experience that hopefully will lead to good judgments.” [Petricoff]
G. Raymond Lorello - Not an attorney, his early career work was with chambers of commerce. He first served as development director for the City of Columbus, Ohio and then as director of Public Utilities and Aviation. Following seven years in private sector consulting work, he worked at the Ohio Department of Transportation as a planning and program administrator, then as program manager for the Statewide Utility and Right of Way Program. Selected last year by the Nominating Council as one of four candidates it sent to governor.
”My candidacy bring with it a diversity of professional skills, knowledge and experience which would serve me well in representing the interests of all Ohioans should I be fortunate enough to be selected for this position.” [Lorello]
Dave Rinebolt – An attorney, is Executive Director and Counsel for Ohio Partners for Affordable Energy, a trade association providing advocacy and litigation services to 60 nonprofit anti-poverty and community development organizations. Served previously as a legislative liaison to the Ohio Association of Community Action Agencies and Director of Programs for the National Association of State Energy Officials before that.
”The depth and diversity of my work in the energy field has prepared me to take on the challenge of serving as a commissioner. Utility regulation has gone through a period of unprecedented change. My work has focused on developing the legislative and regulatory framework to implement these changes…Ascending to the Public Utilities Commission of Ohio would provide the opportunity to utilize this background to implement policy decisions made by the General Assembly and Congress.” [Rinebolt]
Fred Strahorn – A Democratic State Representative representing the 40th House District since 2001 who is the current Minority Whip is a term-limited elected official who has served on major committees like Public Utilities, Ways and Means, Finance and Appropriations and Economic Development and Environment, and on lesser subcommittee like Primary & Secondary Education.
”The Public Utilities Commission is an integral part of our state’s economic future. I would be an honor to be considered for service on such an important Commission.” [Strahorn]
Steven Lesser – An attorney, he is currently PUCO Chief of Staff. Previously, he was assistant director of the PUCO’s legal department and before that deputy director of the agency’s transportation department. His early career posts were as law director of the Village of Hanover, and then as legal counsel to Lawyers Title Insurance Corporation. He received several appointments from US secretaries and directors to serve on advisory committees.
”I believe my legal education and my varied experience in all areas of the Commission’s jurisdiction establish my qualifications for the position…I would hope that based on my education and experience I would have the opportunity to further discuss my qualifications with the Nominating Council. I am a registered Democrat.” [Lesser]
Paul J. Duffy – An attorney, he has been PUCO law director from 1989 to the present. Previously, in the early 70s, he was a budget department supervisor for Columbia Gas of Ohio. From there he worked his way up the rungs of the agency from Attorney Examiner to Legal Department Telecommunications and Water/Sewer Chief to Legal Department Rate Chief then to Deputy Legal Director.
”I have been offering advice to commissioners and assisting them in deciding complex cases and issues for over 30 years. During that period, I believe I have developed the reputation of one who puts in long hours to help keep the Commission running smoothly, makes thoughtful and well-reasoned decisions, cooperates with utility management to solve many of their issues on an informal basis, works with members of the legal profession to facilitate the interests of their clients before the Commission, assists the Commission staff in the proper development of issues in a case, and spends time on the telephone willingly talking with upset citizens of Ohio who are unfamiliar with the operations of the Commission or are frustrated with their utility service providers. I am a registered Democrat” [Duffy]
Gretchen Hummel – An attorney, she was director of the Advocacy Services Division of the Office of Consumers’ Counsel, then served as Assistant Director of the PUCO’s Utility Department, then worked as an Energy and Utility consultant for the law firms of Chester, Willcox & Saxbe and McNees Wallace and Nurick, where she resides as Of Counsel, dealing with a variety of energy consumers, utility companies, alternative energy suppliers and natural gas producers in regulatory matters before state and federal legislators and courts.
”…the next Commissioner appointed must be able to perform upon appointment and confirmation. I am fortunate to have been involved in some way in nearly every significant event affecting the delivery of energy services to Ohio residents in the past three decades. My knowledge of the interests of all utility customer classes and my prior service as a regulator has uniquely prepared me to make a substantive contribution to the urgent business of the Commission.” [Hummel]
Donald Mason – An attorney, he has been a PUCO Commissioner since 1998. previously, he served as Chief of the Division of Oil and Gas for the Ohio Department of Natural Resources, where prior to that he was Deputy Director for Recreation Management. He was a city council member then council president in Zanesville, Ohio, where he became mayor for seven years.
”There has never been a time more demanding of focus on energy and environmental matters than the present. Global climate change, energy diversity and imports, research and development, smart metering and infrastructure investment, dominate the regulatory agenda. Over the next several years the PUCO must reassess its past practices, policies, rules and regulations as they pertain to creating a stable investment climate, reduce price volatility and encourage energy efficiency and conservation…I have learned a great deal over the last 9 years regarding electricity “deregulation” to understand what works and what is troublesome. Experience truly matters,, now more than eve before. The course we set will have a long term lasting impact on all Ohioans.” [Mason]
Following Wednesday’s interviews, the Nominating Council – composed of the chair of the Consumers' Counsel Governing Board, the president of the Accountancy Board of Ohio, the chair of the State Board of Registration for Professional Engineers and Surveyors, the president of the Ohio State Bar Association, the president of the Ohio Municipal League, the director of the Department of Development, and appointees of the Ohio Department on Aging, the president of the Ohio Senate, the speaker of the Ohio House and the governor, who represent the utility industry, the business community, and organized labor – will pick four candidates and forward their names to Strickland.
The governor then has 30 days of receiving the names to make a selection. But Ohio law gives him the authority to ask for a second slate of candidates if he’s not satisfied with the first-round selections. However, he must choose one from the second round, Ohio law (ORC 4901.021) says. The final hurdle for the chosen one is to pass muster with the Ohio Senate, who advises and consents on the governor’s pick.
The Ohio Senate, currently controlled by Republicans, 21-12, could exert their political power and influence by counterbalancing the power and authority of Strickland, the first Democrat to hold the post in 16 years, who may want a new, fresh face whose agenda is more oriented towards the needs of consumers than has been the case in this PUCO in recent years.
One factor affecting Strickland’s decision is the framework of the comprehensive energy reform bill passed by the Senate and now in the House, which envisions a hybrid system between market forces and state regulation.
OCC READY TO DUKE IT OUT OVER RATE INCREASE
Saying the natural gas rate increase for Duke Energy Ohio’s customers is unreasonable and will harm consumers, the OCC, Ohio’s consumer advocate, called on the PUCO to reject the proposal they figure will siphon off another $500 million from press pocketbooks in the coming years.
Janine Migden-Ostrander, the OCC since 2004, said customers, by the ninth year of the proposal, should it be approved as presented, could force a customer to pay $345 annually before they actually use any natural gas.
“These proposed rates would harm consumers by increasing customer charges that must be paid and cannot be offset by using less energy. As a policy matter, this hurts customers’ ability to control the size of their bills through conservation or energy efficiency.” [Migden-Ostrander, OCC Media Release]
She spelled out her three concerns with the rate increase proposal, citing a shifting in costs for the customer charge, the unnecessary continuation of a replacement program from which she says the company has spent little of the money it has already collected and an overreaching base rate increase she said one-fifth of what’s proposed.
When asked about whether such a dramatic rise in rates is good for consumers who are undergoing pocketbook stress due to rising food and fuel costs and whether he will weigh in on the case at this early date, Strickland spokesman Keith Dailey maneuvered around the question, choosing instead to say the “governor believes the Public Utilities Commission of Ohio is the appropriate state agency to make these decisions” because it has “the statutory authority to decide rate cases on behalf of the people of Ohio.”
When pressed further by ONB for a more direct response, Dailey wrote in an email that the governor’s “primary concerns are protecting consumers by preventing skyrocketing energy price spikes when the current rate stabilization plans end on Dec. 31, 2008, ensuring Ohio is well positioned to create tens of thousands of new jobs by encouraging investment in renewable and advanced energy technologies and safeguarding Ohio families by empowering consumers to demand greater efficiency, transparency and service from their utility companies.”
For these reasons, Dailey said that why "the governor has been working so hard to pass his comprehensive energy reform bill.
Duke Energy Ohio's rate filing can be seen here. In it DE-Ohio says they want their 424,000 customers to pay higher rates to "generate sufficient revenues for DE-Ohio to pay its operating expenses, to "service its debt, and to provide an adequate rate of return on its property used and use-fill in the rendition of gas service to its customers."
The energy giant says it wants a return rate closer to the 9.27 percent the PUCO already "found reasonable" in a previous natural gas rate case, and that the rate of 5.62 percent projected by agency staff for the proposed test period of one year isn't to their liking. Their application suggests a more reasonable rate of return rate of 8.73 percent, which they describe as "fair and reasonable."
Hearings in the Duke Energy Ohio rate case before the PUCO itself have not been scheduled to date, according to Matt Butler, an agency spokesman. However, ONB has learned that the PUCO has set dates for public hearings in and around Cincinnati in southwestern Ohio.
An OCC media release encouraged citizens to attend these regional hearings, saying the overall rate increase proposal would disproportionately impact residential customers in smaller homes or who try to be energy efficient.
John Michael Spinelli is a former Ohio Statehouse government and political reporter and business columnist. He now serves as the OhioNews Bureau Chief for ePluribus Media Journal. Find ONB archives here.
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