In re Application of FirstEnergy Advisors for Certification as a Competitive Retail Elec. Serv. Power Broker & Aggregator (Slip Opinion) , 2021 Ohio 3630 ( 2021 )

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as In
re Application of FirstEnergy Advisors for Certification as a Competitive Retail Elec. Serv. Power
Broker & Aggregator, Slip Opinion No. 2021-Ohio-3630.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
SLIP OPINION NO. 2021-OHIO-3630IN RE APPLICATION OF SUVON, L.L.C., D.B.A. FIRSTENERGY ADVISORS, FOR
CERTIFICATION AS A COMPETITIVE RETAIL ELECTRIC SERVICE POWER
BROKER AND AGGREGATOR IN OHIO; OFFICE OF OHIO CONSUMERS’ COUNSEL
AND NORTHEAST OHIO PUBLIC ENERGY COUNCIL, APPELLANTS; PUBLIC
UTILITIES COMMISSION, APPELLEE; SUVON, L.L.C., D.B.A. FIRSTENERGY
ADVISORS, INTERVENING APPELLEE.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as In re Application of FirstEnergy Advisors for Certification as a
Competitive Retail Elec. Serv. Power Broker & Aggregator, Slip Opinion No.
2021-Ohio-3630.]
Public utilities—R.C. 4928.08—Certification of competitive retail-electric-service
providers—Before it can be certified by the Public Utilities Commission, a
company must prove, among other things, that it has the managerial,
financial, and technical fitness and capability to (1) provide competitive
retail electric service and (2) comply with all applicable commission rules
and orders—Ohio Adm.Code 4901:1-24-10(C)(1) and (C)(2)—Public
January Term, 2021
Utilities Commission must file a written opinion setting forth the reasons
for certifying a company as fit and capable of providing retail electric
service and complying with the commission’s rules.
(No. 2020-1009—Submitted June 29, 2021—Decided October 14, 2021.)
APPEAL from the Public Utilities Commission, No. 20-0103-EL-AGG.
____________________
DEWINE, J.
{¶ 1} Ohio consumers have the option of purchasing electricity in the
competitive marketplace through a variety of competitive retail-electric-service
providers. Before an entity of this type can market its services to customers, it must
be certified by the Public Utilities Commission of Ohio (“PUCO”). R.C.
4928.08(B). In this case, we deal with an appeal from a PUCO decision granting
certification to one such provider, Suvon, L.L.C., d.b.a. FirstEnergy Advisors
(“FirstEnergy Advisors”).
{¶ 2} To be certified by PUCO, a company must prove, among other things,
that it has the managerial, financial, and technical fitness and capability to (1)
provide competitive retail electric service and (2) comply with all applicable
commission rules and orders. Ohio Adm.Code 4901:1-24-10(C)(1) and (C)(2).
Two organizations intervened in PUCO proceedings and objected to the
certification, raising issues about FirstEnergy Advisors’ relationship with its parent
company—FirstEnergy Corporation.
{¶ 3} Despite the objections, PUCO granted the certification request,
issuing a barebones order that offered no explanation as to how FirstEnergy
Advisors met the applicable legal requirements. In regard to FirstEnergy Advisors’
relationship with its parent, PUCO concluded that these issues were best deferred
to be dealt with in another ongoing PUCO proceeding.
{¶ 4} We now reverse PUCO’s certification decision and remand the matter
to the commission for further proceedings. By statute, PUCO must file “findings
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of fact and written opinions setting forth the reasons prompting the decisions
arrived at.” R.C. 4903.09. The order in this case falls well short of this requirement.
Further, in deferring consideration of issues relating to FirstEnergy Advisors’
relationship with its parent corporation to another proceeding, PUCO violated its
statutory duty to find, before approving a certification application, that a company
is fit and capable of complying with all commission rules.
I. Background
{¶ 5} Before we get to the facts, a brief overview of Ohio’s energy
landscape is helpful. Consumers have the option of purchasing electricity either
from their local “distribution utility”—which also provides the infrastructure that
delivers the electricity to the end-user—or through a host of competitive retail
electric service providers (“CRES providers”). See Ohio Consumers’ Counsel v.
Pub. Util. Comm., 110 Ohio St.3d 394, 2006-Ohio-4706, 853 N.E.2d 1153, ¶ 5. In
either case, the electricity is delivered over wires owned and maintained by the local
distribution utility, and that company can continue to charge for the delivery
service. Id.{¶ 6} A distribution utility may compete on the competitive wholesale
market by establishing its own CRES provider. R.C. 4928.01(A)(4), (A)(9), and
(A)(27); R.C. 4928.17(A)(1) and (2); R.C. 4928.08. In addition to selling electricity
directly to customers, CRES providers may offer brokerage and aggregation
services. Entities that provide power brokerage services arrange for the sale and
supply of electricity to consumers, but they do not acquire title to the electricity
sold. Electric aggregators bring consumers together in a buying group and
negotiate with electricity suppliers for better prices and other benefits.1 Public
1. For background on aggregation and brokerage in Ohio’s Energy Choice program see generally
Ohio Consumer’s Counsel, Energy Choice 101, http://www.occ.ohio.gov/factsheet/energy-choice-
101 (accessed Sept. 8, 2021) [https://perma.cc/9WXW-FRAK]; Public Utilities Commission of
Ohio, Energy Choice Ohio—What is aggregation, https://energychoice.ohio.gov/Pages/What is
Aggregation.aspx (accessed Sept. 8, 2021) [https://perma.cc/7GG3-5YZ7]; Public Utilities
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Utility Commission of Ohio, Competitive Retail Electric Service Provider Forms
and Applications, https://puco.ohio.gov/wps/portal/gov/puco/utilities/electricity/
resources/competitive-retail-electric-service-certification (accessed Sept. 8, 2021)
[https://perma.cc/3Q7M-L8UX]. To prevent a utility-affiliated CRES provider
from having an unfair advantage in the marketplace, the utility-affiliated CRES
provider must be fully separate from the distribution utility. R.C. 4928.17(A)(1).
And before a company can begin providing such services, it must be certified by
PUCO. R.C. 4928.08(B).
{¶ 7} FirstEnergy Corporation is the parent company of several distribution
utilities, including the Ohio Edison Company, the Cleveland Electric Illuminating
Company, and the Toledo Edison Company. It is also the parent of FirstEnergy
Advisors, the CRES provider that is the subject of this appeal.
A. FirstEnergy Advisors applies to PUCO for certification
{¶ 8} In January 2020, FirstEnergy Advisors applied for certification to
provide aggregator and brokerage services as a CRES provider. In re the
Application of Suvon, L.L.C., d.b.a. FirstEnergy Advisors, as a Competitive Retail
Electric Service Power Broker and Aggregator in Ohio, Pub. Util. Comm. No. 20-
0103-EL-AGG. Applications for certification are automatically approved 30 days
after filing, unless PUCO or one of its attorney-examiners suspends the application.
R.C. 4928.08(B) and Ohio Adm.Code 4901:1-24-10(A). The two appellants in this
action, the Northeast Ohio Public Energy Council and the Ohio Consumers’
Counsel (collectively, “the objectors”) moved to intervene before PUCO, as did
several other parties. At the same time, the objectors asked PUCO to suspend
FirstEnergy Advisors’ application and to conduct an evidentiary hearing. Their
joint motion was premised on FirstEnergy Advisors’ alleged failure to comply with
Commission of Ohio, Energy Choice Ohio—Glossary of Terms,
https://energychoice.ohio.gov/Pages/Glossary of Terms.aspx (accessed on Sept. 8, 2021)
[https://perma.cc/ZE2J-KK3V].
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requirements that there be “corporate separation,” see R.C. 4928.17, between itself
and distribution utilities associated with FirstEnergy Corporation.
B. A brief detour: the audit case
{¶ 9} To allow the reader to understand the gravamen of the concerns raised
by the objectors, we need to provide some background on a separate proceeding,
which we will call the “audit case.” To prevent unfair competition, Ohio law
imposes “corporate-separation” requirements on CRES providers that are affiliated
with an electric-distribution utility. See R.C. 4928.17; Ohio Adm.Code Chapter
4901:1-37. In 2017, PUCO opened a case to determine whether the three
FirstEnergy electric-distribution utilities operating in Ohio are complying with
these legal requirements. See In re Review of the Ohio Edison Company, the
Cleveland Electric Illuminating Company, and the Toledo Edison Company’s
Compliance with R.C. 4928.17 and the Ohio Adm.Code Chapter 4901:1-37, Pub.
Util. Comm. No. 17-0974-EL-UNC.
{¶ 10} An independent auditor selected by PUCO prepared a report in 2018
that focused primarily on the FirstEnergy utilities’ relationship with FirstEnergy
Solutions Corporation, then a CRES provider affiliated with FirstEnergy. The audit
report recommended that the entities modify several practices that provided
FirstEnergy Solutions with a competitive advantage. The report found that the
sharing of certain employees between FirstEnergy Solutions, FirstEnergy
Corporation, and the FirstEnergy distribution utilities was inappropriate because it
gave FirstEnergy Solutions access to information and resources not available to
other market participants. The audit report also recommended that PUCO require
FirstEnergy Solutions to stop using the “FirstEnergy” name, to eliminate affiliate
bias and prevent customer confusion.
{¶ 11} Before a final report was issued, FirstEnergy Solutions filed for
Chapter 11 bankruptcy protection. The company later emerged from bankruptcy,
adopted a new name, and is no longer affiliated with FirstEnergy Corporation. Pub.
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Util. Comm. No. 17-0974-EL-UNC, Entry, ¶ 6-7 (Dec. 2, 2020). Despite this, the
audit case remains open. And as we will explain shortly, PUCO is using the case
as a vehicle to examine the corporate-separation issues relating to FirstEnergy
Advisors.
C. PUCO certifies FirstEnergy Advisors
{¶ 12} We now return to the FirstEnergy Advisors’ certification
proceeding. Relying on information from the audit case, the objectors alleged two
ways in which FirstEnergy Advisors lacked the “managerial, technical, and
financial capability” to provide competitive retail electrical services and comply
with all applicable PUCO rules and regulations. First, they asserted that by sharing
corporate officers and directors with FirstEnergy Corporation and the FirstEnergy
distribution utilities, FirstEnergy Advisors violated the requirement of R.C.
4928.17(A)(1) that electrical services be provided through “a fully separated
affiliate of the utility.” They noted, for example, that Charles Jones—FirstEnergy
Corporation’s CEO—also served as a manager of FirstEnergy Advisors and as a
director of FirstEnergy’s regulated utilities. Likewise, one other senior officer of
FirstEnergy Corporation held a management position in both FirstEnergy Advisors
and the regulated utilities and another held a management position with FirstEnergy
Advisors. Second, they contended that FirstEnergy Advisors, by using the
“FirstEnergy” name, was violating Ohio Adm.Code 4901:1-37-04(D)(7), which
prohibits distribution utilities from specifying that a CRES provider is an affiliate.
In support of their motion, the objectors relied on findings made by PUCO in the
audit case.
{¶ 13} The day after the objectors’ filings, an attorney-examiner suspended
the certification process to allow the commission additional time to investigate
FirstEnergy Advisors’ application. Pub. Util. Comm. No. 20-0103-EL-AGG,
Entry, ¶ 5-9 (Feb. 11, 2020).
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{¶ 14} Several weeks later, PUCO staff issued a two-paragraph report
recommending approval of the application. The report states:
[FirstEnergy] Advisors has answered all applicable sections and
provided all required exhibits as listed in the application form. In
addition, [FirstEnergy] Advisors has stated that it intends to comply
with all commission rules.
* * * Staff has thoroughly reviewed and evaluated this
application, accompanying exhibits, and amendments. Based on
this review, Staff believes the application filed by * * * FirstEnergy
Advisors * * *, as amended * * *, is in compliance with [the] Ohio
Administrative Code and therefore, Staff recommends that this
application be approved.
{¶ 15} While PUCO was considering whether to adopt the staff
recommendation, the objectors served discovery requests on FirstEnergy Advisors.
FirstEnergy Advisors refused to provide the requested discovery, and the objectors
responded by filing motions to compel. FirstEnergy Advisors, in turn, sought a
protective order to prevent discovery from going forward.
{¶ 16} A little over two weeks after receiving the staff report and
recommendation, PUCO entered an order adopting the staff report and approving
FirstEnergy Advisors’ application. In regard to the issues raised by the objectors,
PUCO concluded that issues concerning use of the FirstEnergy name and
“compliance with corporate separation requirements by FirstEnergy Corp. affiliates
are best raised in other proceedings, specifically” the audit case. Pub. Util. Comm.
No. 20-0103-EL-AGG, Finding and Order, ¶ 20 (April 22, 2020). Having pushed
the corporate-separation issues to the side, PUCO next determined that “the only
relevant issues” were whether FirstEnergy Advisors had the managerial, financial,
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and technical capabilities to provide electricity aggregator and brokerage services
in Ohio. Id. at ¶ 21. It noted that its staff had “thoroughly reviewed” FirstEnergy
Advisors’ application and that no “other parties have raised material issues
regarding [FirstEnergy Advisors’] managerial, technical and financial capability.”
Id.
{¶ 17} In granting the application, PUCO found that no hearing was
necessary. Id. at ¶ 22. It also denied as moot the objectors’ motions to compel
discovery as well as FirstEnergy Advisors’ request for a protective order. Id. at
¶ 25.
{¶ 18} The objectors requested rehearing, which PUCO denied. Pub. Util.
Comm. No. 20-0103-EL-AGG, Entry on Rehearing, ¶ 1 (June 17, 2020). In
denying rehearing, PUCO noted that the auditor’s finding in the audit case on the
use of the FirstEnergy trade name “represent[ed] a significant departure from well-
established Commission precedents” and that it would be more efficient to deal
with that issue, as well as the shared-employee issue, in the audit case. Id. at ¶ 16.
As for the objectors’ claim that it had failed to make factual findings and
conclusions of law as required by R.C. 4903.09, PUCO simply stated: “[W]e find
that our reasoning, and the factual basis supporting approval of [FirstEnergy
Advisors’] application, are easily discernable from the [original] Finding and
Order.” Id. at ¶ 28.
{¶ 19} The objectors appealed to this court, each raising several
propositions of law, some of which overlap. Generally, they assert that PUCO erred
by (1) failing to provide a sufficient rationale for its decision, (2) approving the
application without determining whether FirstEnergy Advisors met corporate-
separation requirements, (3) denying the objectors an opportunity to conduct
discovery, (4) failing to hold a hearing, and (5) improperly shifting the burden of
proof to the objectors. The commission has defended its order, and we granted
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FirstEnergy Advisors’ request to intervene in this appeal. 160 Ohio St.3d 1402,
2020-Ohio-4481, 153 N.E.3d 97.
II. Analysis
A. The commission’s order violates R.C. 4903.09 because it fails to explain the
reasoning and factual grounds for granting FirstEnergy Advisors’ application
{¶ 20} We take up first the assertion that PUCO violated R.C. 4903.09,
which requires it to explain the reasoning and factual grounds for its decision. That
provision provides:
In all contested cases heard by the public utilities
commission, a complete record of all of the proceedings shall be
made, including a transcript of all testimony and of all exhibits, and
the commission shall file, with the records of such cases, findings of
fact and written opinions setting forth the reasons prompting the
decisions arrived at, based upon said findings of fact.
(Emphasis added.)
{¶ 21} The purposes behind R.C. 4903.09’s requirements are
straightforward. For a reviewing court to do its job, it needs to have enough
information to know how the commission reached its result. Allnet
Communications Servs., Inc. v. Pub. Util. Comm., 70 Ohio St.3d 202, 209, 638
N.E.2d 516 (1994). The “statute requires the commission to set forth the reasons
for its decisions and prohibits summary rulings and conclusions that do not develop
the supporting rationale or record.” In re Application of Ohio Power Co., 155 Ohio
St.3d 326, 2018-Ohio-4698, 121 N.E.3d 320, ¶ 24.
{¶ 22} Of course, PUCO can adopt reports prepared by its staff and
incorporate them into its order, but these reports must satisfy the requirements of
the statute; that is, they must contain sufficient factual findings and conclusions of
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law. MCI Telecommunications Corp. v. Pub. Util. Comm., 32 Ohio St.3d 306, 311,
513 N.E.2d 337 (1987). At bottom, PUCO’s order “must show, in sufficient detail,
the facts in the record upon which the order is based, and the reasoning followed
by the [commission] in reaching its conclusions.” Id. at 312. The order here does
neither.
{¶ 23} To approve FirstEnergy Advisors’ application, PUCO was required
to find that the company was “managerially, financially, and technically fit and
capable of” (1) “performing the service it intends to provide” and (2) “complying
with all applicable commission rules and orders.” Ohio Adm.Code 4901:1-24-
10(C)(1) and (C)(2).
{¶ 24} Neither PUCO’s order nor the staff report it adopts explains how
FirstEnergy Advisors is managerially, financially, and technically fit to provide
electricity aggregator and brokerage services. The staff report simply recites that
FirstEnergy Advisors provided the requested materials, that PUCO staff
“thoroughly reviewed” these materials, and that the staff believes that the
application complies with the Ohio Administrative Code.
{¶ 25} PUCO did not make any independent findings about FirstEnergy
Advisors’ managerial fitness and competence to provide competitive retail electric
services. Rather than engage in any analysis of whether FirstEnergy Advisors met
the statutory requirements, PUCO simply noted that none of the intervening parties
countered the staff report’s findings or “raised material issues” about FirstEnergy
Advisors’ capability to provide the applied-for services. Pub. Util. Comm. No. 20-
0103-EL-AGG, Finding and Order at ¶ 21 (April 22, 2020). It did not explain how
FirstEnergy Advisors established that its managers and employees have the skill,
experience, and training needed to provide competitive retail electric services to
Ohio consumers. See Ohio Adm.Code 4901:1-24-10(C)(1). Nor did it cite any
facts in the record to support its conclusions.
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{¶ 26} Similar deficiencies arise when we consider the requirement that
PUCO find that FirstEnergy Advisors is fit and capable of complying with all
applicable commission rules and orders. The staff report simply recites that
FirstEnergy Advisors “has stated that it intends to comply with all commission
rules.” That report, however, does not explain how FirstEnergy Advisors’
application establishes that the company’s managers and employees possess the
skill, experience, and training necessary to provide broker and aggregator services.
Nor is it self-evident how the staff’s recitation of FirstEnergy Advisors’ statement
that it intends to comply with all commission rules satisfies PUCO’s obligation to
find that FirstEnergy Advisors is fit and capable of complying with commission
rules. Rather than relying on the company’s stated intent, PUCO should have
identified plans, procedures, and protocols FirstEnergy Advisors has in place that
show the company is fit and capable of complying with all applicable commission
rules and orders.
{¶ 27} In sum, PUCO violated R.C. 4903.09 in two ways. First, it failed to
provide a reasoned explanation of the basis of its decision that FirstEnergy Advisors
met the requirements of Ohio Adm.Code 4901:1-24-10(C)(1) and (2). See In re
Application of Duke Energy Ohio, Inc., 148 Ohio St.3d 510, 2016-Ohio-7535, 71
N.E.3d 997, ¶ 19-22; MCI Telecommunications Corp., 32 Ohio St.3d at 311, 513
N.E.2d 337. And it failed to identify the facts in the record on which it based its
decision. See Ohio Consumers’ Counsel v. Pub. Util. Comm., 111 Ohio St.3d 300,
2006-Ohio-5789, 856 N.E.2d 213, ¶ 22-36; Tongren v. Pub. Util. Comm., 85 Ohio
St.3d 87, 89-91, 706 N.E.2d 1255 (1999).
{¶ 28} FirstEnergy Advisors argues that even if PUCO did not comply with
its obligation to provide a sufficient rationale for its decision, we should not reverse
PUCO’s order because the objectors have failed to show that they have suffered
any actual prejudice by PUCO’s certification of FirstEnergy Advisors. Essentially,
FirstEnergy Advisors argues that the most the objectors can complain about is the
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possibility that FirstEnergy Advisors will engage in anticompetitive practices after
certification and that such a possibility does not constitute prejudice sufficient to
allow for reversal of the PUCO certification order.
{¶ 29} Under FirstEnergy’s prejudice theory, a PUCO certification order
would essentially be unreviewable. Harm from an improper certification will
always be speculative until the newly certified CRES provider enters the
marketplace and engages in harmful behavior. We are reluctant to read the
prejudice requirement so broadly that it would swallow up the right to challenge a
CRES certification altogether.
{¶ 30} We have also recognized in the context of R.C. 4903.09 challenges
that PUCO’s failure to provide any rationale for its order may effectively preclude
a party from showing prejudice. Tongren, 85 Ohio St.3d at 92-93, 706 N.E.2d
1255. In Tongren, we explained that when “[PUCO] fails to provide a record, the
complaining party is effectively foreclosed from ‘demonstrating’ the prejudicial
effect of the order.” Id. at 92. Thus,
where [PUCO] fails to meet the requirements of R.C. 4903.09 by
not disclosing the sources of its information to those who most
require it, thereby preventing the complaining party from
demonstrating prejudice, the matter must be remanded for
development of an appropriate record, to leave open the potential
demonstration of prejudice by a party based upon that record in a
subsequent appeal.
Id. at 92-93.
{¶ 31} To be sure, Tongren involved circumstances somewhat different
from those present here; in that case, PUCO’s order referred to various findings and
recommendations of staff that were not made part of the record. But the same
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principle applies: without knowing why the commission decided what it did, an
objector faces an almost insurmountable task in showing prejudice. As a result, we
conclude that the matter should be remanded for PUCO to make factual and legal
findings consistent with its obligations under R.C. 4903.09.
{¶ 32} This is not to say that the application necessarily lacks sufficient
information. PUCO may be able to explain on remand how FirstEnergy Advisors
met the requirements of Ohio Adm.Code 4901:1-24-10(C)(1) and (2). But PUCO
explained none of these matters, and the stated basis for its decision (the staff
report) lacks sufficient reasoning.
B. PUCO erred by deferring a determination whether FirstEnergy Advisors
is fit and capable of complying with corporate-separation requirements
{¶ 33} We also conclude that PUCO violated its duty to find that
FirstEnergy Advisors was “fit and capable of complying with all applicable
commission rules” by deferring all consideration of the corporate-separation issues
to the audit case.
{¶ 34} An electric utility and a CRES affiliate that provide services within
the utility’s service area must comply with a detailed set of legal requirements.
Ohio Adm.Code 4901:1-37-04. A utility is not barred from sharing employees with
an affiliate, but when it does so, it must comply with a “code of conduct” designed
to prevent the utility-affiliated company from gaining an unfair competitive
advantage over other competitors. Ohio Adm.Code 4901:1-37-04(A)(4) and (D).
The code of conduct prohibits the improper flow of information between shared
service employees of the electric utility and competitive affiliates. See Ohio
Adm.Code 4901:1-37-04(D)(1), (3), and (4).
{¶ 35} Here, PUCO made no finding at all about FirstEnergy Advisors’
capability or fitness to comply with these rules. There was no examination of the
shared employees nor of procedures and policies FirstEnergy Advisors had in place
to prevent information from passing improperly between shared employees.
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Instead of determining whether FirstEnergy Advisors had shown that it could
comply with the code of conduct, PUCO deferred all issues regarding corporate-
separation requirements to the audit case. Pub. Util. Comm. No. 20-0103-EL-
AGG, Entry on Rehearing at ¶ 11, 33 (June 17, 2020).
{¶ 36} This PUCO cannot do. Under R.C. 4928.08(B), a company cannot
provide competitive retail electric services to consumers “without first being
certified.” And to be certified, PUCO must find that an applicant is “fit and capable
of complying” with the commission’s rules. Ohio Adm.Code 4901:1-24-10(C)(2).
These rules provide no flexibility for PUCO to defer a finding about a CRES
provider’s fitness and capability to comply with the rules until after PUCO has
certified the applicant.
{¶ 37} In arguing that the requisite finding was made, FirstEnergy Advisors
and PUCO point to PUCO’s statement that its staff had thoroughly reviewed and
evaluated the company’s ability to comply with PUCO’s rules or orders under R.C.
Chapter 4928. But this general pronouncement must be read in conjunction with
PUCO’s explicit statements that the corporate-separation issues are “best raised in
other proceedings,” Pub. Util. Comm. No. 20-0103-EL-AGG, Finding and Order
at ¶ 20-21 (April 22, 2020), and that as a result, “the only relevant issues in this
certification proceeding are whether [FirstEnergy] Advisors has the managerial,
technical and financial capability to be a CRES broker/aggregator in this state,” id.
at ¶ 21. When PUCO’s orders—both its initial order and its order on
reconsideration—are read as a whole, it is clear that PUCO made no determination
about FirstEnergy Advisors’ capability and fitness to comply with the corporate-
separation requirements but deferred all consideration of these matters to the audit
case.
{¶ 38} To be clear, it was not error for the commission to defer questions
about FirstEnergy Advisors’ actual compliance with the code of conduct to another
proceeding once the company had been certified to provide broker and aggregator
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services. But PUCO was required to decide whether FirstEnergy Advisors had
demonstrated that it could comply with corporate-separation requirements before
certifying the company to provide service in Ohio.
{¶ 39} Thus, on remand, before granting certification, PUCO must
determine whether FirstEnergy Advisors had demonstrated that it is fit and capable
of complying with all PUCO rules, including corporate-separation requirements. It
cannot simply defer resolution of these matters to another proceeding.
C. The other issues presented for review may be resolved in short order
{¶ 40} Given our decision to remand this matter to PUCO, we can resolve
the remaining issues in short order and provide guidance to the commission on
remand.
{¶ 41} First, on remand, PUCO should decide on the merits the discovery
motions filed by the objectors. In its order, the commission denied the motions to
compel discovery as moot because it had approved FirstEnergy Advisors’
application on the merits. Pub. Util. Comm. No. 20-0103-EL-AGG, Finding and
Order at ¶ 25 (April 22, 2020). And on rehearing, PUCO provided an additional
rationale, asserting that the objectors had not “expeditiously prosecute[d]” their
discovery motions under the expedited review process found in R.C. 4928.08(B)
(giving the commission 90 days to approve or deny an application for certification
after an attorney-examiner suspends consideration). Pub. Util. Comm. No. 20-
0103-EL-AGG, Entry on Rehearing at ¶ 23 (June 17, 2020). Because our decision
reverses PUCO’s order granting FirstEnergy Advisors’ application on the merits,
on remand the discovery issue will not be moot.
{¶ 42} We have recognized PUCO’s broad discretion to regulate its
proceedings and manage its docket. See, e.g., Weiss v. Pub. Util. Comm., 90 Ohio
St.3d 15, 19, 734 N.E.2d 775 (2000). But intervening parties in proceedings before
PUCO also have a statutory right to discovery under R.C. 4903.082. See also Ohio
Adm.Code 4901-1-16(B) and (H). And we have construed these provisions as
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allowing broad discovery of nonprivileged matters. See Ohio Consumers’ Counsel
v. Pub. Util. Comm., 111 Ohio St.3d 300, 2006-Ohio-5789, 856 N.E.2d 213, ¶ 82-
83. To be sure, PUCO was under a tight deadline given the expedited review of
certification applications. But both objectors requested discovery from FirstEnergy
Advisors and, when such discovery was not forthcoming, sought PUCO’s
assistance within the statutory timeframe. PUCO should have decided whether
discovery was necessary; not simply decided that discovery was unnecessary
because it had already made a decision. On remand, PUCO should rule on the
merits of the discovery motions before issuing a decision on the certification
application. In doing so it will need to balance the statutory right to discovery and
the constraints imposed by the statutory time frame for ruling on the certification
application.
{¶ 43} Second, PUCO will need to rule on the objectors’ request for an
evidentiary hearing. The objectors have asserted that PUCO abused its discretion
by approving the certification application without holding an evidentiary hearing
on FirstEnergy Advisors’ application. Our determination to reverse and remand so
that PUCO can explain its decision renders this proposition of law moot. On
remand, PUCO may “[a]t its discretion, set the matter for hearing.” See Ohio
Adm.Code 4901:1-24-10(A)(2)(c). In exercising this discretion, PUCO will need
to be mindful of the statutory time frame for decision-making and consider the
extent to which a hearing would be beneficial in view of the materials submitted in
support of the application and the objections that have been raised.
{¶ 44} Third, one of the objectors has argued that PUCO improperly shifted
the burden of proof. The basis for this argument comes from PUCO’s reliance in
its order denying reconsideration on the fact that “no party in this case had
materially disputed Staff’s determination that [FirstEnergy Advisors] had the
managerial, technical and financial capability to serve as a CRES power broker and
aggregator.” Pub. Util. Comm. No. 20-0103-EL-AGG, Entry on Rehearing at ¶ 28
16
January Term, 2021
(June 17, 2020). Our decision to set aside PUCO’s order and remand the case
renders this proposition of law moot. In evaluating the application on remand, we
trust that PUCO will be mindful that it remains the applicant’s burden to
demonstrate that it meets the statutory requirements for certification regardless of
whether any other party has disputed the applicant’s qualifications.
III. Conclusion
{¶ 45} For these reasons, we reverse PUCO’s orders and remand the case
to PUCO for further proceedings consistent with this opinion.
Orders reversed
and cause remanded.
O’CONNOR, C.J., and KENNEDY, FISCHER, DONNELLY, STEWART, and
BRUNNER, JJ., concur.
_________________
Bruce Weston, Ohio Consumers’ Counsel, and Angela D. O’Brien,
Assistant Consumers’ Counsel; and Carpenter, Lipps & Leland, L.L.P., and
Kimberly W. Bojko, for appellant Office of the Ohio Consumers’ Counsel.
Bricker & Eckler, L.L.P., Glenn S. Krassen, and Dane Stinson, for appellant
Northeast Ohio Public Energy Council.
Dave Yost, Attorney General, and John H. Jones, Thomas G. Lindgren, and
Kyle L. Kern, Assistant Attorneys General, for appellee.
Benesch, Friedlander, Coplan & Aronoff, L.L.P., N. Trevor Alexander, and
Kari D. Hehmeyer, for intervening appellee Suvon L.L.C., d.b.a. FirstEnergy
Advisors.
_________________
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