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Millions at stake in PUCO complaint

Re-vote by regulators could cost DP&L customers big.

Most DP&L utility customers didn’t know it, but a little publicized vote of the Public Utilities Commission of Ohio last September cost them up to $63.8 million.

On Sept. 4, 2013, four commissioners signed off on an order that detailed how Dayton Power & Light Co. must spin off its electric generation assets. Included in the order were surcharges DP&L may collect from customers and the timetable for when DP&L must offer service at competitive market rates. The PUCO, which regulates Ohio utilities, issued a press release describing the terms.

But two days later, three members of the five-member PUCO board signed a new entry that granted DP&L a longer timetable and authorized the company to collect $63.8 million more from consumers. The meeting to approve the second order took just two minutes, according to meeting minutes.

The PUCO said commissioners made a mistake and signed the wrong order the first time around.

The order is part of an effort that started in 1999 to move Ohio’s electric utilities from regulated companies that charge government approved rates to ones that offer competitive prices driven by the market.

Utilities were given a long window to transition from regulated rates to the competitive market, during which they were allowed to recover “stranded costs” — money that they’d lose from switching to competitive prices. By giving DP&L a longer window to collect on those costs — to December 2016, according to the second order — the utility was allowed to collect millions of dollars more from its 500,000 customers in southwest Ohio. DP&L is the last large electric provider to move to market-driven rates.

PUCO and DP&L officials aren’t saying who made the error, who noticed it or who asked that it be corrected. A public records request by the Dayton Daily News for phone records, emails, memos and other documents did not offer any clues either. The PUCO communicated the situation to Gov. John Kasich’s office but those documents were withheld by both Kasich’s office and PUCO because they contained legal advice.

The Ohio Consumers’ Counsel, which acts as the lawyer for the state’s 4.5 million residential utility consumers, protested the second order and how it was delivered. “An administrative error cannot justify the magnitude of changes that the PUCO announced in its nunc pro tunc entry,” the OCC said in filings with the PUCO, referring to the term used to substitute language in a legal document. “All of those changes were made with no reasoning offered and no mention of the record.”

Former PUCO chairman Alan Schriber said typically, a “nunc pro tunc” is used to correct clerical errors such as if “millions” was written instead of “billions.”

Commissioner Steve Lesser, whose career at the PUCO spans four decades, wasn’t there for the vote on the second order.

“It was Rosh Hashanah, a Jewish holiday,” he said. “I do not officially know what the discussion was. I knew what order I was signing the first day. I can’t speak to what other commissioners knew.”

Minutes of the meeting say he supported the second order, though Lesser said he was only advised that an error needed to be corrected.

Other commissioners did not return telephone messages. A spokesman for the PUCO said they couldn’t comment on a pending case. (Commissioner Asim Haque abstained from signing either order since he previously represented Honda Manufacturing of America, which weighed in on the DP&L case.)

Ethics questions raised

After the second order went through, DP&L’s parent company, AES, gave a consulting contract to Eric Weldele, who had been the PUCO chief of staff when the revised entry went through.

“Mr. Weldele is a consultant, currently under contract with AES, for work on DP&L regulatory matters that were filed after his employment with the PUCO concluded,” according to a statement from DP&L’s corporate communications office. The utility did not disclose what Weldele is working on or how much he is being paid.

Weldele is a partner in the Columbus-based lobbying and political consulting firm, Cox Consulting Group.

Weldele resigned his $109,000-a-year PUCO job on Dec. 3 and Gov. John Kasich appointed him to the PUCO nominating committee 10 days later. The committee, which meets as needed, screens candidates for appointment to the PUCO.

“My practice is to not discuss deliberations on matters pending when I was chief of staff at the PUCO,” Weldele said in an email to the Daily News. “With respect to my current consulting relationship with AES, I’ve been retained to advise the company in connection with a matter filed after I left my employment with the PUCO. As it is a new matter, it is permitted under Ohio ethics rules.”

State ethics laws prohibit former public employees, for 12 months after leaving public service, from representing clients on any issues that they handled while working for the government. The prohibition window is 24 months for PUCO commissioners and attorney examiners.

Weldele sought and received an advisory opinion from the Ohio Ethics Commission in March. The opinion outlines state law and instructs Weldele that he can represent clients on new matters only.

“Because of your position as chief of staff, you would have to be extremely cautious during the first year after you leave PUCO to ensure that any representation of a party by yourself is on a new matter that arose after you left or a matter than never came before the PUCO during your employment,” the five-page opinion says.

Weldele did not respond to a question about what new matter he is representing DP&L on before the PUCO.

Earlier this year, the Indiana Supreme Court disciplined a former top lawyer at the Indiana Utility Regulatory Commission for lining up a job for himself with Duke Energy while the commission was considering whether to allow Duke to pass along to customers hundreds of millions of dollars in costs, the Indianapolis Star reported.

Attorney Sam Randazzo, who represents the Industrial Users of Ohio and has been a utility regulatory attorney for more than 40 years, said Weldele working for DP&L raises a perception issue.

“I can’t identify a specific problem. I’d say at a minimum, the perception is a problem. He was clearly involved in cases involving DP&L and AES — DP&L’s only shareholder. But it would depend on what his role is with DP&L and AES,” Randazzo said.

Case still pending

The Ohio Consumers’ Counsel, the Industrial Energy Users of Ohio and interested parties are continuing to fight elements in the PUCO order on the DP&L case.

“It is a big deal as the $63 million difference would suggest,” Randazzo said. “It’s an important case.”

Immediately following the Sept. 6 order, the OCC and others asked for a rehearing. The commission granted a rehearing and reworked the schedule imposed on DP&L to move to a competitive market. That triggered another round of requests for a rehearing by the interested parties.

The case is still before the PUCO but may eventually be appealed to the Ohio Supreme Court, which can take 18 to 24 months to render a decision. In the meantime, DP&L has been authorized to begin collecting the authorized charges from its customers.

Randazzo said if the court rules two years from now that the PUCO order was improper, there is no rebate for consumers. “The clock may have run as a practical matter,” he said. “There is no remedy available to customers.”

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