Gov. Mike DeWine vetoed a measure Wednesday that would’ve set the terms for utility submetering companies in Ohio. Those companies purchase electricity in bulk at a lower rate and then sell it to a multi-unit complex like apartments or condos at a higher residential rate.
Ohio House Bill 173’s supporters contend it’s good deal for consumers. The measure included protections against utility shutoffs and access to the federally funded Home Energy Assistance Program. Late additions to the bill even required submetering companies to charge slightly less than the typical residential rate.
But detractors pointed to submetering companies’ reputation for unexplained fees and shoddy customer service. Residents at a submetered complex can’t use Ohio’s Percent of Income Payment Plan, and they can’t shop for a different power provider like any other Ohio ratepayer.
In his veto message, DeWine nodded to the sponsors’ efforts to protect consumers.
“However,” he added, “the submetering model, itself, is fundamentally flawed.”
What went wrong
“What is a utility?” is at the heart of the submetering debate. Ohio law holds that a company “engaged in the business of supplying energy” to consumers is a utility. Submetering companies insisted that definition didn’t fit their business. Instead of delivering energy to consumers they were delivering it to landlords.
Ohio regulators bought that explanation. The state supreme court did not.
In a unanimous April decision penned by the governor’s son, Justice Patrick DeWine, the court determined “there is little question” submetering companies meet the statutory definition of a utility. It’s an important distinction because, as a utility, submetering companies would be subject to more stringent oversight from the Public Utilities Commission of Ohio.
Ohio House Bill 173 attempted to split the difference — mandating more PUCO oversight than current law but stopping short of classifying submetering companies as utilities.
Ohio Supreme Court reverses PUCO decision, finds utility resellers are utilities under state law
That didn’t fly with Gov. DeWine.
“While this bill does contain some consumer protections,” he said, “they are not as robust as those afforded to customers of Ohio’s electric utilities.”
The governor pointed to the same critiques raised by opponents and added that the court’s ruling only applies to submetering companies that are buying and reselling power. Third party companies that calculate a tenant’s power use and divvy up the billing are welcome to continue operating.
The distinction, DeWine said, is the business model.
“For that work, the third-party billing company is paid a fee by the property owner,” he wrote. “The billing company does not buy the electricity at wholesale price and sell it at retail price.”
DeWine’s veto comes after some last-minute political largesse from one of Ohio’s primary submetering companies.
As The Columbus Dispatch reported, early this month, Nationwide Energy Partners CEO Michael DeAscentis II gave $12,5000 to Republican candidate for governor, Vivek Ramaswamy. His running mate, Rob McColley, currently serves as Senate President. DeAscentis gave another $10,000 to the chair of the Senate Public Utilities committee, Ohio state Sen. Shane Wilkin, R-Hillsboro, and $16,615 to House Speaker Matt Huffman.
Reactions
Critics of H.B. 173 welcomed DeWine’s decision. Ohio state Rep. Tristan Rader, D-Lakewood, called the veto “a victory for basic fairness.”
“This bill would have codified a broken submetering scheme that puts middlemen between tenants and the utilities they depend on.” he said. “After the Ohio Supreme Court affirmed that these companies can be treated as public utilities, HB 173 would have weakened hard-won consumer protections for renters and utility customers.
Ohio state Rep. Sean Brennan, D-Parma, said, “The issue is whether all Ohio utility consumers are entitled to the same rights, protections, and access to assistance programs.”
“No Ohioan should receive fewer consumer protections simply because a third-party company inserts itself between the customer and the utility service they depend on,” he continued. “Creating a second class of utility consumers is bad public policy, and this veto helps ensure that every Ohioan is treated fairly.”
But the bill’s sponsor, Ohio state Rep. David Thomas, R-Jefferson, contends the veto only maintains a broken status quo.
Despite what his veto message says, renters and consumers aren’t actually gaining anything by him vetoing this legislation,” Thomas said. “They’re actually losing the in law protections that we put in place.”
Instead of black and white expectations for the industry, Thomas predicted on more lawsuits and legal uncertainty as the PUCO figures out how to regulate submetering companies.
“The legislature has been trying to put guardrails and regulations around the industry for 15 years now,” he said. “This was the furthest it’s gone we’ve never gotten it out of one chamber, let alone to the governor’s office.”
Still Thomas took the veto in stride and said he’s ready to go back to the drawing board.
“I’ve been vetoed many times before. I think I may be the most vetoed legislator currently,” he said. “We didn’t give up on those policies, and I don’t think we can give up on this.”
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This story is republished from the Ohio Capital Journal under a Creative Commons license. View the original article.
