2007 PUCO End of Year Review PDF version
The PUCO issued the 2007-2008 Winter Reconnect Order on Sept. 5, 2007. The Winter Reconnect Order allows customers that have been disconnected for nonpayment, or who have been threatened with disconnection, to have the service maintained or restored provided they make payment arrangements with their natural gas or electric company and pay $175 plus a reconnection fee or their outstanding balance, whichever is less. Any Ohioan can use the Winter Reconnect Order one time during the winter heating season. During the 2006-2007 Winter Heating Season, more than 225,000 customers utilized the Winter Reconnect Order.
In addition to the Winter Reconnect Order, the PUCO took action to protect the Ohioans most at risk for losing their home heating source this winter. On Dec. 19, 2007, the PUCO issued an order prohibiting natural gas and electric companies from disconnecting service to residential customers whose household income is at or below 175 percent of federal poverty guidelines.
This prohibition, or “moratorium,” on disconnection is to be used only by customers who cannot make their monthly natural gas or electric payment by any other means. To take advantage of the moratorium, eligible customers must enroll in the Percentage of Income Payment Plan (PIPP) or another extended payment plan offered by their utility. The moratorium does not forgive utility bill payments. Participating customers remain responsible for payment of the entire amount owed their natural gas or electric company. Normal disconnection procedures will continue to apply, and anyone who receives a disconnection notice should contact their natural gas or electric utility immediately.
Paul A. Centolella appointed to PUCO
Gov. Ted Strickland appointed Paul A. Centolella to the PUCO in April 2007 following the retirement of Judy A. Jones. Commissioner Centolella brings to the PUCO a broad range of experience in public utilities and energy law and policy. From 1992 to 2007, Commissioner Centolella worked as a Senior Economist in the Energy Solutions Group of Science Applications International Corporation (SAIC). In this capacity, he managed projects involving energy and environmental market design, electric power system operations and economic policy analysis. These projects included performing cost-benefit studies for the Midwest Independent Transmission System Operator (MISO), advising the U.S. Department of Energy on electric industry restructuring issues and leading studies to improve business management processes.
Prior to working at SAIC, Commissioner Centolella served as the Senior Energy Policy Advisor and a Senior Utility Attorney for the Office of the Ohio Consumers’ Counsel (OCC) from 1982 to 1992, conducting analyses of energy policy and representing the OCC in numerous proceedings. While at OCC, he helped develop market-based approaches to environmental regulation, which accelerated emission reductions and reduced the costs of the 1990 Clean Air Act Amendments, and served on U.S. EPA’s Acid Rain Advisory Committee.
Commissioner Centolella earned a bachelor’s degree in economics from Oberlin College and a Juris Doctor from the University of Michigan Law School. He has completed post-graduate and executive education programs through the Harvard Business School, SAIC, and the Institute for Strategic Management. Commissioner Centolella is a member of the Ohio State Bar Association, the California Bar Association, the Washington State Bar Association, the American Economic Association, and the International Association for Energy Economics
Consumer call center continues tradition of service
The PUCO Consumer Call Center is the PUCO’s direct link to the public. Each day, callers from throughout the state contact PUCO representatives, seeking assistance with utility issues. PUCO representatives are able to answer questions, offer suggestions to callers seeking assistance with their utility bills and mediate disputes between customers and utility companies.
In one instance, a PUCO investigator was able to save a residential customer more than $13,000 concerning a billing dispute with a natural gas company. A commercial customer saved more than $40,000 when a PUCO investigator helped resolve an issue with a telephone company.
In total, PUCO investigators saved Ohio consumers more than $500,000 in 2007. The PUCO also learns a great deal from customers that call in with questions and complaints. This information is used to ensure that companies engage in fair and reasonable practices. It also helps the PUCO to formulate rules and regulations. The call center is an invaluable asset to the PUCO.
Reaching out across Ohio
Informing Ohio’s citizens about utility-related issues is one of the many important jobs of the PUCO. In 2007, PUCO representatives travelled to more than 60 cities across the state speaking to more than 100 groups of consumers ranging from low-income families to senior citizens to professionals working in energy-related fields. The PUCO also appeared at the Ohio State Fair, Delaware County Fair, Columbus Women’s Expo and several community-sponsored events.
In addition to speaking engagements, the PUCO’s Web site, www.PUCO.ohio.gov, was visited more than 770,000 times.
Electric
Energy Plan for Ohio
In September 2007, Gov. Ted Strickland announced his “Energy, Jobs and Progress” plan in an effort to develop a comprehensive, long-term approach to the challenges of supplying reliable and affordable power and address the approaching expiration of Rate Stabilization Plans (RSPs) established through the cooperation of the PUCO and Ohio’s electric utilities. The market development period, established in Senate Bill 3 in 1999, intended to provide time for a competitive retail electric market to develop. However, when the market development period expired on Dec. 31, 2005, Ohio’s electric customers would have been subject to market-based pricing. Given the state of the market at that time, Ohio’s ratepayers might have experienced “sticker shock” had RSPs not been implemented.
As the expiration date for the RSPs approaches, it has become evident that few competitive options existed at the retail level, and action is necessary to secure Ohio’s energy future. Gov. Strickland proposed a plan to the Ohio General Assembly that would not close the door on market pricing, but would allow the PUCO to have a more active role in setting rates and allow companies to recoup the cost for new generation and modernization of the electric system. Gov. Strickland’s proposal also included an advanced energy portfolio that would expand Ohio’s investment in advanced energy technologies, including renewable energy and cleaner generation technologies utilizing traditional fuel sources.
In September 2007, Chairman Alan R. Schriber testified before the Senate Public Utilities and Energy Committee in support of the governor’s proposal. Sub. Senate Bill 221 passed the Ohio Senate unanimously. Hearings on the bill are now underway in the Ohio House of Representatives. The PUCO and other interested parties are working with the legislature to address this complex issue in time to have rules in place when most of the RSPs expire on Dec. 31, 2008.
FirstEnergy files distribution rate case
In May 2007, FirstEnergy informed the PUCO that it would be seeking an increase in the rates it charges customers for delivering electricity. Following the deregulation of the electric industry in 1999, the transmission and distribution of electricity remained regulated, while the generation of electricity was deregulated.
Ohio law allows for a regulated utility to recover the costs associated with providing service, plus a return on the investments made to provide service. As the state agency tasked with regulating investor-owned utilities, the PUCO reviews the financial information presented by the utility, as well as takes into consideration the testimony of interested parties, including residential consumers. As part of the rate case process, the staff of the PUCO prepares a staff report for the Commission outlining the findings of the staff’s analysis of the company’s records. The staff issued its report to the Commission in December 2007.
Renewable energy options
Renewable energy resources have caught the attention of many utility customers during the last several years. Rather than go through the expense of installing a windmill, solar panels or other source of renewable energy, many utility customers across the U.S. have opted to purchase power generated from renewable resources.
In 2007, the PUCO approved plans for Duke Energy Ohio, FirstEnergy and American Electric Power-Ohio (AEP-Ohio) to begin offering green pricing options to consumers. Under the programs, customers may choose to purchase renewable energy credits (RECs) as a premium to their electric bill. While purchasing RECs does not guarantee that the power delivered to a customer came from a renewable resource, purchasing RECs is guaranteed to help fund the advancement of renewable technologies.
Each company’s program varies slightly, but in general, for a few dollars per month a consumer can purchase enough RECs to offset their entire usage. The programs ensure that money collected through the purchase of RECs is channeled to approved projects, such as the development of wind power, biofuels and solar energy.
As consumers and utility companies become more sensitive to issues such as global climate change and energy independence, the PUCO believes that these programs offer a way to support projects and maintain reliable utility service.
AEP-Ohio withdraws reliability plan request
In 2006, AEP-Ohio asked the PUCO to approve a reliability plan that would have cost rate payers $10 million. After several local public hearings and considering the testimony of concerned citizens, AEP-Ohio requested to withdraw its application on April 18, 2007. The PUCO, AEP-Ohio and other interested parties were unable to come to a solution which all parties felt was beneficial to the company and ratepayers. This withdrawal, however, does not affect the 2006 decision of the PUCO to order AEP-Ohio to invest heavily in improving reliability throughout the state.
PUCO approves Duke demand side management program
The PUCO has always encouraged customers to try to manage their energy usage. Managing energy use is one way customers can reduce their electric bills. By replacing old appliances and equipment with newer energy efficient models, customers can reduce their usage and their utility bills. However, in addition to benefiting the customer by lowering bills, managing energy use also helps utilities manage their need to build more generating facilities.
One principle, known as Demand Side Management (DSM), focuses on reducing the consumption of electricity and natural gas through various means. In 2007, the PUCO approved a plan that would allow Duke Energy Ohio to begin implementing 13 different DSM programs throughout their service territory. Of the 10 programs designed for residential consumers, four will provide home energy audits and others will provide incentives for using energy efficient heating and cooling equipment as well as household appliances.
Commercial and industrial customers will also have an opportunity to participate through incentives aimed at encouraging large users to replace or retrofit equipment to be more energy efficient. By reducing the amount of energy necessary for Duke to provide, all customers can benefit by negating the need to purchase electricity from suppliers, building new generation facilities or looking for additional supplies of natural gas.
Natural Gas
PUCO issues order on Columbia Gas of Ohio risers
Safety is a top priority of the PUCO. The PUCO’s natural gas pipeline safety inspectors check everything from natural gas transmission lines, which carry natural gas under high pressure from as far away as the Gulf of Mexico, to the distribution lines that serve neighborhoods. In any major incident where more than $10,000 of property damage occurs, the PUCO completes a thorough formal investigation to determine the cause.
Following the discovery of several natural gas leaks linked to a faulty piece of equipment known as a natural gas riser, which connects a customer’s natural gas service line to the natural gas meter, the PUCO became concerned and opened an investigation in April 2005. The PUCO sought to determine if any specific type or types of risers were especially prone to failure and hired an independent laboratory from Akron to conduct tests on natural gas risers throughout the state.
In November 2006, the PUCO issued a staff report based on the results of the laboratory testing. In the staff report, it was noted that a few particular types of risers were prone to failure. In January 2007, PUCO Chairman Alan R. Schriber sent a letter to Ohio’s natural gas distribution companies urging them to complete a survey of the customer-owned natural gas services lines in their territories to determine how many of the risers known to be prone to failure were currently in service. Because, under Ohio law, the customer is responsible for the installation and maintenance of their natural gas service line, concerns were raised about the remedy to this potentially dangerous situation.
In July 2007, the PUCO approved a proposal from Columbia Gas of Ohio that, among other things, would allow the company to replace risers categorized as prone to failure, regardless of whether or not they are actually leaking. In addition, the PUCO allowed customers who had already replaced a prone-to-failure to apply for reimbursement from the company. Additional aspects of Columbia’s proposal are still pending before the Commission.
The PUCO is concerned for the safety of all Ohioans. By giving the company responsibility for replacing risers that are prone to failure, customers without the means to replace these components themselves will not be forced to choose between safety and other necessities.
Dominion customers receive natural gas through Standard Service Offer
In 2005, the Dominion East Ohio Gas Company (Dominion) approached the PUCO with a proposal to change the way natural gas is purchased for Dominion customers. Under its proposal, instead of Dominion purchasing natural gas, several competitive suppliers would purchase the natural gas for Dominion customers. Dominion would still deliver the natural gas, read meters and service pipelines.
In May of 2006, the Commission approved Dominion’s pilot project and, in August 2006, an auction was conducted and competitive suppliers bid to serve groups of customers and determine the retail price adjustment rate. The auction resulted in a rate of $1.44 per MCF, which was added to the monthly NYMEX settlement price to determine the rate Dominion customers would pay for natural gas. The resulting rate is known as the Standard Service Offer, or SSO. The SSO varies from month to month, much like the gas cost recovery rate it replaces.
The customer rates resulting from the SSO have been promising to this point. It appears that customers have saved some money through this plan. The PUCO, however, is carefully monitoring the SSO and intends to evaluate the long-term implications of the SSO before moving to the next phase of the program where all eligible customers would have to choose a supplier on their own. An evaluation will be conducted in August 2008 when the SSO program expires to determine what the next steps should be taken.
Local distribution company rate cases filed
In 2007, five natural gas companies filed applications for an increase in rates with the PUCO. The companies include large distribution utilities Duke Energy Ohio, Vectren Energy Delivery of Ohio and Dominion East Ohio Gas, as well as smaller distribution utilities including Suburban Natural Gas and Waterville Gas.
In Ohio, natural gas companies earn money by delivering natural gas, not by selling natural gas. By law, distribution utilities are allowed to earn a rate of return on the investments made in their operations. Generally, rate case proceedings are lengthy. As such, a company may go several years without requesting a rate increase.
In the case of Waterville Gas, the last rate case was in 1986. After a complete and thorough review of Waterville Gas’s application and financial records, the PUCO Staff issued its report, recommending a customer charge of $10.00 per month and a distribution rate of $2.71 per hundred cubic feet. A local public hearing was held in October. In November, the Commission authorized a rate increase, based on a stipulation between Staff and Waterville Gas, increasing the rates to a customer charge of $10.00 per month and a distribution rate of $2.63 per hundred cubic feet.
In each of the other pending rate cases, a staff report with recommendations will be prepared, followed by local public hearings. The PUCO is aware of the delicate financial situations many customers face, but must also weigh the risk endured by a company serving as a public utility. After a thorough examination of each company’s records, the PUCO Staff will make a determination and present their independent findings to the Commission.
Ohio’s Natural Gas Choice program
Ohio has one of the most successful natural gas choice programs in the nation. More than half of Ohio’s natural gas customers can choose the company that supplies their natural gas. Customers of Ohio’s four largest local distribution companies, Columbia Gas of Ohio, Dominion East Ohio, Vectren Energy Delivery of Ohio and Duke Energy Ohio, can choose the company that serves their natural gas needs. The local distribution company continues to maintain pipes, read meters and bill customers.
As of September 2007, nearly half of all eligible customers in Ohio were participating in natural gas choice. The PUCO helps inform consumers about the options available to them by producing an Apples to Apples comparison chart for each of the four distribution company’s service territories. The chart contains information from marketers currently offering natural gas to consumers and information about the local distribution company’s current rate. Customers can also use the Interactive Calculator at www.PUCO.ohio.gov to see a comparison of what their bill would be if they switched to a marketer or stayed with the local distribution company. Customers without Internet access may also have an Apples to Apples chart mailed to them by contacting the PUCO’s toll-free number at (800) 686-PUCO (7826).
In addition to individual customers choosing a natural gas supplier, communities are able to form an aggregation group, which bundles all natural gas customers in a community together and allows leaders from the area to negotiate natural gas rates on their behalf. Currently, more than 100 communities across the state have formed aggregation groups.
Ohio has the second largest choice program, bested only by Georgia. As Ohio’s natural gas choice program continues to grow, the PUCO will continue to provide customers with tools to assist them in making informed decisions.
Telephone
Enhanced wireless 9-1-1 fund
Ohio’s Wireless Enhanced 9-1-1 (E-9-1-1) Fund was created in 2005 to assist local emergency response organizations in upgrading facilities and equipment to enable them to receive information transmitted when a 9-1-1 call is made from a wireless phone. Through these enhancements, emergency responders are able to use technology that assists in locating callers that may be unable to give their exact location.
In 2007, 15 counties received approval of their E 9-1-1 plans, bringing the total to 74 of Ohio’s 88 counties. In addition, 24 counties implemented Phase II of E9-1-1 which allows emergency operators to pinpoint the location of callers using advanced technology. Thirty-six Ohio counties have this capability.
More than $40 million has been disbursed by the PUCO. The PUCO collects and disburses funds paid by wireless subscribers to individual county emergency response organizations. The PUCO and Ohio 9-1-1 Council review the expenditures submitted by each county to ensure funds are properly expended.
AT&T Ohio granted authority to market additional services to Lifeline customers
The Lifeline program was started several years ago under the premise of providing affordable telephone service to individuals who are income eligible. Since that time, the telephone has evolved from a device that transmits voice to one with several advanced services available, such as caller ID, three-way calling and voicemail capabilities. Additionally, pricing has evolved to the point where it is much more economical to buy these services as a package. Under the original rules of the Lifeline program, customers wishing to subscribe to these additional services had to certify that the additional features were necessary for medical or safety reasons and had to pay the full retail price of the individual features.
In April 2007, the PUCO allowed AT&T Ohio to begin marketing these services to Lifeline customers, without the need for the customer to certify the necessity of the service. As a safety-net provision, the Ohio minimum telephone service standards (MTSS) would not allow AT&T Ohio to disconnect service from a customer that continued to pay the basic local regulated charges for their telephone service.
This waiver was approved for a trial period, during which AT&T Ohio must collect data so that the PUCO can monitor the company’s Lifeline statistics. The goal of granting this waiver was to ensure that customers benefit by having advanced features available to them, while ensuring that their basic service remains connected. Several social service and outreach agencies that advocate on behalf of many of the customers benefiting from the Lifeline program urged the PUCO to allow AT&T Ohio to market these packages to Lifeline customers. The PUCO will review the information collected and determine whether or not the waiver should be extended at the conclusion of the trial period.
Buzz Telecom
In October 2006, the PUCO’s Reliability and Service Analysis group recognized an increasing number of customer contacts regarding Buzz Telecom. Many customers complained that the company changed their telephone provider without permission, otherwise known as slamming, and that the company’s representatives were employing deceptive sales practices during sales calls. Both of these practices are violations of Ohio’s MTSS developed by the PUCO. By December 2006, the PUCO had opened a formal investigation into these matters and ordered Buzz Telecom to stop marketing its services to customers in Ohio.
At a hearing in February 2007, Buzz Telecom failed to appear to present their side of the case. The PUCO attempted to remedy the situation with Buzz Telecom, but the company eventually refused to work with the PUCO. The PUCO, in October 2007, fined Buzz Telecom $251,000 and informed former Buzz Telecom customers of the process they must follow if they feel Buzz Telecom provided them with inadequate service.
PUCO directs Verizon North to improve service quality
In May 2007, the PUCO adopted a stipulation between PUCO staff and Verizon North Inc. (Verizon) as a result of the company failing to meet portions of Ohio’s MTSS. Verizon will pay certain forfeitures for noncompliance and must meet benchmarks to ensure compliance with required service standards.
The PUCO became aware of service quality issues in December 2005, when PUCO Call Center staff noticed an increasing number of complaints from Verizon customers about extended and repeated outages, missed repair appointments, line static and incomplete repairs. An audit conducted by PUCO Staff in November 2006 found that Verizon failed to meet provisions of the MTSS service outage standard. The staff report also confirmed Verizon did not meet MTSS requirements for out-of-service conditions, where the customer is completely without service.
The stipulated agreement between the PUCO and Verizon includes several enforcement actions, including requiring Verizon to invest $1 million in facilities in areas where the most outages occurred, determined by PUCO staff and the company. The stipulation also states Verizon must pay $250,000 in forfeitures to the Ohio General Revenue Fund for past violations of MTSS out-of-service requirements. Another $250,000 will be held in abeyance, pending Verizon meeting benchmarks for repairing out-of service conditions for a 12-month period starting May 1, 2007. Also, $100,000 will be held in abeyance, pending Verizon meeting benchmarks for repairing service affecting conditions within 48 hours for a 12-month period starting May 1, 2007.
The agreement also provides for customer credits where certain performance levels are not maintained, and performance benchmarks for service installations. Verizon must submit monthly reports to PUCO staff about the company’s performance with service installation, out-of-service and service affecting performance for each district in the 12-months following May 2007. The PUCO is committed to ensuring service quality to Ohio’s telephone customers.
PUCO enhances Minimum Telephone Service Standards
The PUCO has adopted service standards for natural gas and telephone companies that outline the responsibilities of the company and the customer. Ohio law requires the PUCO to review these rules every five years. In 2007, the PUCO wrapped up an extensive review and revision of the Minimum Telephone Service Standards (MTSS), which detail the obligations telephone companies must fulfill.
Under the new MTSS, customers who are without telephone service for three days will receive credit for a full month of their regulated services. The PUCO still expects the company to respond to out-of-service situations, where the customer has no dial tone, within 24 hours of the repair request.
In addition to simplified outage crediting practices, the PUCO was also interested in ensuring customers understood the packages they were purchasing and their total cost, including surcharges and taxes. Under the new MTSS rules, when a customer signs up for service, the company must send them a letter within 10 days detailing the service options that were selected and their cost. Additionally, the customer has 30 days from the postmark of the letter to make changes to their service without incurring a service fee.
Motor Carrier
Roadcheck
Hazardous materials travel through municipal areas in Ohio each day, often on commercial motor vehicles that pick up shipments from rail yards. Because these shipments are driven on city roadways rather than on highways, their transport often goes unchecked. Efforts from PUCO hazardous materials inspectors help ensure that hazardous materials traveling through municipal areas are meeting state and federal transportation regulations.
In June 2007, 15 inspectors worked in Akron, Cleveland, Cincinnati, Columbus, Dayton, Toledo and Youngstown to conduct comprehensive inspections on vehicles, drivers and cargo while participating in Roadcheck 2007. Roadcheck is an annual international transportation safety and security event sponsored by the Commercial Vehicle Safety Alliance. PUCO inspectors conducted 184 inspections during the three-day Roadcheck event, finding 366 total safety violations and placing 29 percent of the vehicles out-of-service.
For vehicles traveling with hazardous materials, 83 vehicle safety violations were found and 102 hazardous materials violations were found, with 22 percent of hazardous materials vehicles being placed out-of-service. Thanks to the diligence of PUCO hazardous materials inspectors, these motor carriers were removed from Ohio roadways until the appropriate safety measures were taken.
While PUCO inspectors work every day to perform inspections and keep Ohio highways safe, Roadcheck highlights the combined efforts of law enforcement and the transportation industry to promote highway safety. The event has been held each year since 1988 in the United States, Canada and Mexico.
Hazmat Training Grants
The PUCO approved five hazardous materials training grants totaling $301,374 to local government agencies and educational institutions across Ohio in 2007. The grants will be used to train public safety and emergency services personnel in the proper techniques for the management of hazardous materials transportation and spills.
The PUCO awards hazardous materials planning and training grants to local government subdivisions, educational institutions and state agencies in Ohio. Money for these grants comes from fines paid by hazardous material carriers and shippers. Individual grants are based upon applications to the PUCO and are awarded on a reimbursement basis.
The PUCO has regulatory authority to conduct audits, inspections and safety reviews to evaluate the safety records, policies, and procedures of motor carriers, including hazardous materials carriers. The PUCO hazardous materials transportation program has been recognized by Battelle Memorial Institute as one of the best and most comprehensive such programs in the nation.
Railroad
Highway-Rail Grade crossing upgrades ordered
Ohio has more than 6,000 rail crossings throughout the state. The PUCO, along with the Ohio Rail Development Commission, is responsible for providing funding for the installation of warning devices at highway-rail grade crossings. In 2007, the PUCO approved funding for the installation of flashing lights and gates at 68 crossings throughout Ohio. Additional assistance was given for circuitry upgrades, vegetation removal, supplemental warning measures such as rumble strips and closing superfluous grade crossings. Many of the measures taken by the PUCO have helped reduce the number of fatal crashes at highway-rail grade crossings.
New rail mapping system
The PUCO collects volumes of data each year. With advancements in technology and the Internet, we are constantly seeking ways to share information with interested individuals. The PUCO’s Railroad Division is responsible for inventorying each highway-rail grade crossing in the state. Citizens can gather detailed information about crossings in their communities by visiting the PUCO’s Rail Crossing Information page at http://gradecrossings.puco.ohio.gov.
Rail inspectors photograph the crossing and collect information about the daily traffic flowing through the crossing. Other information, such as the railroad responsible for maintaining the crossing, is available as well. In addition to the Rail Crossing Information collected by PUCO inspectors, the PUCO has also compiled several maps containing railroad information. One of the newest maps allows visitors to view crash statistics for crossings that meet certain parameters. This interactive map is available through the PUCO Web site at www.PUCO.ohio.gov.
Water
Ohio American Water rate cases
In March 2007, the PUCO, OCC and Ohio American Water entered into an agreement that set in motions actions to resolve water quality issues that were identified by Ohio American customers. The agreement requires the company to make certain improvements to its services and quality of its water and allows the company to increase rates. However, in several of the service territories, certain improvements were to be made before certain increases were allowed.
During public hearings held by the PUCO in 2006, many customers of Ohio American expressed their dissatisfaction with the quality of water they were receiving. In order to address these concerns, the PUCO and other parties adopted an agreement that attempted to address the concerns of these customers. The PUCO instituted strict water quality control measures and ordered the company to meet these standards before it could begin to charge new rates for certain services. The PUCO instituted reporting requirements and conducted tests independently to ensure customers were receiving the quality utility product they were paying for.
Most of the tests show that the company is improving overall quality in several important areas. The PUCO will continue to closely monitor the company’s progress in improving services provided to customers.