COLUMBUS - In a victory for Toledo Edison and other investor-owned utilities, the Ohio Supreme Court has ruled that municipal electric utilities cannot buy excess power for the sole purpose of re-selling it to a customer outside their boundaries.
The 6-1 decision could have statewide implications as customer choice for electric power starts Jan. 1.
Edison's attorneys had complained that municipal electric utilities that don't generate their own power could compete against for-profit firms by acting as a “conduit to any customer in the state, from the Jeep plant in Toledo to the Honda plant in Marysville.”
Writing for the majority, Justice Evelyn Stratton said the state Constitution allows a municipal electric utility to buy power for its residents and businesses and then resell only a certain amount of the surplus to customers outside its boundaries.
“We believe it is a confirmation by the court that the intent of the Constitution is for municipalities to serve their residents and not go into competition with taxpaying businesses,” said Ralph DiNicola, a spokesman for FirstEnergy Corp., Toledo Edison's parent company.
The case stems from the decision by four Williams County municipalities - Bryan, Pioneer, Montpelier, and Edgerton - to band together to sell power to Chase Brass & Copper Co., a plant near Montpelier that makes brass rods and steel tubes.
Toledo Edison, which lost Chase as a customer in 1995, sued the four municipalities, saying the deal violated the state Constitution. It allows municipalities to sell excess power outside its boundaries as long as the amount does not exceed 50 per cent of what it supplies within its boundaries.
An appeals court ordered that a Williams County Common Pleas Court judge hold hearings on how much excess power the four municipalities could sell.
The Supreme Court yesterday reversed that order, ruling that the trial court hold more hearings to determine whether the power that was bought was “solely for the purpose of resale.”
The four municipalities have said the chief purpose of the transmission line built from Bryan to Chase Brass was to increase the reliability of the service offered by their electric utilities.
John Bentine, a Columbus attorney who represented the four municipalities, said the decision could chill competition between electric power suppliers. “The decision seems to stand in stark contrast to the current legislation in Ohio and across the United States that encourages additional competition in the electric industry,” Mr. Bentine said.
Of the seven justices, four recused themselves from the case because of existing or potential conflicts of interest, according to their clerks:
The state appeals court judges who replaced them are W. Scott Gwinn of the 5th District, William O'Neill of the 11th District, William J. Young of the 10th District, and Ronald E. Hadley of the 3rd District.
Judge Hadley was the sole dissenter. He wrote that the only constitutional limitation on municipalities is the provision that they not sell more than 50 per cent of what they supply inside their boundaries to companies and residents on the outskirts.