IN THE SUPREME COURT OF OHIO Colunibus Southern Company Case No. 09-2298 Appellant, Appeal from Public V. Utilities Commission of Ohio The Public Utilities Commission of Ohio, Public Utilities Commission of Ohio Appellee. Case No. 08-917-EL-SSO MERIT BR1EF AND APPENDIX OF APPELLANT COLUMBUS SOUTIIERN POWER COMPANY Matvin I. Resnik (0005695) Ricliard Cordray (0038034) Counsel of Record Attonrey General of Ohio Kevin F. Duffy (0005867) Duane W. Luckey (0023557) Steven "T. Nonrse (0046705) Chief, Public Utilities Section Matthew J.Satterwhite (0071972) Werner L. Margard 111 (0024858) Anrerican Electric Power Service Thomas G. Lindgren (0039210) Corporation John H.Jones(0051913) I Riverside Plaza, 29Floor Assistant Attorneys General Colutnbus, Ohio 43215-2373 180 East Broad Street Telephone: (614) 716-1606 Columbus, Ohio 43215-3793 Facsimile: (614) 716-2950 Teleplione: (614) 644-8698 miresnikr),aep.com Facsunile: (614) 644-8764 kfduffy^c^aep.com duane.luckey a yuc.statc.oh.us stnourseL^,aepeont. [email protected] m'tsatterwlute kaep^con thonras.lin Lrennpuc. state. oli.us l'o lm.iones(^pue.state.oh.us Daniel R. Conway (0023058) Counsel for Appellee, Porter Wright Morris & Arthur LLP Public Utilities Cotnniission of Ohio 41 South lligh Street Columbus, Ohio 43215 Telephone: (614) 227-2270 Facsimilc: (614) 227-2100 dconwa cJ orterwright.com Counsel for Appellant, Colutnbus Southern Power Company Samuel C. Randazzo (0016386) Janine L. Migden-Ostrander (0002310) (Counsel oCRecord) Consuniers' Counsel Lisa G. McAlister (0075043) Terry Etter (0067445) Joseph M. Clark (0080711) Counsel of Record McNees Wallace & Nuriclc LLC Maw•een R. Grady (0020847) 21 East State Street, 17"' Floor Assistant Consumers' Counsel Columbus, Ohio 43215 Offiee of the Ohio Consumers' Counsel Telephone: 614-469-8000 10 West Broad Street, Suite 1800 Facs imil e: 614-469-4633 Columbas, Ohio 43215-3485 sarn c^mwncmh.com Telephone: 614-466-8574 [email protected] Facsimile: 614-466-9475 iclark(c)mwncmh.com etter(a)occ.statc.oh.us pady_r @occ.state.oh.us Counsel for Intervening Appellee, Industrial Energy Users-Ohio Counsel for Intervening Appellee, Office of the Ohio Consrnners' Counsel David F. Boehm Michael L. Kurtz Boelun Kurtz & Lowry 36 East Seventh Street, Suite 1510 Cincimlati, Ohio 45202 Tel ephone: 513 -421-22 5 5 Facsimile: 513-421-2764 dboefin(cJ,BKLlawftrm.com mkurtz(ci)BKLlawfirm. com Counsel for Intervening Appellee, Oliio Energy Group TABLE OF CONTENETS Page TABLE OF AUTHORITIF,S ........................................................................................... ii STATEMENT OF FACTS AND OF THE CASE ......................................................... 1 STANDARD OF REVIEW ............................................................................................. 7 ARGU MENT .................................................................................................................... 8 Proposition of Law No. 1 When the Public Utilities Commissiou of Ohio considers an application for approval to sell or transfer generating assets which never have been included in the electric distribution atility's plant-in-service for rate making purposes at the same time it considers the utility's Electric Security Plan application, it is unlawfid for the Commission to deny the authority to sell or transfer those assets and at the same time refuse to allow, as part of the Electric Security Plan, an adjustment for costs associated with maintaining and operating those same assets ................................................................................................... 8 CONCLUSI ON ............................................................................................................... 15 APPENDIX PROOF OF SERVICE TABLE OF AUTHORITIES CASES AT&T Comn2unications of Ohio, Inc. v. Piub. Util. Comm. (2000), 88 Ohio St. 3d 549, 555 ....................................................................................................................................... 7 Constellation IVewF,nergy, Inc. v. Pub, Util. Comm. (2004), 104 Ohio St.3d 530 ............. 7 Discoaent Cellular, Inc. v. Pub. Util. Comm., 112 Ohio St. 3d 360, 2007-Ohio-53, ¶51 ..................................................................................................................................... 13 Monongahela Power Co. v. Pub. Util. Comm. (2004), 104 Ohio St.3d 571 ...................... 7 Myer.s v. Pub. Util. Comna., (1992), 64 Ohio St.3d 299, 302 ............................................. 7 Ohio Consumers' Counsel v. Pub. UtiC. Contrn. (2009), 121 Ohio St. 3d 362, 365........... 7 O&io F,dison Co. v. Pub. Util. Contm. (1997), 78 Ohio St. 3d 466, 469 ............................ 7 Tongren v. Pub. Util. Comm. (1999), 85 Ohio St. 3d 87, 88 ............................................ 13 OHIO REVISED CODE SECTIONS R.C. 4903.13 ....................................................................................................................... 7 R.C. 4909.05 ....................................................................................................................... 9 R.C. 4909.15 ..................................................................................................................9, 12 R.C. 4909.19 ...............................................................................................................:....... 9 R. C. 4928.141 ................................................................................................................. 1,8 R.C. 4928J 42 ..................................................................................................................1, 8 R.C. 4928.143 ..................................................................................................1, 7, 9, 10, 13 R.C. 4928.17 ................................................................................................... 2, 3, 5, 6, 8,9 OHIO ADMINISTRATIVE CODE Sec. 4901:1-37-09, Ohio Admin. Code .............................................................................. 4 MISCELLANEOUS Ponner R.C. 4928.17 .......................................................................................................... 2 ii IN TIIE SUPREME COURT OF OHIO Columbus Southern Company Case No. 09-2298 Appellant, Appeal from Public V. Utilities Commission of Ohio The Public Utilities Commission of Ohio, Public Utilities Commission of Ohio Appellee. Case No. 08-917-EL-SSO MERIT BRIEF AND APPENDIX OF APPELLANT COLUMBUS SOUTHERN POWER COMPANY STATEMF,NT OF FACTS AND OF THE CASE With the enactrnent of Am. Sub. S. B. 221 (SB 221) by Ohio's 127"' General Assembly, Ohio's electric distribution companies were required by R.C. 4928.141 (A) to "apply to the public utilities coinmission to establish the standard service offer in accordance with section 4928.142 or 4928.143 of the Revised Code. ..." Appellant Columbus Southern Power Company (CSP) and its affiliate Ohio Power Company, both of which are electric utility operating company subsidiaries of American Electric Power Company, lnc., each filed applications with the Public Utilities Connnission of Ohio (Commission) for approval of Electric Security Plans (ESP) under R.C. 4928.143. These applications were filed on July 31, 2008, fne effective date of 5B 221. (CSP App. p. 37). In addition to seeking approval of its proposed ESP, CSP sought approval for the sale or transfer of certain of its generating assets. Commission appi-oval of the sale or transfer was nceessitated by an amendment made by SB 221 to the veision of R.C. 4928.17 (E) enacted as part of Am. Sub. S.B. 3 (SB 3). Prior to this particular amendment, R.C. 4928.17 (E) provided that: Notwithstauding section 4905.20, 4905.21, 4905.46, or 4905.48 of the Revised Code, an electric utility may divest itself of auy generating asset at any timc without commission approval, subject to the provisions of Title XLIX of the Revised Code relating to the transfer of transmission, distribution, or ancillary service provided by such generating asset. (emphasis added). Former R.C. 4928.17 (E); CSP App. p. 23 (Enrphasis added). Division (E) was an appropriate complement to the remainder of R.C. 4928.17 wliich was enacted in 1999 as part of Am. Sub. S. B. 3, (SB 3), and which was an integral part of the General Assembly's restructuring the regulation of Ohio's electric utilities, particularly the newly effective competitive electric generation function of those utilities. This Section required, and continues to require, a cotporate separation plan that at a minimum: "[provides for] competitive retail electric service ... t1u•ough a fully separated affiliate of the utility;" "satisfies the public interest in preventing unfair competitive advantage;" and "is sufficient to ensure that the utility will not extend any undue preference or advantage to any affiliate, division, or part of its own business engaged in the business of supplying the competitive retail electric service ... and to ensure that any such affrliate, division, or part will not receive undue preference or advantage from any affiliate, division, or part of the business engaged in [the] business of supplying the noncompetitive retail electric service." R.C. 4928.17 (A) (1) (2) and (3); CSP App. p. 20. While SB 221 did not make any changes to the underlying requirement for corporate separation of the generation funetion from the utiiity's noncompetitive fiinctions, division (E) was amended to read as follows: 2 No electric distribution utility shall sell or transfer any generaling