Before
The Ohio House of Representatives
The Finance Subcommittee on Agriculture, Development and Natural Resources
Testimony on House Bill 110 – OCC Budget
Bruce Weston, Agency Director
Office of the Ohio Consumers’ Counsel
February 25, 2021
Hello Chair Kick, Ranking Member O’Brien and Members of the Subcommittee. I hope you and your colleagues are well. Thank you for this opportunity to testify about the Consumers’ Counsel’s services to Ohioans. And thanks to the Chair and the Ranking Member, respectively, for meeting with OCC in advance during this busy time for you.
I am Bruce Weston, the Ohio Consumers’ Counsel. I am testifying in support of most of the Administration’s budget proposal for the Office of the Ohio Consumers’ Counsel. The budget provides the funding for our services on behalf of millions of Ohioans regarding their electric, natural gas, telephone, and water utility services. OCC’s budget is funded by assessments on utilities, not taxes. OCC Governing Board Chair Mike Watkins, Vice-Chair Stuart Young, Deputy Consumers’ Counsel Larry Sauer, and I appreciate your consideration.
Proposals
I thank the Administration for proposing an annual budget of $5.64 million for OCC’s protection of residential utility consumers. (H.B. 110, Lines 52245 to 52249.) That amount reflects an increase of $100,000. However, OCC had proposed an increase of $700,000, for a budget of $6.24 million. I respectfully ask that this Subcommittee propose a budget of $6.24 million for each year of the biennium.
The $700,000 budget increase approximately would restore OCC’s purchasing power for about $580,000 in costs that OCC has absorbed in recent years. Those costs have been for the state employee salary increases for “parity” with collective bargaining increases and for benefits cost increases. To this amount we added the $100,000 from a budget reduction by the Kasich Administration in fiscal year 2018, which is nearly $700,000.
The Administration’s proposal of $5.64 million is just two-thirds of OCC’s budget of $8.5 million in the beginning of 2011. But later in 2011 the Kasich Administration initiated a slashing of the $8.5 million budget by nearly $3 million. Also, OCC’s call center for helping consumers was then prohibited by law, in R.C. 4911.021.
The 2011 budget cut of about $3 million no doubt protected some influential industry special interests – meaning it protected them (regulated entities) from more of OCC’s consumer advocacy. But greatly reducing OCC’s funding didn’t protect residential consumers. For some historical perspective on the slashing of OCC’s budget, there is the news article, “Kasich friends in high demand,” J. Hallett, Columbus Dispatch (May 23, 2011).
Looking further back, OCC’s budget was at $9.3 million in 2003 to 2005. That figure would be even higher today if accounting for the time value of money. OCC has not had a budget increase since fiscal year 2008.
We use the budget to provide legal representation for Ohio’s residential utility consumers in cases opposite Ohio’s lawyered-up utilities. And we provide education to consumers. Also, I want the Agency to be helpful to you and your constituents on utility consumer issues. I have been, and will continue to be, committed to delivering value for Ohioans with our budget.
As stated, my primary proposal is for adopting a $6.24 million budget for consumer protection.
We also asked the Administration to remove the prohibition against operating a call center for consumers, in R.C. 4911.021. My proposal is to allow OCC to operate a call center for limited purposes and special projects for consumer protection. Assisting consumers during the pandemic would be an example.
Overview
The Ohio General Assembly created OCC in 1976. The Agency’s Mission is to “advocate for Ohio’s residential utility consumers through representation and education....” The Agency’s Vision is for “Informed consumers able to choose among a variety of affordable, quality utility services with options to control and customize their utility usage.” The Consumers’ Counsel provides a customer perspective in utility-related cases at state and federal regulatory agencies and the courts. OCC provides residential utility consumers with a voice where they otherwise would have little or none. Also, we appreciate the opportunity to provide legislators with consumer perspectives for the legislative process. Additionally, we provide outreach and education to Ohioans to help them save money on their utility bills. For example, we help educate consumers regarding their choices for energy suppliers. Attached is an example of one of OCC’s Fact Sheets for informing consumers.
During our nearly 45 years of service, the Consumers’ Counsel has helped Ohioans save a lot of money on their utility bills. And those savings far surpass the cost of our budget. Here are some examples of our advocacy. We put our budget to good use for consumers with our advocacy that is pro-market (where competition can be effective) and anti-subsidy. We testified seven times against subsidies in House Bill 6 and now seven times for a repeal of that tainted legislation. There has been a lot of talk about $60 million that FirstEnergy, at least in part, used toward achieving the passage of House Bill 6. That incredible amount of money alone is eleven times OCC’s annual budget for all of our activities. It epitomizes our challenge in a field where powerful, influential utilities have so much money to spend for advocacy.
Attached is OCC’s Subsidy Scorecard, where we keep track of Ohio’s subsidy culture affecting electric customers, despite deregulation in 1999. There are circumstances where we and others succeed in consumer protection appeals when the Ohio Supreme Court overturns a PUCO-approved charge (such as an unlawful subsidy). But a travesty of justice has occurred for decades where consumers have been denied refunds of charges found to be improper. A pie chart is attached, showing that electric consumers have lost about $1.5 billion in denied refunds since the awful ratemaking enacted in the 2008 energy law. FirstEnergy cashed in on nearly a half-billion dollars from its so-called distribution modernization charge, resulting from denied refunds despite the Supreme Court finding the charge unlawful. We’ve used our budget to advocate for reform of this injustice.
During the pandemic we have advocated for consumer protections. Our message has been that Ohio should lead with its heart. For example, we recommended a much longer moratorium against utility disconnections of consumers for nonpayment, given the health and financial crises afflicting many Ohio families. Losing utility services can be disastrous for Ohioans, affecting nearly every aspect of their lives.
Funding
The source of the Consumers’ Counsel’s funding is not from taxes or Ohio’s General Revenue Fund. Instead, the General Assembly decided the Agency would be funded through a fee on the intrastate gross earnings of utilities and other entities regulated by the PUCO. That process is similar to how the PUCO is funded in part.
If all regulated entities charged their customers for the cost of the Consumers’ Counsel’s budget, this charge would cost consumers a few cents for every hundred dollars in utility bills. This amount is equivalent to less than a dollar a year for a typical residential consumer. We have saved consumers much more money than this cost, individually or by working with other stakeholders.
Cost Reductions and Efficiencies
We are dedicated to serving consumers with less funding since the big cut in OCC’s budget in 2011 – not that it’s adequate for consumer protection. It’s not. The continuing cost reductions from the decreased budget include: the many earlier workforce reductions; closing the consumer call center; and lowering office rental cost by reducing occupied floor space. I am grateful to OCC staff for their dedicated services to Ohioans. And I appreciate that we’ve maintained continuity of consumer services during the Administration’s transition from office to remote work in the pandemic.
Agency Structure
The Agency is structured as follows.
Governing Board: The Ohio Attorney General appoints the Agency’s nine-member, bi- partisan Governing Board. The Board Chair is Mike Watkins and the Vice-Chair is Stuart Young. The Agency Governing Board appoints two officials: the Ohio Consumers’ Counsel and the Deputy Consumers’ Counsel. Attached is an example of a Board Resolution (opposing both House Bill 6 and House Bill 246).
Analytical Department: This Department provides the analytical expertise needed for technical utility issues. This expertise can include accounting, economics, engineering, finance, and other disciplines.
Legal Department: This Department provides the consumer representation involving issues with lawyered-up, influential utilities. OCC advocates in cases at the PUCO, Federal Energy Regulatory Commission, the Supreme Court of Ohio and elsewhere.
Operations Department: This Department provides fiscal and administrative support for the Agency. These functions include Human Resources, Fiscal Processing and IT.
Public Affairs Department: This Department provides education for consumers, responds to media requests, answers contacts from Ohio consumers, and provides constituent assistance to legislators. OCC’s website is www.occ.ohio.gov. Our Twitter handle is @OCC4Consumers.
In conclusion, we thank you for your consideration. At OCC we put consumers first.