Before
The Ohio Senate
General Government Budget Committee
Testimony on Substitute House Bill 110 – OCC Budget
Bruce Weston, Ohio Consumers’ Counsel (Agency Director)
Office of the Ohio Consumers’ Counsel
April 27, 2021
Hello Chair Schaffer, Vice Chair Wilson, Ranking Member Craig and Members of the Committee. I hope you and your colleagues are well. Thank you for this opportunity to testify about the Consumers’ Counsel’s services to millions of Ohio residential utility consumers.
I am Bruce Weston, the Ohio Consumers’ Counsel. The OCC Governing Board and I appreciate your consideration. The Board Chair is Mike Watkins, now retired from the Fraternal Order of Police. The Board Vice-Chair is Stuart Young of Young’s Jersey Dairy Farm. Larry Sauer is the Deputy Consumers’ Counsel.
The Agency’s Mission is to “advocate for Ohio’s residential utility consumers through representation and education....” Therefore, the budget provides the funding for our services regarding consumers’ electric, natural gas, telephone, and water utility services from investor-owned utilities. OCC’s budget is funded by assessments on utilities, not taxes. Our consumer advocacy last year was framed by the pandemic’s health and financial crises and the utility consumer issues involving the House Bill 6 scandal. Please call me if OCC may help with consumer issues involving legislation or constituents.
My September 2020 budget proposal to the Administration was for an increase of $700,000. That would increase OCC’s budget for its consumer services from $5.54 million to $6.24 million. The Administration proposed a $100,000 increase (which I do appreciate). The House adopted the $100,000 increase in the budget bill that it passed on April 21, 2021. (Lines 71308 to 71312) I respectfully ask that the Senate pass a $700,000 increase. Attached is amendment SC2190, as drafted by LSC, which could be used for the $700,000 increase.
Also, note that the Administration adopted language to clarify that the existing $150 stipends to the Board members for attending Board meetings (usually every two months) may be paid for virtual meetings. The House amended that language. (Lines 83278 to 83282) It would be preferable for the Senate to adopt the Administration’s earlier language.
As background, the Kasich Administration (with utility industry support)1 initiated a nearly $3 million cut in OCC’ budget in 2011. The resulting OCC budget of $5.64 million ten years ago (after the $3 million decrease) is the level in Substitute House Bill 110 today. OCC last had a budget increase in 2007. OCC’s budget was above $9 million in 2002. OCC’s budget today is lower than its budget 24 years ago for consumer advocacy.
The Agency’s structure is as follows. The Attorney General appoints the nine-member bi-partisan Governing Board. The Board appoints the Consumers’ Counsel (Agency Director) and Deputy. OCC has four departments. They are: Legal (with attorneys for representing consumers); Analytical (with technical staff such as for analysis in accounting, economics, etc.); Public Affairs for (education, our website, media, etc.) and Operations (for HR, fiscal, IT, etc.). OCC currently has 31 employees, plus temporary staff and consultants. I appreciate their dedicated services to Ohioans. Our website is at www.occ.ohio.gov. Our Twitter handle is @OCC4Consumers.
An example of a Board resolution is attached. It is the Board’s proposal for reform to require refunds to consumers for utility charges found improper by the Ohio Supreme Court. The attached pie chart shows how electric consumers have been denied about $1.5 billion in refunds since 2009. Former Supreme Court Justice Pfeifer described the denial of refunds for consumers as “unconscionable,” in a dissent.2
The attached Subsidy Scorecard reflects our opposition to charging Ohioans for electric subsidies, showing about $14.7 billion in subsidies charged to electric consumers since 2000. And attached is an example of our fact sheets for educating consumers, this one being about avoiding scams.
The Consumers’ Counsel’s consumer protection advocacy saves money for Ohioans on their utility bills. In the recent AEP rate case (Case 20-585), we reached a settlement with AEP and others this year. Instead of the rate increase that AEP proposed, we reached a compromise for a rate decrease for residential electric consumers, saving them millions of dollars. Another example is the process we initiated in 2018 (Cases 12-1842 and 18-1419) to protect consumers in Dominion’s area from rip-offs involving high charges by some energy marketers (ranging up to nearly four times Dominion’s own gas offer price). The issue was known as the “monthly variable rate.” We settled the case with Dominion, the PUCO Staff and others, which the PUCO adopted last year. I appreciate the efforts of AEP, the PUCO Staff and others in the electric rate case and appreciate the efforts of Dominion, the PUCO Staff and others to settle the gas marketing case.
One more set of examples of saving consumers money involves our efforts to protect electric consumers from the subsidy culture of the PUCO and utilities. One is we and others filed at FERC [FERC EL-16-33 (AEP) and EL-16-34 (FirstEnergy)] in 2016 to overturn massive PUCO subsidies involving billions of dollars for FirstEnergy and AEP (Cases 14-1297 and 13-2385 and 14-1693). Those cases involved power purchase agreements that would have been in effect for years. Two is we and others appealed and obtained a Court decision (Court 2017-1444 and 2017-1664) overturning the PUCO’s allowance of the infamous “distribution modernization charge” for FirstEnergy. Three is that the Court’s overturning of the FirstEnergy charge led to the ending of a similar charge to DP&L’s consumers. And four is we alone succeeded in an appeal (Court 2019-961) to protect the opportunity for consumer refunds where the PUCO under-counted FirstEnergy’s profits by excluding distribution modernization revenues from the profits calculation in Case 18-857.
Returning to our proposed budget increase, the $700,000 would help restore our purchasing power for consumer advocacy. That has been eroded by the state salary “parity” increases that the agency has adopted and increases for employee benefits costs. When I testified in the House Subcommittee in February, OCC was absorbing about $580,000 annually. Now added to this amount will be that the Administration last month unfroze a state parity increase. We appreciate that it will help employees; it will also cost OCC about $70,000 more annually. The “parity” reference means that non-union state employees can receive the increases that are in the collective bargaining agreements. Additionally, we want to offset the $100,000 budget reduction initiated by the Kasich Administration in fiscal year 2018.
In conclusion, we are competing on behalf of consumers against lawyered-up utilities and others in ratemaking and policymaking forums. That does cost money. The $60 million that FirstEnergy allegedly spent in connection with House Bill 6 is about eleven times OCC’s budget for all our consumer advocacy in a year. In AEP’s recent rate case application, it proposed charging consumers about $325,000 for its legal and other costs of presenting its case to the PUCO.
That concludes my testimony. Thank you for your consideration.
1 The Columbus Dispatch, “Kasich friends in high demand,” J. Hallett (May 23, 2011);
https://www.dispatch.com/article/20110523/NEWS/305239825
2 In re Columbus Southern Power Co., 138 Ohio St.3d 488, 2014-Ohio-462, ¶62 (dissent) (February 13, 2014).