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IN RE: COMPLAINT OF ALLIED ERECTING & DISMANTLING COMPANY (2021)

Supreme Court of Ohio.2021-07-08No. No. 2014-0008

Summary

Holding. The court affirmed the commission's orders, holding that Allied failed to demonstrate reversible error in the commission's determination that Ohio Edison's back-bill estimates were reasonable and supported by reliable evidence.

Allied Erecting & Dismantling Company challenged a Public Utilities Commission order requiring it to pay approximately $94,676.58 in back charges for electricity consumed over a nearly three-year period when Ohio Edison failed to bill for one of Allied's meters. Ohio Edison had mistakenly deleted the meter from its billing system in 2004 and discovered the error in 2006. The utility calculated the back bill using a combination of actual meter readings and estimates based on Allied's historical electricity usage from corresponding months in prior years, accounting for seasonal variations.

Allied argued that Ohio Edison violated its tariff by disregarding an actual meter reading of 38 kilowatts from June 2006 and by using estimates when obtaining readings was not truly impractical or impossible. The commission found that Ohio Edison provided sufficient evidence supporting the reliability of its estimates and that Allied failed to prove the estimates were unreasonable. The commission ordered Ohio Edison to establish a 36-month payment plan without interest or late fees and directed the utility to conduct an internal review of its metering operations due to its violation of state administrative rules regarding annual meter readings.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether Ohio Edison violated its tariff provision regarding estimated billing by disregarding an actual meter reading
  • Whether the 38 kilowatt reading should have been applied to all 28 months of the unbilled period
  • Whether Ohio Edison's tariff permitted estimated billing only when meter readings were physically impractical or impossible to obtain
  • Validity and reliability of back-bill calculations based on historical usage estimates

Procedural posture

Allied appealed from Public Utilities Commission orders approving Ohio Edison's back bill and establishing a payment plan, after the commission found the utility's evidence sufficiently supported the accuracy of its estimates.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

{¶ 1} Appellant, Allied Erecting & Dismantling Co., Inc. (“Allied”), appeals from orders of appellee, Public Utilities Commission, requiring Allied to pay for electricity consumed during an almost three-year period in which intervening appellee, the Ohio Edison Company, failed to bill Allied for one of its electric meters. Ohio Edison estimated the amount owed based on Allieds historical electricity usage, and the commission found that Ohio Edison had provided sufficient evidence to support the accuracy of its estimates. On appeal, Allied primarily argues that the commission failed to enforce a provision in Ohio Edisons tariff regarding estimated billing. For the reasons explained below, we hold that Allied has failed to demonstrate reversible error. We therefore affirm the commissions orders.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Allieds complaint against Ohio Edison

{¶ 2} Allied is an industrial contractor with a 250-acre facility in Youngstown, Ohio. In December 2003, a motor-vehicle accident destroyed one of Allieds six electric meters at its Youngstown facility. When Ohio Edison replaced the damaged meter, it mistakenly deleted one of Allieds other, undamaged meters from Ohio Edisons internal billing system. Although the deleted meter was functional and remained physically accessible at Allieds facility, Ohio Edison did not read the meter or bill Allied for the electric usage recorded by that meter. In June 2006, Ohio Edison discovered its error, and after an internal investigation, it calculated Allieds back bill for the unbilled period—from February 2004 to January 2007—to be $94,676.58.

{¶ 3} In January 2007, Ohio Edison sent Allied the back bill. Allied was surprised by the amount due and later filed a complaint with the commission pursuant to R.C. 4905.26. Allied requested (1) an explanation of the error, (2) an explanation of the back-bill calculation considering Ohio Edisons failure to read the meter for a 2.5-year period, (3) protection against an unwarranted assessment of interest and late fees, and to the extent that any amount is due, (4) an appropriate payment plan.

B. The conflicting evidence adduced at the hearing

{¶ 4} The commission held a two-day hearing on Allieds complaint. Ohio Edison presented Lisa Nentwick, a senior account manager, to testify about how she had calculated Allieds back bill. Nentwick explained that when Ohio Edison cannot obtain an actual reading of a meter, it will estimate a customers bill based on at least two years of the customers historical electric usage. According to Nentwick, there are two ways to estimate usage based on historical data: (1) taking the lowest usage for each corresponding month from the previous two years or (2) calculating an average usage from the corresponding months from the two previous years.

{¶ 5} Regarding Allieds bill, Nentwick testified that actual readings were unavailable from February 2004 to June 2006 because the meter was not in Ohio Edisons billing system. Therefore, she had had to estimate usage for each of those months. To calculate the estimated usage, Nentwick used a combination of the two methods described above. For the first 12 months of the unbilled period, she used the lowest usage amount for the corresponding month from the two previously available years. For example, to calculate Allieds bill for June 2004, she examined Allieds usage in June 2002 and June 2003 and took the lower of those two numbers. For the other months, Nentwick used the average of the usage for that month from the two previously available years. After the discovery of Ohio Edisons error in June 2006, Nentwick took actual readings from the meter for June, July, and August 2006, but estimated usage for the four remaining months in 2006. Ohio Edison entered Nentwicks estimated readings and the three actual readings into its billing system, which generated Allieds back bill of $94,676.58.

{¶ 6} Allied presented Douglas Hull, who testified that Ohio Edisons estimates and calculations were unreliable and flawed. Hull, a retired Ohio Edison employee, explained that the type of meter at issue here gets reset only when actual readings are taken. Hull claimed that because Ohio Edison had not read the meter in question from February 2004 to June 2006, the meter had not been reset for 28 months. And because the meter had not been reset, Hull testified, the first reading in June 2006—which was 38 kW—must have been the single high for the previous 28 months. Therefore, according to Hull, the demand for each of the previous 28 months should have been equal to or less than 38 kW a month. Hull concluded that because Nentwicks estimates ranged from 77 kW to 100 kW a month, she had disregarded the actual reading of the meter and overstated the amount of Allieds back bill.

{¶ 7} Nentwick acknowledged that Ohio Edisons first reading after discovering its error was 38 kW and that it used that actual reading to calculate Allieds monthly charge for June 2006. But she further testified that the 38 kW reading was not a reliable number to use for any other month. According to Nentwick, the 38 kW reading was less than half of any other reading ever recorded by that meter and was likely a result of transcription error by the meter reader or the meter “turn[ing] over” or resetting during the unbilled period.

C. The commissions order

{¶ 8} In its September 2013 opinion and order, the commission first found that Ohio Edison had violated Ohio Adm.Code 4901:1-10-05(I) by failing to obtain actual readings of all its meters at least once each calendar year. Because Ohio Edison violated this regulation, the commission ordered it to conduct an internal review of its metering operations and policies and file a report of its findings within 90 days of the commissions order.

{¶ 9} Notwithstanding Ohio Edisons violation of the administrative rule, the commission also found that (1) Ohio Edison had provided sufficient evidence supporting the accuracy of the estimates in the back bill and (2) Allied had not sustained its burden in proving that Ohio Edisons estimates were unreasonable. Accordingly, the commission ordered that Ohio Edison establish a 36-month payment plan for Allied to pay the back bill, with no interest or late fees. After the commission denied Allieds application for rehearing, Allied appealed to this court. Ohio Edison intervened as an appellee.

D. Allied files for bankruptcy

{¶ 10} In April 2016—one month before the scheduled oral argument in this court—Allied commenced a Chapter 11 bankruptcy case, which stayed this appeal for almost five years. See 145 Ohio St.3d 1465, 2016-Ohio-2911, 49 N.E.3d 1309. In March 2021, Allied notified this court that its bankruptcy case had concluded, and we lifted the stay. 162 Ohio St.3d 1405, 2021-Ohio-929, 165 N.E.3d 322. The parties waived oral argument. Id.

II. STANDARD OF REVIEW

{¶ 11} “R.C. 4903.13 provides that a [commission] order shall be reversed, vacated, or modified by this court only when, upon consideration of the record, the court finds the order to be unlawful or unreasonable.” Constellation NewEnergy, Inc. v. Pub. Util. Comm., 104 Ohio St.3d 530, 2004-Ohio-6767, 820 N.E.2d 885, ¶ 50. We will not reverse or modify the commissions decision as to questions of fact when the record contains sufficient probative evidence to show that the commissions decision was not manifestly against the weight of the evidence and was not so clearly unsupported by the record as to show misapprehension, mistake, or willful disregard of duty. Monongahela Power Co. v. Pub. Util. Comm., 104 Ohio St.3d 571, 2004-Ohio-6896, 820 N.E.2d 921, ¶ 29. The “appellant bears the burden of demonstrating that the commissions decision is against the manifest weight of the evidence or is clearly unsupported by the record.” Id.

III. ANALYSIS

{¶ 12} Throughout its merit brief, Allied criticizes Ohio Edison for failing to keep track of its meters and for allegedly failing to communicate with Allied about the billing error. The issue before the commission, however, was whether Ohio Edisons estimated back bill was fair and reliable. Allied, as the complainant, had the burden to present sufficient evidence supporting the allegations in its complaint. See Grossman v. Pub. Util. Comm., 5 Ohio St.2d 189, 190, 214 N.E.2d 666 (1966). The commission determined that Allied failed to carry its burden. On appeal, Allied challenges the commissions orders on two grounds. We conclude that neither justifies reversal.

A. Proposition of Law No. 1: whether the commission failed to enforce Ohio Edisons tariff and R.C. 4905.22

{¶ 13} In its first proposition of law, Allied asserts that the commissions order was unreasonable and unlawful because the commission failed to enforce article VII(F) of Ohio Edisons tariff and R.C. 4905.22. Article VII(F) of Ohio Edisons tariff provides:

Estimated Bills: The Company attempts to read meters on a monthly basis but there are occasions when it is impractical or impossible to do so. In such instances the Company will render an estimated bill based upon past use of service and estimated customer load characteristics. Where the customer has a load meter and the actual load reading when obtained is less than the estimated load used in billing, the account will be recalculated using the actual load reading. The recalculated amount will be compared with the amount originally billed and the customer will be billed the lesser of the two amounts.

(Boldface sic.) R.C. 4905.22 provides that all charges for utility service “shall be just, reasonable, and not more than the charges allowed by law or order of the public utilities commission.”

{¶ 14} Allieds argument focuses on the last two sentences of the tariff provision, which require that when a customers actual load meter reading is less than an estimated load used for billing, Ohio Edison must recalculate the account using the actual reading. Allied claims that Ohio Edison “disregarded” actual readings that were less than the estimates Ohio Edison used to calculate the back bill and therefore violated this tariff provision.

{¶ 15} Specifically, Allied argues that Hull testified that the actual reading of 38 kW for June 2006 means that 38 kW was the single high demand for the preceding 28 months during which Ohio Edison had failed to read the meter. Thus, according to Allied, Ohio Edison should have used 38 kW as the actual load reading for each month during that unbilled period and Ohio Edisons failure to do so violated article VII(F). Allied also asserts that it is irrelevant whether the actual reading of 38 kW was accurate, because the tariff requires only that Ohio Edison charge a customer an actual reading when it is less than the estimate. And the commissions failure to enforce Ohio Edisons tariff, Allied argues, resulted in unjust and unreasonable charges in violation of R.C. 4905.22.

{¶ 16} For the following reasons, we hold that Allied has not carried its burden of demonstrating error. First, Allieds insistence that Ohio Edison “disregarded” the “actual readings” for the unbilled period—and therefore violated its tariff—is factually inaccurate. No one from Ohio Edison read the meter in question between February 2004 and June 19, 2006. Allied acknowledges this fact in its brief when it states that “[t]he truth is that the actual load for the subject period of time will never be known.” Yet Allied also insists that the actual reading for February 2004 to June 2006 was “equal to or less than 38.0 kW” and that “Ohio Edisons disregard of the actual load reading of 38 kW is * * * legally improper.” Allied is free to develop theories regarding how Ohio Edison should have calculated the back bill, but it cannot distort the record to prove a tariff violation. Allied has failed to explain why article VII(F) required Ohio Edison to extend an actual read from a single month—June 2006—to 28 other months when there were no readings taken in those months.

{¶ 17} Second, the record supports the commissions determination. During the proceedings below, the parties presented alternative ways to calculate Allieds back bill. Ohio Edison used a combination of estimates and actual readings from the unbilled period. Nentwick—who had been calculating back bills for 18 years—testified that using historical data to estimate a customers consumption during an unbilled period is reasonable because a customers past usage is the most accurate way to determine what the customers consumption was during the period for which meter readings are not available. Nentwick also testified that because Ohio Edison considered historical usage from corresponding months, her estimates accounted for any variations due to seasonal weather patterns or similar factors.

{¶ 18} In contrast, Allied set forth Hulls theory that Ohio Edison should have used the 38 kW reading from June 2006 for each of the 28 previous months. In response to Hulls theory, Nentwick pointed out that the 38 kW reading was approximately half of any other reading ever recorded by that meter. Indeed, the lowest reading from 2001 to 2003 was 77 kW, and the actual readings after June 2006 were 78 kW in July and 84 kW in August. Thus, Nentwick concluded that it would have been unreasonable to assume that Allieds electricity usage dramatically decreased for the 28-month period in which Ohio Edison failed to read the meter but then somehow doubled when Ohio Edison began reading the meter again.

{¶ 19} Based on the competing evidence, the commission found that Hulls lack of experience with estimating bills undercut his credibility, that the 38 kW reading was an “outlier,” and that Ohio Edison “provided sufficient evidence to support the accuracy of the bill estimates.” On appeal, Allied asks us to reweigh the evidence and substitute our judgment for that of the commission. Allied, however, has not shown that the commissions finding was against the weight of the evidence, and it is well settled that “this court will not second-guess the commission on questions of fact absent such a showing.” Ohio Consumers’ Counsel v. Pub. Util. Comm., 114 Ohio St.3d 340, 2007-Ohio-4276, 872 N.E.2d 269, ¶ 29. Because Allied has not established that Ohio Edison violated article VII(F), it has also failed to establish the back-bill charges were unjust or unreasonable under R.C. 4905.22.

{¶ 20} Within this proposition of law, Allied also argues that Ohio Edison violated its “internal procedures” and “guidelines for rebilling,” which required Ohio Edison to, among other things, limit a customers rebill to one years worth of charges. Allied, however, failed to preserve any argument regarding Ohio Edisons internal rebilling procedures. Neither Allieds application for rehearing nor its notice of appeal mention an alleged violation of Ohio Edisons guidelines or internal procedures. “[T]he failure to raise the argument at rehearing and in its notice of appeal precludes this court from considering the argument.” Ohio Partners for Affordable Energy v. Pub. Util. Comm., 115 Ohio St.3d 208, 2007-Ohio-4790, 874 N.E.2d 764, ¶ 17.

B. Proposition of Law No. 2: whether article VII(F) of Ohio Edisons tariff provided a legal basis for using estimates to generate the back bill

{¶ 21} In its second proposition of law, Allied focuses on the first two sentences of article VII(F) of Ohio Edisons tariff, which provide:

Estimated Bills: The Company attempts to read meters on a monthly basis but there are occasions when it is impractical or impossible to do so. In such instances the Company will render an estimated bill based upon past use of service and estimated customer load characteristics.

(Boldface sic.) Allied argues that article VII(F) authorizes Ohio Edison to use estimated billing only when obtaining actual readings is “impractical or impossible.” Allied argues that under the facts here, Ohio Edison failed to read the meter because of its own malfeasance—not because of any impracticality or impossibility. Allied interprets the “impractical or impossible” language as covering situations in which a meter was physically inaccessible, such as due to extreme weather conditions. Thus, Allied argues that article VII(F) did not give Ohio Edison “a legal basis” to use estimated billing in this case.

{¶ 22} Allied has again failed to carry its burden of demonstrating error. As a preliminary matter, Allied did not identify where the commission allegedly concluded that article VII(F) provided the “legal basis” for using estimates to generate Ohio Edisons back bill. The commission merely concluded that Ohio Edison did not violate the tariff provision. Allieds second proposition of law appears to be in response to one of Ohio Edisons arguments to the commission that the commission did not expressly rely upon in the orders on appeal.

{¶ 23} Regardless, Allied has not proved that article VII(F) prohibited Ohio Edison from using estimates to calculate a back bill necessitated by the utilitys billing error. We have previously held that back billing is permissible when a utility undercharges a customer due to a meter malfunction. See Norman v. Pub. Util. Comm., 62 Ohio St.2d 345, 353, 406 N.E.2d 492 (1980) (noting that the statutes prohibiting a utility from charging a customer a different rate than that in the utilitys rate schedule require that the utilitys tariff be interpreted to allow back billing). And although R.C. 4933.28 now limits back billing of residential customers to one year, the legislature has not placed a similar limitation on back billing for nonresidential customers. See id. at 349, 354, 406 N.E.2d 492.

{¶ 24} Article VII(F) merely provides that Ohio Edison will “attempt” to read meters monthly but on “occasions when it is impractical or impossible to do so,” it will “render an estimated bill” based on historical use. This provision does not limit or prohibit Ohio Edisons ability to estimate a back bill for undercharged electric service. If Allieds interpretation of Ohio Edisons tariff were correct, then Ohio Edison could estimate a customers back bill only when it failed to read a meter that was physically inaccessible due to extreme weather or similar scenarios.

{¶ 25} Alternatively, if article VII(F) were applicable, because Ohio Edison had inadvertently deleted the meter from its billing system, it would have been impractical or impossible for the utility to obtain monthly readings during the unbilled period. Therefore, Ohio Edisons use of estimated billing was not inconsistent with the tariff provision.

IV. CONCLUSION

{¶ 26} For the reasons explained above, we hold that Allied has not demonstrated that the commission erred in deciding the complaint in Ohio Edisons favor. Ohio Edison back billed Allied using a combination of actual readings and estimates based on historical usage, which accounted for seasonal changes. The commission found that Ohio Edisons back bill was reasonable and supported by reliable evidence, and the commission ordered that Ohio Edison establish a 36-month repayment plan, with no interest or late fees. Allied has not demonstrated that the commissions decision was unreasonable or that it violated any provision in Ohio Edisons tariff. We therefore affirm the commissions orders.

Orders affirmed.

Fischer, J.

OConnor, C.J., and Kennedy, DeWine, Donnelly, Stewart, and Brunner, JJ., concur.