Utilities' foe faces uncertain future

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Utilities' foe faces uncertain future
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Customers' watchdog may get 51% budget cut
Sunday, March 27, 2011  03:15 AM
By Dan Gearino

THE COLUMBUS DISPATCH

Ohio utility customers might soon find out what happens when a watchdog loses its bite.

Gov. John Kasich has proposed a 51 percent budget cut for the Office of the Ohio Consumers' Counsel, the state's advocate for the people who pay for electricity, natural gas, water and telecommunications.

Critics say the Consumers' Counsel spends too much energy on lawsuits that do little to reduce customer costs. Supporters say the office has been a formidable adversary of utilities, helping to win hundreds of millions of dollars in savings for customers, while making powerful enemies.

The governor says the annual cut of $4.4 million would reduce overlap with the Public Utilities Commission of Ohio. Both offices operate call centers and have programs to educate consumers about ways to save money on utilities.

But the proposal would go much deeper, threatening the office's core function, which is representing the public when utilities seek to raise rates, said Consumers' Counsel Janine Migden-Ostrander.

"We would be down to bare bones," she said.

Also, the budget cut would have no effect on the state's $8 billion budget deficit. The office is funded through a fee in utility bills, which is separate from the general fund.

The measure that created the Consumers' Counsel in 1976 was sponsored by U.S. Sen. Sherrod Brown, D-Ohio, when he was a state legislator.

"This is about making sure working Ohioans get a fair shake, even against powerful corporations," Brown says today of the agency's work.



The critics speak
The case against the Consumers' Counsel can be summed up by Ohio Supreme Court Justice Paul E. Pfeifer, in his written opinion in December in a case involving the office: "The OCC's office continues to tilt at windmills, when it could instead be engaging in a practical way to help Ohioans contain their energy costs," he said.

The agency has gone before the court about 20 times since 2007, and it has either lost or withdrawn all but a few times. Almost every case was an appeal of a PUCO decision.

Migden-Ostrander defends this record, noting that Pfeifer's comments were part of a long battle over natural-gas companies' ability to charge a flat fee for some services, a fight she thinks was worthwhile even if her office was unsuccessful.

Such procedural challenges are often a waste of taxpayer resources, said Kasich spokesman Rob Nichols. "Utility customers are paying for the high-priced lawyers at the OCC who litigate everything," he said.

But Kasich's main rationale for the cut is the overlap of some services with the

PUCO, such as the call centers. The PUCO's call center has 33 operators, while the Consumers' Counsel has 10. The difference, Migden-Ostrander said, is that her call center is solely focused on protecting residential customers.

The PUCO call center, and the agency as a whole, has a broad mandate to serve all parties, said Todd Snitchler, the newly appointed PUCO chairman.

"I think this agency has a history of striking an appropriate balance," he said.

The Consumers' Counsel's main opponents are the utilities, which are some of the largest companies in the state. Utility officials declined comment on the budget. "That's a legislative decision, and we would defer to their expertise," said Ellen Raines, spokeswoman for Akron-based FirstEnergy.

Her company's CEO, Anthony Alexander, was among the top individual donors to Kasich's campaign, with $21,000. The FirstEnergy political-action committee gave an additional $11,300. But utilities also made large donations to Kasich's opponent, Ted Strickland.

Customer savings
Midgen-Ostrander says that her office, which has about 75 employees, pays for itself in the savings it wins for customers.

In the past two years, the agency has gotten $54.8 mil-

lion shaved off of customers' bills by successfully preventing utilities from charging for those costs, she said, citing specific cases.

Often the victories were a matter of degree, with the utilities merely charging less than they otherwise wanted to, but Migden-Ostrander said the outcome would have been much worse for customers if her attorneys had not been there. The office also responded to 45,988 customers last year, through the call center, public meetings or website inquiries.

She also cites $1.9 billion in shared savings, meaning her office was one of several parties that negotiated lower charges for customers.

"If it were not for them, we would have had a 37 percent increase in our water rates last year and a total of 60 per-

cent in the last three or four years," said Joy Neff of Westerville, whose subdivision is served by Ohio American Water.

The Consumers' Counsel helped to secure much smaller rate increases. Neff has concerns that the proposed budget cut would take away the resources to help on relatively small cases such as hers because the Consumers' Counsel would be "too busy with the big guys" such as American Electric Power and Columbia Gas of Ohio.

A weaker Consumers' Counsel would be a "real kick in the stomach" for consumers, said Dave Rinebolt, executive director of Ohio Partners for Affordable Energy.

Since its founding, the Consumers' Counsel has been targeted for cuts or elimination several times, only to survive. In many ways, the office sows the seeds of its demise merely by doing its job, said Thomas V. Chema, the president of Hiram College who served as PUCO chairman from 1985 to 1989.

"The Consumers' Counsel is basically an adversary," he said. By advocating for residential customers, the office can't help but make enemies of commercial and industrial customers and the utilities. Those groups have tremendous political power, he said.

He fought with the Consumers' Counsel when he was PUCO chairman, but he thinks consumers need a watchdog. The problem is its status as a government agency, he said.

His solution, which he describes as radical, would be to spin off the office from the government and make it a private, nonprofit company that still would be funded by a fee on utility bills. He doesn't know if this approach would have any support from legislators.

The point, he said, is that something needs to happen to change the dynamics of the funding debate or else the same arguments will be repeated each budget season for as long as the Consumers' Counsel exists.