Ohio Edison Co. v. Public Utilities Commission

[This opinion has been published in Ohio Official Reports at 

78 Ohio St.3d 466

.]




  OHIO EDISON COMPANY, APPELLANT, v. PUBLIC UTILITIES COMMISSION OF
                               OHIO ET AL., APPELLEES.
         [Cite as Ohio Edison Co. v. Pub. Util. Comm., 

1997-Ohio-196

.]
Public utilities—Public utility’s authority to grant reduced-rate service to a
        political subdivision not subject to R.C. 4905.33 prohibition against
        furnishing below-cost service for the purpose of detroying competition.
Pursuant to R.C. 4905.34, a public utility’s authority to grant reduced-rate utility
        service to a political subdivision is not subject to the R.C. 4905.33
        prohibition against furnishing below-cost utility service for the purpose of
        destroying competition.
       (No. 95-2575—Submitted January 7, 1997—Decided May 21, 1997.)
  APPEAL from the Public Utilities Commission of Ohio, No. 93-1408-EL-CSS.
                                  __________________
        {¶ 1} This appeal involves an order by the Public Utilities Commission of
Ohio (“commission”) resolving a complaint brought by Youngstown Thermal,
Limited Partnership (“Thermal”) against Ohio Edison Company (“Ohio Edison”)
for selling electricity below cost in violation of R.C. 4905.33.
        {¶ 2} Thermal is a limited partnership that owns and operates a district
heating system that provides steam-heating service to approximately fifty buildings
in downtown Youngstown, Ohio. Thermal’s general partner is primarily engaged
in acquiring, expanding, and operating district heating and cooling systems in
several cities, including Pittsburgh. Pursuant to the Certified Territory Act, Ohio
Edison is the monopoly electric provider for the city of Youngstown and vicinity.
Thermal and Ohio Edison presently compete for the heating load in Youngstown.
        {¶ 3} In the 1980s, Mahoning County proposed construction of a 198,000
square foot jail facility in downtown Youngstown. The jail was to be built across
                              SUPREME COURT OF OHIO




the street from Thermal’s existing steam plant. A county building commission was
created to determine various aspects of the construction and equipment to be used
in the jail facility. Architectural and engineering firms were hired to prepare plans
and specifications for the facility.
        {¶ 4} Ohio Edison, being the monopoly electric provider for the
Youngstown area, had no competitors for the general electric load at the jail and
agreed to provide the general electric load service to the jail at Ohio Edison’s
standard commercial rate. Ohio Edison also sought to provide the cooling load at
that same commercial rate. However, Thermal wanted to use the jail as the anchor
for a district cooling system in Youngstown. Ohio Edison viewed the jail project
as critical to protecting its existing downtown cooling-load customer base. Thus,
Thermal and Ohio Edison began competing for the jail’s cooling load.
        {¶ 5} Thermal submitted a bid for the cooling-load to the building
commission. Ohio Edison responded by offering cooling-load service at a reduced
rate, a cash incentive to purchase the chillers, and a high efficiency lighting
allowance of $30,000-$50,000. Each party then offered several progressively
lower bids, including multiple-tiered, usage-based, fixed or capped rates and
sizable cash incentives, in an effort to obtain the cooling-load bid at the jail facility.
        {¶ 6} On September 22, 1993, the building commission met and publicly
voted five to two to negotiate exclusively with Thermal for thirty days to finalize a
contract. Ohio Edison continued to contact and discuss the project with the building
commission members. Ohio Edison also sent a letter to the chairman of the building
commission reaffirming that its offer remained on the table.
        {¶ 7} On October 22, 1993, the building commission members learned that
Thermal had negotiated a contract with the county representatives. Apparently, the
building commission then deferred a vote on the Thermal contract until later in
October, citing a need to review the contract terms. The commission disapproved
the contract by a vote of four to three at its October 26 meeting. Ohio Edison next




                                            2
                                January Term, 1997




offered to include an interest-free loan with its bid. On December 22, 1993, the
Mahoning County Commissioners awarded the final contract (“service
agreement”), including the cooling load, to Ohio Edison.
       {¶ 8} On August 23, 1993, Thermal brought an R.C. 4905.26 complaint
before the commission against Ohio Edison alleging that Ohio Edison was
proposing to provide a cooling service without authority and that Ohio Edison had
priced the cooling service below Ohio Edison’s actual cost for the purpose of
destroying competition in violation of R.C. 4905.33. Ohio Edison sought to dismiss
the complaint because the proposed service agreement did not provide cooling
services and was not subject to commission review under R.C. 4905.34. Ohio
Edison’s motion to dismiss was denied.
       {¶ 9} At a prehearing conference, the parties agreed to narrow the issues for
hearing and to submit briefs on one legal issue:
       “[I]s the authority granted a utility by [R.C.] Section 4905.34, * * * to offer
free or reduced rate service limited by [R.C.] Section 4905.33, * * * which prohibits
a utility from furnishing free service or service for less than actual cost for the
purpose of destroying competition[?]”
       {¶ 10} The commission issued an entry finding that although these sections
were not in conflict, the grant of authority in R.C. 4905.34 was limited by the
statement in R.C. 4905.33 that a utility cannot provide reduced-rate service for the
purpose of destroying competition. The commission stated that this entry was not
final or appealable. Ohio Edison sought but was denied rehearing.
       {¶ 11} The commission then conducted an evidentiary hearing on the issue
of Ohio Edison’s actual cost to provide the power for the cooling load at the jail
project. Thermal presented two witnesses who testified that Ohio Edison was
providing electrical energy below its actual cost for the cooling load to the jail
project. Ohio Edison presented four witnesses who testified that the estimated total
jail revenues would exceed the cost to serve the facility.




                                          3
                            SUPREME COURT OF OHIO




       {¶ 12} The commission reviewed the conflicting evidence and held that
Ohio Edison had violated R.C. 4905.33 by agreeing to provide the cooling-load
power to the jail at a rate below Ohio Edison’s actual cost for the purpose of
destroying competition by Thermal. However, the commission assessed no civil
forfeiture against Ohio Edison on the basis that this was the first time that the
commission had been presented with the question at hand.
       {¶ 13} Ohio Edison sought rehearing. Thermal did not seek rehearing, but
it opposed Ohio Edison’s application for rehearing. The commission denied Ohio
Edison’s application for rehearing.
       {¶ 14} The cause is now before this court upon an appeal as of right.
                              __________________
       James W. Burk, Michael R. Beiting and Anthony J. Alexander; Roetzel &
Andress Co., L.P.A., and George W. Rooney, Jr., for appellant.
       Betty D. Montgomery, Attorney General, Duane W. Luckey, William L.
Wright, Thomas W. McNamee and Paul A. Colbert, Assistant Attorneys General,
for appellee, Public Utilities Commission of Ohio.
       Vorys, Sater, Seymour & Pease and John Winship Read, for intervening
appellee, Youngstown Thermal, Limited Partnership.
       Kaufman & Cumberland and Frank J. Cumberland, urging affirmance for
amicus curiae, AT&T Communications of Ohio, Inc.
       Chester, Willcox & Saxbe, John W. Bentine and Jeffrey L. Small, urging
affirmance for amicus curiae, American Municipal Power-Ohio, Inc.
                              __________________




                                        4
                                   January Term, 1997




        LUNDBERG STRATTON, J.
        {¶ 15} Appellant poses numerous propositions of law arguing that the
commission erred in its interpretation of R.C. 4905.34 and overstepped its authority
in finding that Ohio Edison violated R.C. 4905.33.                 Each party also filed
supplemental briefs on the two questions that we raised sua sponte: “Did the
commission find that R.C. 4905.34 applies in the case at bar?” and “Does R.C.
4905.34 apply in a case involving a competitive bidding situation?” For the reasons
that follow, we find that R.C. 4905.33 and 4905.34 are clear, unambiguous, and not
in conflict. We also hold that a public utility’s right to enter into a reduced-rate
utility service contract with a political subdivision under R.C. 4905.34 is not limited
by the last sentence of R.C. 4905.33, which prohibits below-cost utility service
contracts that attempt to destroy competition.             Accordingly, we reverse the
commission’s order.1
        {¶ 16} We will not reverse a commission order unless it is against the
manifest weight of the evidence. R.C. 4903.13. Nor will we reweigh the evidence
or substitute our judgment for that of the commission on factual questions where
there is sufficient probative evidence in the record to show that the commission’s
decision is not manifestly against the weight of the evidence and is not so clearly
unsupported by the record as to show misapprehension, mistake, or willful
disregard of duty. Canton Storage & Transfer Co. v. Pub. Util. Comm. (1995), 

72 Ohio St.3d 1, 4

, 

647 N.E.2d 136

, 140; MCI Telecommunications Corp. v. Pub.
Util. Comm. (1988), 

38 Ohio St.3d 266, 268

, 

527 N.E.2d 777, 780

. However, we
have complete and independent power of review as to all questions of law. Id.;
Indus. Energy Consumers of Ohio Power Co. v. Pub. Util. Comm. (1994), 

68 Ohio St.3d 559, 563

, 

629 N.E.2d 423

, 426.



1. Given our finding that the commission erred when interpreting R.C. 4905.33 and 4905.34, we
need not reach the remaining legal and factual issues propounded by the parties.




                                             5
                             SUPREME COURT OF OHIO




       {¶ 17} This case involves the interplay between R.C. 4905.33 and 4905.34
and, more specifically, the commission’s resolution of that interplay. Determining
whether the commission applied the proper legal standard is a question of law.
Time Warner AxS v. Pub. Util. Comm. (1996), 

75 Ohio St.3d 229, 234

, 

661 N.E.2d 1097

, 1101; Canton Storage & Transfer Co., 

72 Ohio St.3d at 5

, 647 N.E.2d at 140.
Accordingly, we consider this question on a de novo basis.                        MCI
Telecommunications Corp., 

38 Ohio St.3d at 268

, 

527 N.E.2d at 780

.
       {¶ 18} R.C. 4905.34 contracts are exempt from R.C. Chapters 4901, 4903,
4905, 4907., 4909, 4921, 4923, and 4925, including commission review under R.C.
4905.26. However, the commission has limited authority to determine the extent
of its jurisdiction and whether a complaint pending before it actually involves a
R.C. 4905.34 contract. In re Complaint of Residents of Struthers (1989), 

45 Ohio St.3d 227

, 

543 N.E.2d 794

. Once the commission determines that the complaint
pending before it involves an R.C. 4905.34 contract, the commission’s jurisdiction
is at an end and the case must be dismissed. 

Id.

 The commission, therefore, erred
when it exercised jurisdiction over the Ohio Edison service agreement.
       {¶ 19} Thermal brought an R.C. 4905.26 and 4905.33 complaint against
Ohio Edison. Ohio Edison sought to dismiss the complaint, asserting that R.C.
4905.34 expressly permits reduced-rate contracts with political subdivisions. Thus,
the commission should have initially determined whether R.C. 4905.34 precluded
its review of the complaint. Instead, all parties simply presumed that R.C. 4905.34
applied in the case at bar. The commission then proceeded to apply R.C. 4905.33
to limit the application of R.C. 4905.34. This was error. We find that R.C. 4905.34
applies in this case and is not subject to the R.C. 4905.33 prohibition against
furnishing below-cost utility service for the purpose of destroying competition.
       {¶ 20} R.C. 4905.33 provides:
       “No public utility shall directly or indirectly, or by any special rate, rebate,
drawback, or other device or method, charge, demand, collect, or receive from any




                                          6
                                  January Term, 1997




person, firm, or corporation a greater or lesser compensation for any services
rendered, or to be rendered, except as provided in Chapters 4901., 4903., 4905.,
4907., 4909., 4921., 4923., and 4925. of the Revised Code, than it charges,
demands, collects, or receives from any other person, firm, or corporation for doing
a like and contemporaneous service under substantially the same circumstances and
conditions. No public utility shall furnish free service or service for less than actual
cost for the purpose of destroying competition.” (Emphasis added.)
          {¶ 21} Thus, public utilities must charge all similarly situated customers the
same rates (Allnet Communications Serv., Inc. v. Pub. Util. Comm. [1994], 

70 Ohio St.3d 202, 205-207

, 

638 N.E.2d 516

, 519-520) and cannot furnish free service or
service below their actual costs for the purpose of destroying competition. R.C.
4905.33 is clear and unambiguous.
          {¶ 22} Immediately following this prohibition, R.C. 4905.34, prior to being
amended in 1996, provided:
          “Chapters 4901., 4903., 4905., 4907., 4909., 4921., 4923., and 4925. of the
Revised Code do not prevent any public utility or railroad from granting any of its
property for any public purpose, or granting reduced rates or free service of any
kind to the United States, to the state or any political subdivision of the state, for
charitable purposes, for its fairs or expositions, or to any officer or employee of
such public utility or railroad or his family. All contracts and agreements made or
entered into by such public utility or railroad for such use, reduced rates, or free
service are valid and enforc[eable] at law. As used in this section, ‘employee’
includes furloughed, pensioned, and superannuated employees.”                (Emphasis
added.)
          {¶ 23} In R.C. 4905.34, the General Assembly has declared that public
utilities may provide the state or its political subdivisions with reduced-rate or even
free utility service notwithstanding R.C. 4905.33. We do not read R.C. 4905.34 to
mean that reduced rates or free service may be granted to governmental entities




                                            7
                                   SUPREME COURT OF OHIO




only for charitable purposes, fairs, or expositions. These categories are merely
examples of other purposes or entities to whom a public utility may grant reduced
rates or free service. The public utility may grant any of its property for any public
purpose, including those so enumerated in the statute. Furthermore, all such
reduced-rate contracts are “valid and enforc[eable] at law.” R.C. 4905.34 is also
clear and unambiguous.
         {¶ 24} We find no conflict between R.C. 4905.33 and 4905.34.21 R.C.
4905.33 prohibits a utility from furnishing service below that utility’s “actual cost
for the purpose of destroying competition.” R.C. 4905.34 is exempt from the
limitation in R.C. 4905.33 and not only permits a utility to enter into a reduced-rate
contract with a political subdivision, but also states that these contracts are “valid
and enforc[eable] at law.” Thus, public utilities can charge governmental entities
special utility rates. Had the General Assembly intended its grant of authority in
R.C. 4905.34 to be limited by the last sentence in R.C. 4905.33, it would have said
so. For example, the General Assembly could have said that public utilities can
grant reduced-rate or free utility service to political subdivisions except for the
purpose of destroying competition, but it chose not to. Therefore, R.C. 4905.34
needs no interpretation and the commission should not have limited its application
by R.C. 4905.33. Time Warner AxS, 

75 Ohio St.3d at 237

, 661 N.E.2d at 1104,
citing Provident Bank v. Wood (1973), 

36 Ohio St.2d 101, 105-106

, 

65 O.O.2d 296, 298

, 

304 N.E.2d 378, 381

.




2. Even were we to find these two sections to be in conflict, the result would be the same. R.C.
4905.33 is a general statute, prohibiting utilities from entering into an agreement to furnish service
below their actual cost for the purpose of destroying competition. R.C. 4905.34 is a specific statute,
exempting itself from the prohibitions in R.C. 4905.33. Absent a manifest legislative intent in R.C.
4905.33 that it should prevail in a conflict with R.C. 4905.34, the specific section takes precedence
over the general section. R.C. 1.51. Since R.C. 4905.33 contains no such intent, a utility’s right to
offer a reduced-rate contract to a political subdivision under R.C. 4905.34 takes precedence. See
Springdale v. CSX Ry. Corp. (1994), 

68 Ohio St.3d 371, 376

, 

627 N.E.2d 534, 538

.




                                                  8
                                January Term, 1997




       {¶ 25} Intervening appellee argues that Ohio Edison did not intend to use
R.C. 4905.34 as authority for its reduced-rate contract with the county. However,
Ohio Edison’s intent is not material. The grant of authority in R.C. 4905.34
contains no requirement of prior intent and we decline to read one into this statute.
       {¶ 26} The General Assembly has expressly given public utilities the
authority to enter into reduced-rate contracts with political subdivisions without
limitation. The General Assembly, not the commission, must make changes in the
regulatory scheme to limit a utility’s rights under R.C. 4905.34. If a utility’s
authority to enter into a reduced-rate utility contract with a political subdivision is
to be limited by anti-competitive conduct, the General Assembly must effect that
change. The General Assembly makes policy decisions expanding or restricting
free competition. See, e.g., Time Warner AxS, 

75 Ohio St.3d at 241

, 661 N.E.2d at
1106; Canton Storage & Transfer Co., 

72 Ohio St.3d at 5

, 647 N.E.2d at 141.
Absent such a change in Ohio’s statutory framework, the commission is required,
as we are, to apply the existing statutory provisions to all complaints and cases
presented to us.
       {¶ 27} We, therefore, find that R.C. 4905.34 is clear and unambiguous. We
further hold that pursuant to R.C. 4905.34, a public utility’s authority to grant
reduced-rate utility service to a political subdivision is not subject to the R.C.
4905.33 prohibition against furnishing below-cost utility service for the purpose of
destroying competition. Accordingly, the commission’s order is reversed.
                                                                      Order reversed.
       DOUGLAS, F.E. SWEENEY and CLOSE, JJ., concur.
       DOUGLAS, J., concurs separately.
       RESNICK, J., concurs in the syllabus and judgment only.
       MOYER, C.J., and PFEIFER, J., dissent.
       MICHAEL L. CLOSE, J., of the Tenth Appellate District, sitting for COOK, J.
                               __________________




                                          9
                                    SUPREME COURT OF OHIO




         DOUGLAS, J., concurring.
         {¶ 28} I concur with the judgment of the majority and its opinion. I write
separately to further define what I believe the statute, R.C. 4905.34, says.
         {¶ 29} In several recent cases, a majority of this court has taken some
umbrage with actions of the Public Utilities Commission. Such activity should not
be misinterpreted as expressing any lack of confidence in or dissatisfaction with the
commission. It is my impression that the court’s policy of giving great deference
to the commission, as it goes about its Herculean tasks, has not changed. There just
are times when a majority of the court feels constrained, given our constitutional
and statutory mandates, to respectfully disagree with the commission over statutory
and/or case law interpretations. The case at bar is one of those instances.
         {¶ 30} I read R.C. 4905.343 to be straightforward and unambiguous. It says,
in part, that there is nothing preventing “* * * any public utility * * * from granting
any of its property for any public purpose * * *.” (Emphasis added.) “Public
purpose” is defined as “* * * a term of classification to distinguish the objects for
which, according to settled usage, the government is to provide, from those which,
by the like usage, are left to private interest, inclination, or liberality.” Black’s Law
Dictionary (6 Ed. Rev. 1990) 1231. “Property” is defined as “[t]hat which is
peculiar or proper to any person; that which belongs exclusively to one. * * *
         “The word is also commonly used to denote everything which is the subject
of ownership, corporeal or incorporeal, tangible or intangible, visible or invisible,


3. R.C. 4905.34 currently provides:
          “Chapters 4901., 4903., 4905., 4907., 4909., 4921., and 4923. of the Revised Code do not
prevent any public utility or railroad from granting any of its property for any public purpose, or
granting reduced rates or free service of any kind to the United States, to the state or any political
subdivision of the state, for charitable purposes, for fairs or expositions, to a law enforcement officer
residing in free housing provided pursuant to section 3735.43 of the Revised Code, or to any officer
or employee of such public utility or railroad or the officer's or employee's family. All contracts
and agreements made or entered into by such public utility or railroad for such use, reduced rates,
or free service are valid and enforcible [sic] at law. As used in this section, ‘employee’ includes
furloughed, pensioned, and superannuated employees.”




                                                   10
                                 January Term, 1997




real or personal; everything that has an exchangeable value or which goes to make
up wealth or estate. * * *
       “* * *
       “Goodwill is property * * *.
       “* * * ‘Property’ means anything of value, including real estate, * * *
contract rights, choses-in-action and other interests in or claims to wealth * * *
[and] electric or other power.” Black’s Law Dictionary at 1216-1217.
       “Grant” is defined as “[t]o bestow; to confer upon some one other than the
person or entity which makes the grant. * * * To bestow or confer, with or without
compensation, a gift or bestowal by one having control or authority over it * * *.
       “* * * Transfer of property real or personal by deed or writing.” Black’s
Law Dictionary at 699.
       {¶ 31} It is clear (1) that appellant is a public utility, (2) that the operation
of the Mahoning County jail facility is a public purpose, (3) that the product
generated by appellant is property, and (4) that appellant granted, in writing, its
property for a public purpose.
       {¶ 32} While the statute, R.C. 4905.34, enters into a further description of
the types of activities that can generate reduced rates or free service lawfully, that
does not change or even modify the plenary authority of a utility to grant “any of
its property for any public purpose.” That should be the end of our inquiry and
should have been the end of the inquiry by the commission. Our decision should
not be read more broadly than this interpretation.
       {¶ 33} I concur.
                                 __________________
       MOYER, J., dissenting.
       {¶ 34} Because the majority misinterprets R.C. 4905.34 in violation of plain
language and legislative intent, I must respectfully dissent.




                                          11
                              SUPREME COURT OF OHIO




        {¶ 35} The majority notes that the Public Utilities Commission erred by
failing to find that R.C. 4905.34 actually applied in the case at bar. The majority
then, without explanation, declares that this section applies in the instant case.
Later, the majority states that a utility needs no prior intent to rely upon R.C.
4905.34 in a given situation. I disagree with both conclusions.
        {¶ 36} R.C. 4905.34 does not apply in this case. Ohio Edison raised R.C.
4905.34 as an affirmative defense to Thermal’s complaint. Thus, Ohio Edison had
the burden of going forward with the evidence to prove its defense. However, the
record reflects that Ohio Edison presented no such evidence below. Absent such a
showing by Ohio Edison, there is no basis for finding that R.C. 4905.34 applies in
this case. Accordingly, any reliance upon that section to resolve this matter is not
supported by evidence of record.
        {¶ 37} Further, the majority misinterprets R.C. 4905.34. Based on the clear
language of that section, it does not apply in competitive bidding situations, like
the one below. R.C. 4905.34 permits a utility to grant “reduced rates * * * [to] any
political subdivision of the state, for charitable purposes, for fairs or expositions, or
to any officer or employee of such public utility or railroad or his family.” Thus,
the General Assembly has set forth a discrete list of civic opportunities under which
a public utility may provide reduced-rate utility service to political subdivisions.
The interpretive maxim expressio unius est exclusio alterius applies to statutes like
R.C. 4905.34. State ex rel. Celebrezze v. Natl. Lime & Stone Co. (1994), 

68 Ohio St.3d 377, 382

, 

627 N.E.2d 538, 542

; Vincent v. Zanesville Civ. Serv. Comm.
(1990), 

54 Ohio St.3d 30, 33

, 

560 N.E.2d 226, 229

, at fn. 2. This section designates
various civic opportunities that allow public utilities to assist political subdivisions
and the families of utility employees. Competitive bidding situations and the
elimination of competitors from the marketplace do not appear as a designated
purpose for applying this section. The clear intent of the General Assembly does
not reconcile with the holding of the majority.




                                           12
                                January Term, 1997




       {¶ 38} The majority asserts that R.C. 4905.33 and 4905.34 are not in
conflict. Each section appears clear and unambiguous when considered in isolation,
but when read in pari materia, as they must be as sections addressing the same
topic, the confusion is apparent. See Consumers’ Counsel v. Pub. Util. Comm.
(1983), 

6 Ohio St.3d 405, 410

, 6 OBR 453, 457, 

453 N.E.2d 584, 588

; Consumers’
Counsel v. Pub. Util. Comm. (1983), 

6 Ohio St.3d 412, 415

, 6 OBR 459, 462, 

453 N.E.2d 590, 592

; Fayetteville Tel. Co. v. Pub. Util. Comm. (1982), 

1 Ohio St.3d 167, 170

, 1 OBR 199, 201, 

438 N.E.2d 128, 131

. R.C. 4905.33 prohibits a public
utility from furnishing service below the utility’s “actual cost for the purpose of
destroying competition.” Yet, R.C. 4905.34 could be interpreted to permit a utility
to enter into just such a contract. These are the only two provisions in R.C. Title
49 that address the ability of a public utility to provide “free” or “reduced price
services” to a customer. Since one section expressly prohibits the same conduct
which the other permits, these two sections are in need of interpretation.
       {¶ 39} Whenever possible, statutes are to be interpreted harmoniously, so
as to give effect to both sections. Gen. Motors Corp. v. McAvoy (1980), 

63 Ohio St.2d 232, 235

, 17 O.O. 3d 143, 146, 

407 N.E.2d 527, 530

; R.C. 1.47. The majority
did not do this. Moreover, we have given administrative construction of statutory
provisions great weight under circumstances like this in the past. Cleveland v. Pub.
Util. Comm. (1981), 

67 Ohio St.2d 446, 451

, 21 O.O. 3d 279, 282, 

424 N.E.2d 561, 565

.   Here, the commission limited the scope of R.C. 4905.34 contracts by
prohibiting public utilities from furnishing services below cost for the purpose of
destroying competition in violation of R.C. 4905.33. Youngstown Thermal, Ltd.
Partnership v. Ohio Edison Co. (Aug. 31, 1995), PUCO No. 93-1408-EL-CSS. The
majority gave this no weight.
       {¶ 40} The spirit and public policy that induced R.C. 4905.33 and 4905.34
are also important. The policy behind R.C. 4905.33 is easily determined from the
words of the statute.    Public utilities are prohibited from engaging in price




                                         13
                             SUPREME COURT OF OHIO




discrimination between similar customers. Columbus v. Pub. Util. Comm. (1992),

62 Ohio St.3d 430, 437-438

, 

584 N.E.2d 646, 651

; see Cty. Commrs. Assn. v. Pub.
Util. Comm. (1980), 

63 Ohio St.2d 243

, 

17 O.O.3d 150

, 

407 N.E.2d 534

. Accord
R.C. 4905.33 and 4905.35. Moreover, a utility may not furnish service at a price
below its actual cost for the purpose of destroying competition.
       {¶ 41} The policy that produced R.C. 4905.34 is less clear. Under R.C.
4905.34, a public utility may reduce rates or give free service to any governmental
body. But in setting out this permissive authority, the General Assembly created a
list of recipients of such benefits, including charitable purposes, fairs, expositions,
or officers and employees of the utility and their families. The purpose of R.C.
4905.34 certainly was not to permit a utility to leverage its rates to political
subdivisions in order to eliminate competitors from the marketplace.
       {¶ 42} Ohio utilities must charge all similarly situated customers the same
rates for the same utility service. Columbus; see Cty. Commrs. Assn. R.C. 4905.34
is an exception to this rule, specifically permitting a utility to engage in rate
discrimination between similarly situated customers. See Cleveland State Univ. v.
Cleveland Elec. Illum. Co. (Oct. 15, 1987), Cuyahoga App. Nos. 52689 and 52710,
unreported. Accord Cty. Commrs. Assn. Thus, R.C. 4905.34 should be narrowly
construed as an exception to the general ratemaking policy of nondiscrimination
among similarly situated customers.
       {¶ 43} This construction does not subject all such contracts to commission
review. The commission readily admits that it has no general jurisdiction over these
contracts, and that its authority to review a contract under R.C. 4905.33 requires a
complaint in order to be triggered. Nor does this construction limit a public utility’s
use of R.C. 4905.34 authority to enter into reduced-rate contracts with political
subdivisions. However, in doing so, the utility must intend to use R.C. 4905.34 as
authority to contract with a political subdivision at a below-tariff rate, much the
same way that a utility must intend to use R.C. 4905.31 as authority for competitive-




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response contracts that provide service that is below the standard commercial tariff.
See Columbus, 

62 Ohio St.3d at 437-438

, 

584 N.E.2d at 651-652

. This construction
also prevents a utility from using hindsight and R.C. 4905.34 in order to justify
anticompetitive conduct.
       {¶ 44} When the language, history, commission analysis, and public
policies for these two sections are considered, the commission properly limited
Ohio Edison’s permissive authority under R.C. 4905.34 to provide below-cost
service to a political subdivision by the express prohibition under R.C. 4905.33.
This interpretation is the only one that gives credence to both sections.
       {¶ 45} The majority necessarily means that contracts with public entities
are exempt from any commission review, with or without a complaint being filed.
Moreover, if these contracts are, as suggested by the majority, totally exempt from
R.C. Chapters 4903, 4905, 4907, etc., then a public utility could breach its contract
with the public authority, without risk of commission review or intervention. This
result is not reasonable.
       {¶ 46} We should permit the commission to review, after a complaint has
properly been filed, a contract between a utility and a political subdivision to
determine whether that contract was executed in violation of R.C. 4905.33.
       {¶ 47} For the foregoing reasons, I respectfully dissent.
       PFEIFER, J., concurs in the foregoing dissenting opinion.
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