OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 260 Bill Analysis
135th General Assembly
Click here for S.B. 260’s Fiscal Note
Version: As Introduced
Primary Sponsors: Reps. Seitz and Robb Blasdel
Effective date:
Kathleen A. Luikart, Research Analyst
SUMMARY
Utility law changes
EDU rate case application every five years
 Requires an electric light company (ELC) to file a rate case application regarding
distribution service at least every five years beginning not later than five years after the
effective date of the bill.
Rate case notice changes
 Under the public utility ratemaking law, changes the number of notices a utility must
publish after filing an application for an increase in any rate, tracker, joint rate, toll,
classification, charge, or rental from one printed in a newspaper and a second published
on the newspaper’s website to just one notice on the newspaper’s website.
 Repeals, among other related provisions, the requirements that the application notice
must include instructions for electronic access to the application or other documents on
file with the Public Utilities Commission of Ohio (PUCO) and that the first notice must be
made in its entirety and the second notice may be abbreviated.
 Reduces the number of times PUCO must publish a hearing notice regarding a utility’s
application for a rate increase from one printed in a newspaper of general circulation in
the affected service area and a second published on the newspaper’s website to just
one notice on the newspaper’s website.
 Repeals the requirement that the hearing notice must state prominently the total
amount of the revenue increase requested in the application for the rate increase.
 Repeals, among other related provisions, the requirements that the first notice for a
hearing must be made in its entirety and the second publication may be abbreviated.
 Regarding a public utility rate case proposal that appears to PUCO to be unjust or
unreasonable, repeals the requirements that (1) PUCO publish a notice of a hearing one
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time in a newspaper of general circulation in each county in the service area affected by
the application and (2) that a written notice of hearing date be sent to the utility.
Rate case: property used and useful, valuation, and rates
 Makes various changes to the law governing rate increases with respect to utility
property, regarding (1) how it is reported to PUCO, valued, determined to be used and
useful or projected to be used and useful as of the date certain and (2) its valuation
effect on rate determinations.
 Permits electric light companies to propose a fully forecasted test period as an
alternative method for determining utility revenue and expenses in a rate increase
application.
 Requires PUCO, when determining the cost to the utility of rendering public utility
service as part of fixing just and reasonable rates, to determine payroll costs and
whether such costs together are reasonable when compared to market rates.
Allowance for construction work in progress (CWIP)
 Repeals all construction work in progress (CWIP) provisions of utility property valuation
law that allow PUCO, in its discretion, to include in the valuation of utility property a
reasonable allowance for CWIP for a construction project that is at least 75% complete.
“Tracker” added to existing utility rate provisions
 Adds “tracker” to several ongoing provisions of ratemaking law for utility rates that lists
“rate, joint rate, toll, classification, charge, or rental, or to modify, amend, change,
increase, or reduce any existing rate, joint rate, toll, classification, charge, or rental.”
Other rate case application requirements
 Adds several requirements that apply to a company’s rate case application, including for
example, that (1) all work papers supporting an application must be filed with the
application in electronic format, with formulas intact, (2) except for PUCO staff, limits
rounds of written discovery and questions during each round, (3) any party and PUCO
staff are entitled to file testimony, and (4) PUCO staff are not subject to discovery.
 Repeals the requirement that PUCO, after a hearing to determine whether proposed
rates in an application are just and reasonable, must, “where practicable, issue an
appropriate order within six months from the date the application was filed.”
PUCO staff report
 Requires, not later than 150 days after the application filing, PUCO staff to make and file
in the rate case a written report of recommendations, including all work papers in
electronic format with all formulas intact.
 Repeals the requirement that a written report of the facts of a rate case application be
made and filed with PUCO within a reasonable time as determined by PUCO and a copy
sent by certified mail to the applicant, the mayor of any municipal corporation affected
by the application, and other persons as PUCO deems interested.
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 Modifies the ongoing requirement that PUCO investigate the facts of an application, to
prohibit applicant investments that have previously deemed prudent from being
included in the investigation for the purpose of establishing prudency.
Objections to staff report
 For objections filed not later than 30 days after a staff report’s filing date, requires
(1) any party that filed objections to file testimony supporting those objections not later
than 45 days after the report’s filing date and (2) PUCO staff to file testimony supporting
their recommendations regarding the application not later than 75 days after that filing
date.
 For objections filed within the time periods specified in the bill, allows (1) PUCO to file
testimony addressing the objections not later than 75 days after the report’s filing date
and (2) the utility to file any rebuttal testimony not later than 90 days after that filing
date.
Application hearing
 Requires PUCO to set the matter of an application’s final hearing for not later than
120 days after the filing date of the staff report.
 Repeals the provision that requires a pre-hearing conference between all parties,
intervenors, and PUCO staff if objections are filed to an investigation report in a case
involving more than 100,000 customers.
 Repeals, for objections filed timely after the staff report is filed, the requirement that
the application must be promptly set down for hearing of testimony before PUCO or
referred to an attorney examiner designated by PUCO to take all testimony and
objections offered by any interested party.
 Repeals the provision requiring PUCO to fix, and to give ten days’ written notice of, the
time and place to take testimony to all parties and repeals the requirement that a full
and complete record of testimony noting all objections made and exceptions taken by
any party or counsel be made and signed by the attorney examiner and filed with PUCO.
 Repeals the requirements that (1) a quorum of PUCO commissioners must consider the
attorney examiner’s recommended opinion and order in an open, formal, public
proceeding prior to PUCO formally considering an application and rendering an order
and (2) PUCO must issue an order “respecting the prayer of the application as seems
just and reasonable” after that proceeding.
Request for temporary rate increase
 If a proceeding for a public utility’s rate case application has not been concluded and a
PUCO opinion and order issued by 365 days after the application’s filing date, specifies
that the rates proposed by the utility must go into effect temporarily without refund
and remain in effect until modified by a PUCO decision on the merits of the application.
 Requires the modified rates to apply prospectively.
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 Repeals the requirement that, if a PUCO order for an application has not been entered
at the expiration of 275 days, an increase, not to exceed the proposed increase, goes
into effect upon the utility filing with PUCO a bond or letter of credit with an affidavit
promising to refund, with interest, any amounts collected over the final rate in the final
PUCO order.
 Specifies that an application is approved by operation of law, if PUCO does not enter an
opinion and order within 545 days from the rate case application’s filing date.
Rate case application notices for certain utility rates
 Requires a public utility that has more than 100,000 customers to notify PUCO of its
intent to file an application under the utility ratemaking law to increase rates or the law
allowing a water-works company to petition PUCO to fix its water utility rates upon the
failure of the municipal legislative authority, by ordinance, to fix those rates.
 Requires such notices to be filed with PUCO not later than 30 days prior to filing the
application described above and requires the notices to include certain information to
be included in the application such as the proposed valuation of the utility’s property,
proposed date certain, and proposed test period.
Trackers requested in rate applications
 Permits an ELC to include a request for approval of a tracker in a rate case application to
increase rates for the purpose of collecting the revenue requirement for distribution
infrastructure investments and distribution operations and maintenance expenses.
 Permits PUCO to approve a distribution investment tracker (DIT), a storm response
tracker (SRT), and up to two cyber security and regulatory trackers (CSRTs) and
establishes several separate requirements for each type of tracker.
 Specifies that a DIT collects the revenue requirement relating to distribution
infrastructure investments designed to maintain or improve safety, reliability, system
efficiency, security, or grid resiliency.
 Specifies that an SRT collects the revenue requirement relating to distribution
infrastructure investments and distribution operations and maintenance expenses
necessitated by weather events not reflected in rates that constitute major events as
determined by PUCO.
 Specifies that up to two CSRTs may collect the revenue requirement relating to
distribution infrastructure investments or distribution operation and maintenance issues
relating to “single issues consistent with state policy.”
 Grants PUCO authority to reduce the amount of, or terminate, a tracker by order, on its
own motion, or upon good cause shown, if the tracker, on a normalized basis, caused
the ELC to earn a rate of return on equity on distribution rate base that is greater than
250 basis points more than most recently authorized.
 Not later than 90 days after the bill’s effective date, requires PUCO to adopt rules and
public notice requirements for trackers and exempts these rules from the regulatory
limitation in existing law.
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Repeal of obsolete Ohio coal tax credit
 In the utility ratemaking law, repeals provisions regarding the obsolete law for the Ohio
coal tax credit in the public utility excise tax law.
Intervenors in PUCO proceedings
 Adds a new requirement for determining who may intervene in a PUCO proceeding by
specifying that any person who may be “adversely and directly affected” by a
proceeding may intervene, which differs from the current law requirement that
specifies that any person who may be “adversely affected” may intervene in the
proceeding.
 Adds the requirement that PUCO must also consider any interest a prospective
intervenor has as a “consumer, customer, or competitor” when ruling on applications to
intervene in its proceedings by considering the nature and extent of the prospective
intervenor’s interest.
Discovery rights in PUCO proceedings
 Specifies that discovery in a PUCO case is limited to “any nonprivileged matter that is
relevant and proportional to the needs of the proceeding.”
Appeal of final PUCO order
 Repeals the provision granting authority to the Ohio Supreme Court to permit any
interested party to intervene by cross appeal in an appeal to reverse, vacate, or modify
a final PUCO order.
PUCO rehearings and appeals
 Specifies that, , if PUCO does not affirm, abrogate, or modify an original order within
150 days from the date granting a rehearing, the order is affirmed by operation of law.
Notices for PUCO orders, rehearings, and appeals
 Requires notices of every PUCO order to continue to be served in the manner prescribed
by PUCO, but repeals the requirement that the service be given by United States mail.
 Repeals the requirements that notices for a rehearing be “given by regular mail” and
notices for an order denying a rehearing or an order made after a rehearing be served
“forthwith by regular mail.”
 Repeals the requirement that notice of appeal be served, unless waived, upon the PUCO
chairperson, or in the event of the chairperson’s absence, upon any PUCO
commissioner, or by leaving a copy at the PUCO Columbus office.
Refunds of improper public utility charges
 Requires all revenues collected from customers by a public utility as part of a rider or
rate mechanism, rather than through base rates, to be subject to refund,
notwithstanding the refund prohibition under current law, if the Ohio Supreme Court
later finds the rider or rate mechanism to be unreasonable, unlawful, or otherwise
improper.
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 Specifies that such charges are subject to refund from the date of the Supreme Court’s
decision until the date when PUCO, to implement the Court’s decision, makes changes
to the rider or mechanism to implement new rates.
 Specifies that PUCO must order the refunds in a manner designed to be allocated to
customer classes in the same proportion as the charges were originally collected.
 Requires PUCO to determine how to allocate any remaining funds that cannot be
refunded for any reason.
Regulatory assets and liabilities
 If, on a public utility’s books and records, PUCO authorizes a deferral of operations and
maintenance expenses as a regulatory asset, requires PUCO to allow the utility to accrue
carrying costs at the utility’s most recently approved long-term cost of debt provided
that the utility applies for authorization within one year of beginning to incur the
expenses.
 If PUCO allows recovery of all or a portion of the regulatory asset, requires PUCO to
allow continued accrual and collection of carrying charges on the unrecovered balance
at the utility’s approved long-term cost of debt under its most recent base rate case.
 If, on a public utility’s books and records, PUCO requires the utility to create a regulatory
liability, specifies that PUCO must require the utility to accrue carrying costs at its most
recently approved long-term cost of debt.
 If PUCO requires all or a portion of the regulatory liability to be credited to customers,
specifies that PUCO must require, on the balance not yet credited, continued accrual of
carrying charges on the unrecovered balance at the utility’s approved long-term cost of
debt under its most recent base rate case.
 Requires carrying charges for regulatory assets to accrue until the entire regulatory
asset and all carrying costs have been recovered and carrying charges for regulatory