# Rubber-Stamp Regulators: Ohio Gives FirstEnergy Another Go-Ahead

*Published:* 2016-05-11
*Author:* Dick Munson

![approved-pixabay](https://blogs.edf.org/energyexchange/wp-content/blogs.dir/38/files/2016/05/approved-pixabay-300x170.jpg)At least in theory, government officials are supposed to monitor electric utilities and ensure they do not abuse their monopoly power. For more than a century, these independent regulators have protected customers from unfair, above-market prices and provided a check on giant corporations.

That social contract is being tested in Ohio.

In an unprecedented move, the Public Utilities Commission of Ohio (PUCO) today [allowed](http://dis.puc.state.oh.us/TiffToPDf/A1001001A16E11B40704D04230.pdf) FirstEnergy to seek a new power plant bailout – a full day before opponents were to offer their objections. So, without listening to the arguments against the deal, the PUCO rubberstamped the utility’s request for a rehearing.

Unfortunately, this is not the PUCO’s first rubber-stamping. FirstEnergy’s [original proposal](https://blogs.edf.org/energyexchange/2015/08/30/everything-you-need-to-know-about-firstenergys-bailout-request/) would have forced customers to pay $4 billion to subsidize the utility’s old and dirty power plants, which could no longer compete in the market. That proposal was almost laughable since the power plants were not needed, and certainly not at such a high price – other companies proposed to offer the same amount of electricity at significantly lower prices.

Many organizations and advocates [spoke out](http://www.cleveland.com/business/index.ssf/2015/12/firstenergy_opponents_have_sha.html) against the deal. But even though groups like the Ohio Consumers’ Counsel and Ohio Manufacturers’ Association complained the subsidies would hurt the state’s customers and industries, the PUCO granted the politically-powerful utility’s bailout – in less than six minutes of formal consideration.

To the agency’s great embarrassment, the Federal Energy Regulatory Commission (FERC) quickly [overturned](https://blogs.edf.org/energyexchange/2016/05/02/ohio-failed-to-protect-customers-and-markets-so-federal-regulators-came-to-the-rescue/) the original PUCO decision, declaring Ohio’s subsidies illegally distorted competitive markets. (FERC has jurisdiction over wholesale power markets, of which Ohio is a part.)

FirstEnergy responded with a [sleight of hand](https://blogs.edf.org/energyexchange/2016/05/04/a-bailout-by-any-other-name-firstenergy-still-trying-to-stick-it-to-ohio-customers/), asking the PUCO to send the subsidy to its *distribution*-monopoly affiliate rather than its *generation*-company affiliate – a creative move to avoid further FERC oversight. Most likely FERC will see through this sham, but that doesn’t seem to be stopping the PUCO from pushing through FirstEnergy’s radically “new” proposal.

Although regulators and the regulated should be separated, the relationship in Ohio appears to be quite cozy. For example, the announcement of the recent PUCO chairman’s departure came not from the PUCO but, amazingly enough, from [FirstEnergy’s own chairman](http://www.bizjournals.com/columbus/news/2016/04/27/puco-chairman-andre-porter-leaving-after-just-1.html), who praised the regulator for doing a great job.

The PUCO’s action today suggests commissioners care more about appeasing a politically-connected company than protecting customers or considering both sides of an argument. That decision should make the Ohio Supreme Court realize these regulators are not independent, nor are they fulfilling their primary purpose: regulating fairly. Since FirstEnergy’s new proposal still reflects illegal exchanges among the utility’s affiliates, it will further embarrass the PUCO when federal regulators or the Ohio Supreme Court rule against the new bailout proposal.

Perhaps more importantly, today’s PUCO ruling forces a reconsideration of the regulatory contract. We need independent oversight of monopolies. We need regulating rather than rubber-stamping.