By Michael Yoder

Ohio regulators last week approved the application of a FirstEnergy subsidiary to operate as an energy broker and aggregator despite protests from consumer advocates and competitors over what they called a conflict of interest.

The Public Utilities Commission of Ohio on Wednesday granted approval for Suvon, doing business as FirstEnergy Advisors, as a competitive retail electric service (CRES) provider to help customers select electricity suppliers. FirstEnergy filed its application in January, and PUCO staff recommended approval of it earlier this month.

Critics, including the Ohio Consumers’ Counsel and the Northeast Ohio Public Energy Council (NOPEC), challenged the filing, saying use of the FirstEnergy name provided an unfair advantage and represented “too great a threat” to Ohio consumers in the retail electric market.

The OCC and NOPEC argued that having Suvon’s offices in the same building as the FirstEnergy’s headquarters in Akron, and having the company controlled by members of the same management team that controls the FirstEnergy utilities, violates state law requiring that a competitive retail electric supplier be “fully separated” from its regulated utilities.

FirstEnergy owns three utilities — Ohio Edison, Toledo Edison and The Illuminating Co. — with monopoly electricity distribution services regulated by PUCO.

NOPEC and the OCC argued that barring the use of the FirstEnergy name was consistent with a 2018 report filed by SAGE Management Consultants, PUCO’s outside auditor, in the commission’s corporate separation audit. The report recommended disallowing a former FirstEnergy affiliate, CRES provider FirstEnergy Solutions (FES), from using the FirstEnergy name.

FES recently emerged from bankruptcy under a new name, Energy Harbor, but the corporate separation case remains pending before the commission (17-974-EL-UNC).

The commission said that issues regarding Suvon’s use of the trade name and compliance with corporate separation requirements “are best raised” in that proceeding, noting that the commission has not adopted the SAGE report’s conclusions. “The finding and conclusions of the auditor should be litigated in that proceeding rather than this case,” it said.

PUCO also determined that the shared service arrangement between FirstEnergy and Suvon does not present a conflict of interest and is permissible under federal law. The commission cited other utility subsidiaries that have been certified as CRES providers, including a case involving Interstate Gas Supply’s (IGS) DPL Energy Resources in 2000.

“We note that the existing requirements for proper disclosure of the affiliate relationship has been considered to be a necessary and sufficient protection in all prior cases,” the commission ruled. “We expect Suvon to include and present the required disclosure in a conspicuous and efficacious manner in all communications with consumers.”

The OCC, Vistra Energy and NOPEC, Ohio’s largest nonprofit energy aggregator, filed motions opposing the certification. The Northwest Aggregation Coalition called for a hearing on it.

“In the long run, what we know in Ohio is when there is no competition, prices go up,” Chuck Keiper, NOPEC’s executive director, said in an email to RTO Insider. “We’ll be moving back to a toxic environment where the utilities control the marketplace.”

In a separate request, NOPEC and the OCC also asked PUCO to release public records of any communications the commissioners or staff had with FirstEnergy Advisors. Keiper said his concern that the commission did not hold a hearing in the case led to the public records request.

“We’re not afraid of another electricity broker coming into the market,” Keiper said. “In fact, we welcome it. But bring it on in a fair, honest, legal and transparent way. Let everyone see communications, if any, between FirstEnergy Advisors and the public body PUCO. Taxpayers and electricity consumers in Ohio are owed that and a fully public process to investigate this application.”

The commission noted that several of those intervening in the case were competitors of Suvon. “Competition should be determined ultimately by acumen in the marketplace, not by presumptive inhibition through a commission certification proceeding,” it said. “Although we have granted intervention in this case to Suvon’s competitors, we will carefully monitor the practice of competitors intervening in certification proceedings to ensure that this does not become a widespread, abusive practice and that competition is not unduly stifled by unnecessary litigation.”

PUCO denied the public records request, saying the staff determination that Suvon has the capabilities to serve as a power broker make the request “moot.”

“Staff has thoroughly reviewed Suvon’s managerial, technical and financial capability and has recommended that Suvon’s application should be approved,” the commission said. “Upon review of the many motions and memoranda filed in this case, we find that no other parties have raised material issues regarding Suvon’s managerial, technical and financial capability.”

J.P. Blackwood, a spokesperson for the OCC, said Thursday the organization was not satisfied by the decision.

“The Ohio Consumers’ Counsel is disappointed that the PUCO granted FirstEnergy Advisors’ operating certificate without imposing the conditions that we and many local governments recommended for consumer protection and fair competition,” Blackwood said.