Thursday, June 27, 2013

Inclusion Through Exclusion: Exempting Mercantile Customers to Encourage Them to Contribute to Energy Efficiency Goals

Inclusion Through Exclusion:
Exempting Mercantile Customers to Encourage Them to Contribute to Energy Efficiency Goals

By Zach Myers
JD Candidate, 2014
Georgetown University Law Center






There is an ironic tension between the concepts of ‘exemption’ and ‘integration’ in Ohio Rev. Code Ann. § 4928.66(A)(2)(c) (2008).  The statute creates an “exemption” that “integrat[es]” mercantile customers into a utility’s energy efficiency program.[1]  Mercantile customers are thus “included in the juridical order solely in the form of [their] exclusion.”[2]  This linguistic tension between exempting customers from a program, while also integrating them into that program is at the heart of the conflict between private businesses interests, and the public interest.  Private businesses are interested in opting-out of utility riders without incurring legal duties; while, the public is likely best served by integrating businesses into the utilities energy efficiency program to ensure that exempted funds are used to reduce energy consumption.  Whether the essential nature of the program is one of ‘exemption’ or ‘integration’ is for Ohio’s Public Utility Commission to determine over the coming months.
Public utility energy efficiency programs have the potential to align private behavior with public interests.  The Public Utilities Commission of Ohio likely has the legal authority structure its energy efficiency rider exemption according to ACEEE best practices. By so structuring its exemption, the Commission can encourage large customers to contribute to energy savings goals; and, thereby, align private customers’ behavior with the public’s interest.
II.                 ENERGY EFFICIENCY COST RECOVERY MECHANISMS
Encouraging energy efficiency can align the interests of individuals with the public’s interest, because increased energy efficiency reduces the cost of service.[3] Saving energy through energy efficiency investments is, on average, much cheaper for public utilities than purchasing new generation.[4]  “Saving a kilowatt hour through energy efficiency improvements is easily one-third or less the cost of any new source of electricity supply, whether conventional fossil fuel or renewable energy source.”[5]  Because increasing energy efficiency can be much cheaper than building new generation, increasing energy efficiency can reduce costs to consumers.
Not only does energy efficiency reduce costs, it also tends to enhance energy system reliability, and reduces emissions from fossil fuels.[6]  Because increased energy efficiency reduces costs of electrical service, increases reliability, and reduces fossil fuel emissions, increasing energy efficiency is in the public interest.[7]
Despite the public benefits of energy efficiency, utilities have a natural incentive to discourage demand-side energy efficiency.[8]  Utilities revenues are based on the volume of electricity they sell. As a result, the less kWhs utilities sell, the less revenue they receive.[9]  Furthermore, unlike sales of kWhs, utilities’ fixed operating costs do not change.[10]  Because fixed operating costs are high, kWh sales have dramatic increasing marginal profitability.[11]  Therefore, utilities have a strong incentive to keep energy consumption high so that they can sell more electricity and maximize profits.[12]
Many States have instituted programs to correct utilities aversion to demand-side energy efficiency.[13]  Effective cost recovery mechanisms can compensate utilities for revenue foregone by increased energy efficiency.[14]  Along, with recovering foregone revenue, successful energy efficiency programs will encourage utilities to invest in demand-side energy efficiency by setting performance targets and allowing utilities to recoup the costs of energy efficiency investments.[15]  By requiring utilities to meet energy-savings performance targets, and compensating utilities for energy efficiency investments (including lost revenue), a well-structured cost-recovery mechanism can align the interests of the utility, with the public’s interest in increased energy efficiency.[16]
Consistent with this approach, electric utilities in Ohio must operate energy efficiency programs that meet statutorily-set yearly energy savings goals (starting at .3% kw savings per year and ending at 2% kw savings per year for every year after 2018).[17]  The electric utilities may institute a “revenue decoupling mechanism,” e.g. a rider, in order to offset the costs of its energy efficiency program.[18]  The Commission is responsible for reviewing electric utilities decoupling mechanism.[19] The Public Utilities Commission of Ohio has approved an energy efficiency cost recovery mechanism to encourage its electric utilities to make energy efficiency investments.[20]
About half the states that have an energy efficiency cost recovery mechanism provide some type of “opt-out” or “self-direct” option for large industrial customers.[21]  Exemptions for such customers are sometimes based on the unfounded assumption “that industrial companies are better at acquiring energy efficiency than [public utilities] and will always acquire all cost-effective energy efficiency on their own.”[22]
Mercantile customers should be interested in increasing the energy efficiency of their facilities, because doing so can reduce their electrical costs.  As a result, there is a superficial alignment between mercantile customers’ interest in reduced costs, and the public’s interest in increased energy efficiency.  However, energy efficiency investments are only one among many types of cost-saving and business-expanding investments which mercantile customers consider.[23]  Because energy efficiency investments compete with other investment opportunities, there are significant opportunity costs to financing increased energy efficiency.[24]  These opportunity costs may overcome the public’s interest increasing energy efficiency absent regulatory intervention.[25]  The experience of utilities in Utah, Wyoming, and Oregon suggest that this is the case. [26] In those States, large industrial customers were prodded to invest in energy efficiency to obtain a fee waiver.[27]  The State’s found that even very sophisticated customers failed to invest in many cost effective energy efficiencies.[28]  Furthermore, because opportunity costs likely prevent many energy efficiency investments, it is invalid to assume that exempted funds will be used to fund increased energy efficient investments without encouraging customers to treat those funds as dedicated to energy efficiency.[29]
While industrial companies likely do not invest in every cost effective energy efficient practice, some sophisticated customers do have knowledge, experience, and expertise about their business that can be help the utility increase energy savings beyond what the utility could do on its own. [30]  Because some industrial customers have such expertise, a well-structured and administered “self-direct” program can yield greater energy savings from large, sophisticated customers than would otherwise be achieved through a generalized public program.[31]
In an attempt to realize the benefits of industrial self-direction, the Ohio legislature authorized the Commission to exempt “mercantile customers” from energy efficiency programs.[32] “Mercantile customers” are customers that consume “more than seven hundred thousand kilowatt hours per year.”[33] In order to exempt mercantile customers the Commission must determine that that exemption “reasonably encourages such customers to commit” “demand-response or other customer-sited capabilities to” the “utility’s energy efficiency … or peak demand reduction programs.”[34]
Recently, the Commission has approved a new “pilot program” for an exemption from its energy efficiency cost recovery mechanism, and is evaluating “the appropriate level and length for energy efficiency exemptions” under Ohio Rev. Code Ann. § 4928.66(A)(2)(c).[35]  The Commission will also “review the experience of other jurisdictions which have enacted similar self-direct programs.”[36]
The Commission is considering the recommendations of the American Council for an Energy Efficient Economy (“ACEEE”).  ACEEE has promulgated, inter alia, the following best practices for incorporating mercantile customer efforts into a utilities energy efficiency program:
1.      Develop a program structure that encourages large customers to treat the exempted rider money as dedicated funds for energy efficiency.
2.      Include a mechanism to recoup funds if large customers do not use exempted rider funds to pay for modifications that increase energy efficiency.
3.      Retain a portion of energy efficiency rider for administrative costs of the self-direct program, and for certain prioritized costs.
4.      Disallow credit for past energy efficiency investments.[37]
The Commission is interested in whether it has the legal authority to implement these ACEEE best practices.
“Due deference should be given to statutory interpretations by an agency that has accumulated substantial expertise and to which the General Assembly has delegated enforcement responsibility.”[38]  Based on its expertise, the Court has deferred to the Commission’s discretion in determining how to achieve the goals of increased energy efficiency and reduced peak consumption.[39]
            Along with institutional deference based on expertise, the Commission also has also been given discretion to structure rules for exemptions by its organic statute.[40]  Under § 4928.66(A)(2)(c), “any mechanism designed to recover the cost of energy efficiency…may exempt mercantile customers… if the commission determines that that exemption reasonably encourages such customers to commit” capabilities to energy efficiency programs.[41] "[U]sage of the term 'may' is generally construed to render optional, permissive, or discretionary the provision in which it is embodied."[42]  Because the Commission ‘may’ exempt mercantile customers, the statute is permissive or discretionary.[43]  “When a statute does not prescribe a particular formula, the PUCO is vested with broad discretion.”[44]  Because the language of the exemption is permissive, the Commission has discretion to determine the appropriateness of a mercantile exemption as an element of an energy efficiency cost recovery mechanism.[45]   
This broad discretion is tempered by the requirement that the Commission only approve a mercantile exemption if it “determines that that exemption reasonably encourages” customers to commit their capabilities to energy efficiency programs.[46]
The Commission should require its utilities to use a disbursement device which encourages customers to treat rider funds as exclusively tied to energy efficiency investments.[48]  The utilities have several options for meeting this requirement: dedicated escrow accounts, rebates earned only upon project completion, and rate credits earned concurrently with measurable energy efficiency investments or energy savings.[49]
Because requiring the utility to encourage mercantile customers to treat rider funds as exclusively tied to energy efficiency investments “reasonably encourages [mercantile] customers” to commit their capabilities to the utilities energy efficiency program, the Commission likely has the authority to do so.[50]


Decisionmakers have a strong aversion to loss, and will likely be motivated more by the threat of losing money than by the opportunity to gain money.[51]  Because people have a unique aversion to loss, a credible threat to recoup rider funds is will “encourage” mercantile customers to contribute their capabilities to energy efficiency goals.[52]  Mercantile customers will not treat their obligations to invest in energy efficiency lightly if the utility has a reliable mechanism in place to take-back exempted money when customers fail to use their funds to increase energy efficiency.
The Commission already requires utilities to “[i]dentify all consequences of noncompliance by” mercantile customers who agree to integrate their capabilities into the utilities energy efficiency programs.[53]  Because, utilities are already required to “identify consequences of noncompliance,” requiring the utility to identify a method of recoupment, is an incremental change to existing regulation.[54]  Because the existing regulation was well within the discretion of the Commission, this incremental change is likely permissible.[55]
Because a recoupment method that retrieves funds from customers’ who fail to meet their energy efficiency obligations “encourages [mercantile] customers” to commit their capabilities to the utilities energy efficiency program, the Commission has authority to require utilities to adopt such a method. [56]



Retaining a portion of cost recovery mechanism revenue from exempted customers can maximize the public benefit of energy efficiency programs.[57]  Retained revenue from industrial customers can be used for the administrative costs of overseeing a successful “self-direct” energy efficiency program.[58]  Maximizing energy savings from industrial customers requires “reporting and savings validation” and “rigorous performance requirements.”[59]  To pay for this oversight, some revenue should be retained from industrial customers via an energy efficiency cost recovery mechanism.[60]  Therefore, full exemption from the rider is likely bad policy.[61]
Along with paying for administration of a self-direct program, retaining revenue may best realize the public interests tied to increased energy efficiency by funding “prioritized program costs,” such as low-income programming.[62]  Such programs may rely on cross-rate subsidization to spread the benefits of energy efficiency equitably.[63]
Not only is it practical to retain funds from industrial customers for administrative costs and prioritized program costs; doing so is equitable.  “All ratepayers enjoy the benefits of energy efficiency in the form of lower demand for new resources, reduced environmental impacts of energy supply, reduced power and fuel costs and other factors.”[64]  Industrial consumers should contribute to the costs of energy efficiency programs, because they share the benefits of increased energy efficiency.[65]
Because the public interest likely favors retention of a portion of industrial consumers’ energy efficiency funds, the Public Utilities Commission of Ohio is interested in whether it had the authority to adjust the level of exemptions for “mercantile customers” under Ohio Rev Code Ann. § 4928.66(A)(2)(c).
                                                        i.            The Commission likely has authority to adjust the level of exemption under Ohio Rev Code Ann. § 4928.66(A)(2)(c), because retention of a portion of the funds from mercantile customers can still “reasonably [encourage mercantile] customers to commit their capabilities” to energy efficiency programs.
Because a mercantile exemption under § 4928.66(A)(2)(c) must reasonably encourage customers to commit their capabilities to the utility’s energy efficiency goals, an exemption should be a significant portion of the overall rider fee; because the bigger the exemption level, the greater the incentive for mercantile customers to commit their capabilities to the utility’s energy efficiency goals.  On the other hand, even a relatively small exemption from rider fees will likely “reasonably encourage” mercantile customers to contribute their capabilities to the utility’s goals—this is especially true given the current bifurcated structure of the law in which customers can receive rebates under  exemption under Ohio Admin. Code Ann. § 4901:1-39-05(G), and then on top of the rebate receive a rider exemption under Ohio Admin. Code Ann. § 4901:1-39-08.[66]  Therefore, while a very high the exemption level would create a very strong incentive for customers to commit their capabilities to energy efficiency goals, even relatively modest proportions (e.g. 50% or 60%) will likely “reasonably encourage[] customers” to do so.[67]
Not only is a less than full exemption sufficient to “reasonably encourage[]” mercantile customers, but having the utility retain a portion of the energy efficiency rider likely better encourages mercantile customers to contribute to energy efficiency.[68]  To encourage customers to commit their resources to utility energy efficiency programs utilities are best served by well-structured reporting, measurement, and verification procedures.[69]  However, administration of such procedures cost money.[70]  Therefore, in order to effectively encourage customers to commit demand response and other cited capabilities to energy efficiency programs, the Commission may reasonably find that a portion of the energy efficiency cost recovery mechanism fee should be retained by the utility for the purpose of administering a structured energy efficiency “self-direct” program.[71]  A rule requiring retention of a portion of a utility’s energy efficiency cost recovery mechanism is a reasonable interpretation of Ohio Rev. Code Ann. § 4928.66(A)(2)(c)’s requirement that a mercantile exemption “reasonably encourage[] customers” to commit resources to the utilities energy efficiency or peak demand reduction programs.
Not only does permitting retention of a portion of an exempted company’s cost recovery mechanism fee meet the requirement for mercantile exemptions under Ohio Rev. Code Ann. § 4928.66(A)(2)(c), it also meets the general requirements for energy efficiency cost recovery mechanisms under Ohio Rev. Code Ann. § 4928.66(D).
Under Ohio Rev. Code Ann. § 4928.66(A)(2)(c) a mercantile exemption is discussed as a potential component of a cost recovery mechanism (“Any mechanism designed to recover the cost of energy efficiency … may exempt mercantile customers…”).  Because a mercantile exemption is a component of the cost recovery mechanism, the statute likely requires the exemption to conform to the requirements for cost recovery mechanisms.[72]  Energy-efficiency cost-recovery mechanisms must (1) provide “for the recovery of revenue that otherwise may be forgone by the utility as a result of … any energy efficiency or energy conservation programs” and (2) reasonably align “the interests of the utility and of its customers in favor of those programs.[73]
Requiring retention of a portion of the cost recovery mechanism fee is a reasonable method to recover “revenue forgone by the utility to implement its energy efficiency program.”[74]  Administrative costs are shared by all customer classes, including exempted mercantile customers.[75]  Because the utility must forego revenue to monitor mercantile customer’s energy savings, retaining a portion of mercantile customer’s fees is a fair method to ensure that the utility recovers revenue forgone for administration of its energy efficiency program, and comports well with the requirements of Ohio Rev. Code Ann. § 4928.66(D).
Potentially limiting the Commission’s discretion is the rule that “an administrative agency cannot ignore its own rules.”[76]  The Commission has so far implemented the Ohio Admin. Code § 4901:1-39-08 exemption as a complete exemption for an indefinite period.[77] Because the Commission’s rules and orders treat the § 4901:1-39-08 exemption as an 100% exemption, the Commission must expressly overrule its prior policy in order to change the level of the exemption.[78]  Orders of the Commission must be lawful and reasonable.[79]  Therefore in its order overruling its past policy of full exemption the Commission should explain that allowing the utility to retain a portion of the energy efficiency rider can more effectively “encourage[]” mercantile customers to contribute to energy efficiency goals. [80]  It should also explain that the old policy did not a poor job capturing revenue foregone by the utility to pay for administration of its energy efficiency program.[81]
The language of Ohio Rev. Code Ann. § 4028.66(A)(2)(c) is comparable to statutory language underlying exemptions to fee riders in other jurisdictions in which utilities retain a portion of the rider.
In Utah and Wyoming, Rocky Mountain Power retains 50% of its fee from exempted customers.[82]  Rocky Mountain Power is governed by 16 USC § 2621(d)(17) (2007). 16 USC § 2621(d)(17) requires that the rates charged by any electric utility “(i) Align utility incentives with the delivery of cost-effective energy efficiency; and (ii) Promote energy efficiency investments.”  This language is very similar to the language of Ohio Rev. Code Ann. § 4928.66(A)(2)(c)—Both statutes require that an exemption “encourage,” “promotes,” or “align” mercantile customers with certain energy efficiency goals.[83]  Rocky Mountain Power permits retention of a portion of its utility’s cost recovery mechanism based on statutory authority very similar to Ohio Rev. Code Ann. § 4928.66(A)(2)(c).  This provides persuasive authority that the Commission and do the same thing under the authority of its similarly-worded statute.[84]
Because retention of a portion of the funds from mercantile customers can still “reasonably [encourage mercantile] customers to commit their capabilities” to energy efficiency programs, the Commission likely has authority to adjust the level of exemption under Ohio Rev Code Ann. § 4928.66(A)(2)(c).
A particularly vexing problem facing the Commission is how to treat historic energy efficiency investments.  Granting credit for historic investments may be politically expedient, because businesses feel that it is fair to give credit to those who signed up early for the benefits of energy efficiency.[85]  However, “giving such credit does not acquire a single new kWh” of energy,[86] because ‘encouraging’ past events is (so far) [87] a physical impossibility.[88]  Instead, “offering such credit is preferential treatment of a single class of customer” without “any energy saving purpose.”[89]  Because credit for historic investments has no public benefit, and actually costs money that could be used for increased energy efficiency in other sectors, it is particularly susceptible to criticism for being a form of “corporate welfare.”[90]  Because the program is susceptible to such criticism, the political expediency of garnering favor with businesses should be weighed against the political cost of this preferential treatment. [91]
Despite the undesirability of giving credit for past investments, the Commission may not have the authority to permit an exemption based solely on prospective energy efficiency investments.  The Commission has authority to authorize an exemption for “mercantile customers that commit their demand-response or other customer-sited capabilities, whether existing or new, for integration into the electric distribution utility's” energy efficiency program.[92]  The term “whether existing or new” may mean that any exemption that the Commission authorizes must count both past (“existing”) and future (“new”) investments.[93]  However, the term “whether existing or new” may also grant the Commission discretion to determine for itself whether to authorize an exemption based on past investments, or future investments, or both, based on what will “reasonably encourage [mercantile] customers.”[94]  Therefore, the term is textually ambiguous.  The legislative record does nothing to resolve this ambiguity.[95]
The Commission has so far permitted the utility to credit historic investments, based on the 3-year-look-back measurement method. [96]  However, the commissioner has also stated that there is a difference between what the Commission is authorized to incentivize and that which the Commission must count under the 3-year-look-back procedures.[97]  Therefore, the 3-year-look-back requirement for counting may not apply to incentivizing and likely does not require the Commission to give credit for historic investments.[98]
Eventually, the issue of whether to credit historic investments may become a moot point.[99]  At some point, all the relevant historic investments will all be credited.[100] At that point, mercantile customers will be forced to make new, prospective, energy efficiency investments in order to qualify for the exemption.[101]
Because the statutory term “whether existing or new” is ambiguous, and because the Commission has recognized a distinction between what is counted under a 3-year-look-back and what is incentivized by a mercantile exemption, the Commission likely does not have to permit exemptions based on historic energy efficiency investments.[102]
However, the Commission should consider seeking guidance or further legislation before acting in this area of textual ambiguity.  
Because the limiting language of its organic statute calls for an exemption that “encourages” customers to contribute to energy efficiency, the Commission likely has the legal authority to implement the ACEEE best practices.  If the Commission implements ACEEE’s recommendations it will encourage large customers to contribute to energy savings goals; thereby, aligning private behavior with the public interest.



[1] Ohio Rev. Code Ann. § 4928.66(A)(2)(c) (2008)
[2] Giorgio Agamben, Homo Sacer: Sovereign Power and Bare Life 12 (1998).
[3] Anna Chittum, Am. Council for an Energy Efficient Econ., Implementing Industrial Self-Direct Options: Who Is Making It Work?, Proceedings of the 2009 ACEEE Summer Study on Energy Efficiency in Industry 4.14-4.27, 4.17 (2009) http://www.aceee.org/sites/default/files-/publications/proceedings/SS09_Panel4_Paper07.pdf [hereinafter Chittum, Implementing Industrial Self-Direct Options]; Anna Chittum, Am. Council for an Energy Efficient Econ., Follow the Leaders: Improving Large Customers Self-Direct Programs 1 (2011) http://www.aceee.org/sites/default/files/publications/researchreports/ie112.pdf [hereinafter Chittum, Follow the Leaders].
[4] Katherine Friedrich, et al., Am. Council for an Energy Efficient Econ., Saving Energy Cost-Effectively: A National Review o the Cost of Energy Saved Through Utility-Sector Energy Efficiency Programs, Report U092 ii (2009) http://www.aceee.org/sites/default/-files/publications/researchreports/U092.pdf.
[5] Id.
[6] Chittum, Follow the Leaders, supra note 1, at 3.
[7] See id.
[8] Nat’l Action Plan for Energy Efficiency Leadership Grp., Aligning Utility Incentives with Investment in Energy Efficiency ES-3 (2007)
[9] See id.
[10] Id.
[11] See id.
[12] Id.
[13] Chittum, Implementing Industrial Self-Direct Options, supra note 1, at 4.14.
[14] Nat’l Action Plan for Energy Efficiency Leadership Grp., supra note 6 at 5-1; see, e.g. Ohio Rev. Code Ann. § 4928.66(D) (Lexis 2008)
[15] Id. at 6-1; see e.g. Ohio Rev. Code Ann. § 4928.66(D) (Lexis 2008).
[16] See id.
[17] Ohio Rev. Code Ann. § 4928.66(A)(1)(a) (Lexis 2008).
[18] Id. at § 4928.66(D).
[19] Id.
[20] In the Matter of the Application of Columbus Southern Power Company for Approval of its Program Portfolio Plan and Request for Expedited Consideration; Case No. 09-1089-EL-POR Opinion and Order § VI, 2010-Ohio PUC LEXIS 516, *61-63 (2010).
[21] Chittum, Follow the Leaders, supra note 1, at iii (“Forty-one states in the US have some sort of a [cost recovery mechanism] in place. Of those, 23 have some sort of opt-out or self-direct provision in place.”).
[22] Id. at 17
[23] Namrita Kapur, et al., Envl. Def. Fund, Show Me the Money: Energy Efficiency Financing Barriers and Opportunities 12 (2011) http://www.edf.org/sites/default/files/11860_EnergyEfficiency-FinancingBarriersandOpportunities_July%202011.pdf.
[24] Id.
[25] See id.; see also Stephen Heins, Energy Efficiency and The Specter of Free-Ridership: Is a Kilowatt Saved Really a Kilowatt Saved? (“Energy efficiency projects have to compete with all other capital initiatives, including investments in new production assets or processes, which are usually given first priority.”)
[26] See Chittum, Follow the Leaders, supra note 1, at 17. (“[O]pt-out and self-direct programs have proven this to be true. In Utah, Wyoming and Oregon, customers can opt out of all or part of their CRM fees if the can prove that they have in fact done all cost effective energy efficiency… To date, no company has taken advantage of these exemptions in any of these states, because there are always some cost-effective projects that could be identified during an energy audit.”) (citations omitted).
[27] Id.
[28] See id.
[29] Id.
[30] Id. at 11.
[31] Id.
[32] Ohio Rev. Code Ann. § 4928.66(A)(2)(c).
[33] Ohio Rev. Code Ann. § 4928.01(19)
[34] Id. at § 4928.66(A)(2)(c).
[35] In the Matter of a Mercantile Application Pilot Program Regarding Special Arrangements with Electric Utilities and Exemptions from Energy Efficiency and Peak Demand Reduction Riders, Case No. 10-834-EL-EEC, Entry ¶ 5, 2010 Ohio PUC LEXIS 952, *3-4 (Sept. 15, 2010)
[36] Id.
[37] Chittum, Follow the Leaders, supra note 1, at 21.
[38] Constellation NewEnergy, Inc. v. Pub. Util. Comm., 104 Ohio St. 3d 530, 540, 2004-Ohio-6767, *51, 820 N.E.2d 885, 895 (citations omitted).
[39] In Re Columbus Southern Power Co., 129 Ohio St. 3d 46, 51-52, 2011-Ohio-2383, *30, 950 N.E.2d 164, 170.
[40] Ohio Rev. Code Ann. § 4928.66(A)(2)(c).
[41] (emphasis added)
[42] In re Ormet Primary Aluminum Corp., 129 Ohio St. 3d 9, 12, 2011-Ohio-2377, *16, 949 N.E.2d 991, 995 (quoting State ex rel. Niles v. Bernard, 53 Ohio St.2d 31, 34, 7 O.O.3d 119, 372 N.E.2d 339).
[43] See id., 129 Ohio St. 3d at 12, 2011-Ohio-2377 at *16, 949 N.E.2d at 995; see also Columbus Southern Power Co., 129 Ohio St. 3d at 51-52, 2011-Ohio-2383 at *30, 950 N.E.2d at 170 (4928.66(A)(2)(c) permits the commission to ‘exempt mercantile customers’ from paying energy-efficiency and peak-demand-reduction charges if those customers ‘commit their demand-response or other customer-sited capabilities’ toward the utility's energy-reduction goals.”) (emphasis added).
[44] Columbus Southern Power Co., 129 Ohio St. 3d at 51, 2011-Ohio-2383 at *27, 950 N.E.2d at 169.
[45] Ormet Primary Aluminum Corp., 129 Ohio St. 3d at 12, 2011-Ohio-2377 at *16, 949 N.E.2d at 995.
[46] Ohio Rev. Code Ann. § 4928.66(A)(2)(c); see also S. 127-221 Final B. Analysis (Ohio 2008) (“any mechanism designed to recover the cost of the act's energy efficiency … can exempt mercantile customers that commit their demand-response or other customer-sited capabilities to the electric distribution utility's … energy efficiency … programs, provided the PUCO determines that that exemption reasonably encourages such customers to commit those capabilities to those programs”) (emphasis added).
[47] Ohio Rev. Code Ann. § 4928.66(A)(2)(c).
[48] Id. at 21.
[49] Id.
[50] Ohio Rev. Code Ann. § 4928.66(A)(2)(c).
[51] See Richard H. Thaler & Cass Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness 37 (2008).
[52] See id.; Ohio Rev. Code Ann. § 4928.66(A)(2)(c).
[53] Ohio Admin. Code § 4901:1-39-05(G) (2009).
[54] See id.
[55] See Columbus Southern Power Co., 129 Ohio St. 3d 46, 51-52, 2011-Ohio-2383, *30, 950 N.E.2d 164, 170.
[56] Ohio Rev. Code Ann. § 4928.66(A)(2)(c).
[57] Chittum, Follow the Leaders, supra note 1, at 8 (“At the far end of the self-direct continuum are the more structured programs with high levels of oversight… These programs usually let a customer self-direct most of their CRM fees, but retain a portion of those fees to fund administration of the program and other programs that serve other public benefits, such as market transformation and low-income programs. Highly structured and well administered programs with substantial oversight offer the best examples of successful and effective self-direct programming.”).
[58] Id. at 21-23.
[59] Id. at 23.
[60] Id. at 21.
[61] See id. at 6, 19, 21.
[62] See id. at 21.
[63] See id.
[64] Id. at 18.
[65] Id.; see also Chittum, Implementing Industrial Self-Direct Options, supra note 1, at 4.17 (“U.S. commercial and industrial electric customers pay about 40 percent of all collected PBF fees, but they experience over 62 percent of the PBF-funded savings in all Consortium for Energy Efficiency (CEE)-member programs… Thus, while the argument that PBF-paying customers are not seeing the benefits of their contributions may be true for some individual customers, it appears that overall, commercial and industrial customers enjoy a larger percentage of the benefits than they pay into the pool of funds.”).
[66]Ohio Admin. Code Ann. § 4901:1-39-08(H) (2009) (“Any request for an exemption may be combined with any other reasonable arrangement, approved pursuant to Chapter 4901:1-38 of the Administrative Code…”); See also In the Matter of the Application of Columbus Southern Power Company for Approval of its Program Portfolio Plan and Request for Expedited Consideration, Case No. 09-1089-EL-POR, Case No. 09-1090-EL-POR, Opinion and Order, 2010 Ohio PUC LEXIS 516, *33-34 (May 13, 2010) (discussing Options 1 and 2).
[67] See id. at § 4928.66(A)(2)(c).
[68] Anna Chittum, Am. Council for an Energy Efficient Econ., Follow the Leaders: Improving Large Customers Self-Direct Programs 21 (2011)
[69] Id. at 8.
[70] See id at 21-23.
[71] See Ohio Rev. Code Ann. § 4928.66(A)(2)(c); Chittum, supra note 38 (“At the far end of the self-direct continuum are the more structured programs with high levels of oversight… These programs usually let a customer self-direct most of their CRM fees, but retain a portion of those fees to fund administration of the program and other programs that serve other public benefits, such as market transformation and low-income programs. Highly structured and well administered programs with substantial oversight offer the best examples of successful and effective self-direct programming.”) (emphasis added).
[72] See Ohio Rev. Code Ann. §§ 4928.66(A)(2)(c), (D).
[73] Ohio Rev. Code Ann. § 4928.66(D)
[74] See id. at § 4928.66(D).
[75] See Chittum, supra note 38, at 8, 21-23.
[76] State ex rel. Kroger Co. v. Morehouse (1995), 74 Ohio St.3d 129, 133, 1995 Ohio 300, 656 N.E.2d 936.
[77] In the Matter of the Mercantile Customer Pilot Program for Integration of Customer Energy Efficiency or Peak-Demand Reduction Programs, Case No. 10-834-EL-POR, Finding and Order ¶ 5, 2012 Ohio PUC LEXIS 775, *4-5 (Sept. 5, 2012) (The Commission has previously found that, for purposes of the EEC Pilot a 100 percent rider exemption is appropriate for so long as the mercantile customer demonstrates energy savings at its own facility or facilities equal to or greater than the electric utility's benchmark requirement (‘the Benchmark Comparison Method’”).
[78] See id.; Kroger Co., 74 Ohio St. 3d at 133, 1995-Ohio-300 at *8, 656 N.E.2d at 939.
[79] Ohio Rev. Code Ann. § 4903.13 (“A final order made by the public utilities commission shall be reversed, vacated, or modified by the supreme court on appeal, if, upon consideration of the record, such court is of the opinion that such order was unlawful or unreasonable.”).
[80] See Ohio Rev. Code Ann. §§ 4928.66(A)(2)(c), 4928.66 (D), 4903.13.
[81] See Ohio Rev. Code Ann. §§ 4928.66(A)(2)(c), 4928.66 (D), 4903.13.
[82] Chittum, supra note 38, at 41 (“If a customer can prove, using an external auditor, that they have achieved all cost efficiency, they may receive a 50% credit of all [cost recovery mechanism] charges for two years.”).
[83] See Ohio Rev. Code Ann. 4928.66(A)(2)(c); 16 USC § 2621(d)(17).
[84] See 16 U.S.C. § 2621(d)(17).
[85] See Anna Chittum, Am. Council for an Energy Efficient Econ., Follow the Leaders: Improving Large Customers Self-Direct Programs 19 (2011) http://www.aceee.org/sites/default/files/publications/researchreports/ie112.pdf [hereinafter Chittum, Follow the Leaders].
[86] Id.
[87] Stephen Hawking, Space and Time Warps (accessed December 19, 2012) (“…rapid space-travel, or travel back in time, can't be ruled out, according to our present understanding”).
[88] Id.
[89] Id.
[90]  Ralph Nader, Cutting Corporate Welfare 30 (“a program is considered corporate welfare if its public cost outweighs its public benefits”); CATO Institute, CATO Handbook For Policymakers (“Many federal programs are sustained by special-interest groups working with policymakers seeking narrow benefits at the expense of taxpayers and the general public.”); see also, e.g. Office of Air and Radiation, U.S. Environmental Protection Agency Office of Environmental Justice In the Matter of the Fifth Meeting of the National Environmental Justice Advisory Council, 9 Admin. L.J. Am. U. 623 (describing a situation in which an energy efficiency program was accused of being “corporate welfare”); Alliance for Materials Mfg. Excellence, Policy Brief (in which an industry group deflected criticism claiming that its members received “corporate welfare” from a DOE energy efficiency investment program).
[91] See id.
[92] Ohio Rev. Code Ann. § 4928.66 (A)(2)(c).
[93] See id.
[94] See id.
[95] The term did not supplant previous language in a meaningful way, and the term was not meaningfully discussed by the Senate’s or House’s Bill Analyses. See S.B. 221 As Pending in the H. Pub. Utils. Comm., 127th Gen. Assemb. (Ohio 2008); S. 127-221 S. Final B. Analysis (Ohio 2008).
[96] In the Matter of the Adoption of Rules for Alternative and Renewable Energy Technology, Resources, and Climate Regulations, and Review of Chapters 4901:5-1,4901:5-3,4901:5-5, and 4901:5-7 of the Ohio Administrative Code, Pursuant to Amended Substitute Senate Bill No. 221, Case No. 08-888-EL-ORD, Entry on Rehearing ¶ 17 (Oct. 15, 2009); see also In the Matter of a Mercantile Application Pilot Program Regarding Special Arrangements with Electric Utilities and Exemptions from Energy Efficiency and Peak Demand Reduction Riders, Case No. 10-834-EL-EEC, Entry ¶ 7, 2010 Ohio PUC LEXIS 952, *6-9 (Sept. 15, 2010); Chittum supra note 69 at 9, 37-38.
[97] In the Matter of the Adoption of Rules for Alternative and Renewable Energy Technology, Resources, and Climate Regulations, and Review of Chapters 4901:5-1,4901:5-3,4901:5-5, and 4901:5-7 of the Ohio Administrative Code, Pursuant to Amended Substitute Senate Bill No. 221, Case No. 08-888-EL-ORD, Entry on Rehearing ¶ 17; In the Matter of a Mercantile Application Pilot Program Regarding Special Arrangements with Electric Utilities and Exemptions from Energy Efficiency and Peak Demand Reduction Riders, Case No. 10-834-EL-EEC, Entry ¶ 7, 2010 Ohio PUC LEXIS 952, *6-7.
[98] See id.
[99] Chittum, supra note 69, at 38.
[100] See id.
[101] Id.
[102] See Ohio Rev. Code Ann. § 4928.66(A)(2)(c); Columbus Southern Power Co., 129 Ohio St. 3d at 51, 2011-Ohio-2383 at *27, 950 N.E.2d at 169.

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