Page 3 - OhioRA 2012SpringFlipBook

Most people in the industry will tell you that, while they are optimistic about the direction the foodservice industry is heading, there still appear to be some challenges.

Less than two months ago, the Public Utilities Commission of Ohio (PUCO) did something that no one around state government recalls happening in recent memory - if ever. The fve commissioners took the unprecedented step of rescinding an electric rate increase they had unanimously approved just weeks earlier. The ORA and several other trade associations, along with hundreds of angry business owners, fooded the PUCO with letters and appeals of the new rates that were 30% to 40% higher than what AEP commercial customers had paid previously.

In the case of one ORA member, the new rates increased his average electricity bill by $15,000 annually. In order to cover the cost of the increase and maintain his proftability, he calculated his restaurant would need to generate an additional $250,000 in food and beverage sales annually. Given the escalating cost of commodities and other expenses over the past year, this increase would have done irreparable damage to his bottom line.

This case illustrates the need for reform to the utility rate-making process. Let me give you a brief background. The PUCO is responsible for setting rates for all investor-owned utilities in Ohio. For decades, the PUCO has attempted to strike a balance between allowing utilities to establish rates that allow for a modest proft while protecting customers from excessive and unjustifed increases. These cases take months, and in some cases more than a year, to wind their way through the PUCO.

To be clear, this process is extremely complex and flled with levels of detail that are virtually impossible for utility customers to understand without the help of retained experts and lawyers who are well-versed in this area. Arguably, no residential customer or small business owner has the time or expertise to follow these cases and effectively represent their interests. In fact, the law specifcally

states that lawyers must represent any interested party that wishes to participate actively in a rate case.

I’d also like to point out that of the three classes of customers - industrial, commercial and residential - only the commercial class has no real voice in the process. The Ohio Consumer’s Counsel, a state-funded offce, is charged with the task to advocate for the residential class of customers while the industrial class has the fnancial resources to effectively represent itself. Restaurateurs and other small businesses are without any reasonable power to have their voice heard as these cases make their way through the system.

What does the future hold? AEP has already fled an amended plan to seek higher rates in this next round of hearings. Other utilities across the state are watching this case closely so they can fgure out how best to approach the PUCO with their own rate cases.

On our end, we are exploring several avenues to bring additional transparency and lower cost access to the rate-making process. To be sure, there are large, well-funded adversaries who have had this rate-making process largely to themselves and who would prefer to keep it that way. I don’t want to create false expectations of long-term success, but you can be assured the ORA will work tirelessly to make a dent in this entrenched process that does not serve restaurateurs’ interests or the long-term goal of fostering economic development in our state. We will be keeping you posted on our progress.

By Geoff Hetrick, President & CEO, Ohio Restaurant Association

ORA Scores a Victory for Members in Contentious AEP Rate Case

Protecting Your Bottom Line

Page 3 - OhioRA 2012SpringFlipBook

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