The Public Utilities Commission of Ohio (PUCO) today ruled that it will assert jurisdiction to stop submetering companies from charging submetered residential customers more than what the PUCO-regulated local public utility charges a customer with equivalent usage through default service rates.
Submetering frequently asked questions
What is submetering?
Submetering is the practice of installing secondary metering devices with the ability to measure utility service usage beyond the primary utility meter. This practice allows a landlord, condominium association, submetering company or other entity to purchase utility services and resell or redistribute the services to its tenants on an individually metered basis.
What is the PUCO’s role in submetering?
The PUCO has supervisory authority over all public utilities within its jurisdiction, and among other responsibilities, has the power to prescribe any rule or order necessary to protect consumers. Submetering companies could fall under PUCO jurisdiction under certain circumstances, namely if the company fails any prong of the Shroyer Test.
What is the Shroyer Test?
The PUCO has traditionally applied the three-part Shroyer Test to determine if an entity is operating as a public utility and thus falls within the scope of the Commission’s exclusive jurisdiction. The prongs of the test are as follows:
- Has the landlord manifested an intent to be a public utility by availing itself of special benefits available to public utilities such as accepting a grant of a franchised territory, a certificate of public convenience and necessity, the use of eminent domain, or use of the public right of way for utility purposes?
- Is the utility service available to the general public rather than just to tenants?
- Is the provision of utility service ancillary to the landlord’s primary business?
Recently, the Commission clarified certain aspects of the Shroyer Test, namely:
- The Shroyer Test should be applied not only to landlords, but also condominium associations, submetering companies and other similarly-situated entities;
- Failure of any one of the three prongs of the Shroyer Test is sufficient to determine that an entity is unlawfully operating as a public utility; and
- For submetered residential customers, a relative price test will be utilized to determine if a submetering entity is presumed to fail the third prong of the Shroyer Test.
What is the relative price test?
The relative price test compares what a submetered residential customer paid for utility service against what that same customer would have paid the local public utility for equivalent usage under the utility’s default service rates.
How is the relative price test performed?
To conduct the relative price test, a submetered residential customer compares what they paid the submetering company to what the customer would have paid the local public utility for equivalent usage under default service rates. Submetered residential customers may contact the PUCO Call Center for assistance.
First, a submetered residential customer will need to determine the local public utility service territory where they reside. To make this determination, a customer may use the PUCO’s Find Utility Information tool.
When contacting the PUCO Call Center for assistance, submetered residential customers need the following information:
- the customer’s service address
- any recent bills from the submetering entity
- the customer’s monthly usage – if this is not printed on the customer’s monthly billing statement, the customer may need to contact the submetering entity to obtain this information.
In order to assist submetered residential customers, the Commission directed local public utility companies to develop, in cooperation with PUCO staff, an online bill calculator tool. Once the online bill calculators are available, submetered residential customers who believes they are being over-charged for utility service will be able to plug their usage in to determine what they would have paid the local public utility for equivalent usage under the default service rates. If the submetered charges are greater than what they would have paid the local public utility, the customer may seek a remedy with the PUCO.
What happens if a submetering company fails the relative price test?
If a submetering entity fails the relative price test, the customer should contact the submetering entity to facilitate an agreeable resolution. A PUCO Call Center representative can also help the customer facilitate a resolution.
If an informal resolution cannot be reached, the customer can file a formal complaint and state that the submetering entity has failed the relative price test and is thus acting as a public utility. The submetering entity would have the ability to respond to that formal complaint. The PUCO will decide formal complaints and assert jurisdiction where necessary on a case-by-case basis.
However, the PUCO does not have the authority to award damages.
If you have utility-related questions or would like to file a complaint, call the PUCO Call Center at (800) 686-7826 (PUCO) or visit www.PUCO.ohio.gov.
How can I learn more?
“It is our hope that today’s Commission decision will serve to protect customers by disciplining pricing in the submetering marketplace and providing a true venue for submetered residential customers to file their grievances,” stated PUCO Chairman Asim Z. Haque.
To determine whether a submetered residential customer is being over-charged, the Commission established a pricing test that does not allow for a submetering entity to charge more than what the local public utility would charge for equivalent usage through default service rates. A submetering company must show that any amounts charged above that amount fit within a safe harbor set forth in today’s decision.
To assist submetered residential customers in performing the price test, the Commission directs local public utility companies to develop, in cooperation with PUCO staff, an online bill calculator tool. If submetered residential customers believe they are being over-charged for utility service, they will be able to utilize this tool or contact the PUCO Call Center for assistance.
In December 2015, the PUCO opened an investigation into the practice of submetering companies and solicited comments from interested parties.
In December 2016, the Commission issued an order modifying the longstanding Shroyer Test, which is used to determine if an entity is operating as a public utility. In doing so, the Commission established a relative price test which, when failed, creates a rebuttable presumption that the submetering company is offering regulated utility services at a profit, thereby subject to PUCO jurisdiction. Additionally, the Commission sought comment from stakeholders on the percentage threshold for the relative price test.