The U.S. Supreme Court declined to hear an appeal Monday from two investor-owned utilities around the state, letting stand a ruling that will save Ohioans an estimated $400 million on their monthly electric bills by 2031.
The justices’ decision locks in a January 2025 ruling from the 6th Circuit Court of Appeals that found the utilities were trying (and in some cases succeeding) to charge customers hefty surcharges as a bonus for joining the regional electrical grid – something Ohio law already requires.
Those bonuses are reserved, the appellate court ruled, for utilities that “voluntarily” join regional grids and not those forced to do so by law.
The decision means more than 2 million Ohioans who get power through AES Ohio or American Electric Power will avoid a surcharge in the future.
And for the roughly 3 million customers of FirstEnergy or Duke Energy, the ruling directs federal regulators to reverse pre-existing surcharges on their bills. This could allow refunds, dating back to 2022, pending a decision from federal regulators.
“This is a huge win for Ohio consumers,” said Maureen Willis, director of the Ohio Consumers’ Counsel, a state agency representing residential ratepayers who fought the new costs. “For too long, utilities have padded their profits with unnecessary charges. Now, hundreds of millions of dollars will stay in the pockets of the people who actually pay the bills.”
State law forces Ohio utilities to join PJM grid
The conflict traces back to Ohio’s membership in PJM, one of the largest “Regional Transmission Organizations” (RTOs) in the nation, serving Washington D.C., Ohio and 12 other states.
RTOs help connect the generation plants that produce electricity to the millions of people and businesses who use it, sometimes hundreds of miles and multiple state lines away.
State law requires Ohio’s utilities to join PJM. But for states with looser rules, the Federal Energy Regulatory Commission, a federal agency that oversees interstate power transmission, allows utility companies to charge customers extra as an “incentive” to join.
AES Ohio asked for FERC’s approval to charge an extra fee from its customers in exchange for its membership in PJM. The FERC changed course and refused to allow it. The agency also reversed a similar surcharge it previously allowed AEP to charge its customers, though it let Duke and FirstEnergy proceed.
The Ohio Consumers’ Counsel estimated the incentive would total $400 million statewide by 2031, though the actual dollar figure would be calculated via a complex regulatory formula.
The courts pushed it even further. The 6th Circuit’s ruling directed FERC to reverse the “RTO adders” for both Duke and FirstEnergy as well.
An AES Ohio spokeswoman declined comment, but noted it was other utilities and not AES Ohio that mounted the Supreme Court appeal.
A FirstEnergy spokeswoman said the company remains “committed to working with regulators to support fair outcomes for our customers and shareholders.”
A spokesman for AEP, the corporate parent of utility AEP Ohio, directed an inquiry to the subsidiary, which didn’t respond.
A Duke Energy spokesman said it’s “premature to speculate the impact on customer rates” given the case was sent back to the FERC.