[Cite as In re Application of Ormet Primary Aluminum Corp., 129 Ohio St.3d 9, 2011-Ohio-
2377.]




     IN RE APPLICATION OF ORMET PRIMARY ALUMINUM CORPORATION.
    IN RE APPLICATION OF COLUMBUS SOUTHERN POWER COMPANY ET AL.
          IN RE APPLICATION FOR ESTABLISHMENT OF A REASONABLE
               ARRANGEMENT BETWEEN ERAMET MARIETTA, INC.
                  AND COLUMBUS SOUTHERN POWER COMPANY.

         [Cite as In re Application of Ormet Primary Aluminum Corp.,
                        129 Ohio St.3d 9, 2011-Ohio-2377.]
Public Utilities — R.C. 4905.31 — Establishment of special arrangements for
       particular customers.
 (Nos. 2009-2060, 2010-0722, and 2010-0723 — Submitted March 22, 2011 —
                               Decided May 24, 2011.)
      APPEALS from the Public Utilities Commission, Nos. 09-119-EL-AEC,
                      09-1095-EL-RDR, and 09-516-EL-AEC.
                               __________________
       PFEIFER, J.
       {¶ 1} Under R.C. 4905.31, the Public Utilities Commission may approve
“reasonable arrangement[s]” between utilities and customers.             Although the
typical customer must take utility service under broadly applicable rates and
tariffs, the reasonable-arrangement statute allows the commission to approve rates
tailored to govern a specific customer’s service. See R.C. 4905.31. In a pair of
cases below, the commission approved reasonable arrangements between two
American Electric Power operating companies, Columbus Southern Power
Company and Ohio Power Company (collectively, “AEP”), and two southeastern
Ohio manufacturing firms, Ormet Primary Aluminum Corporation (“Ormet”) and
Eramet Marietta, Inc. (“Eramet”).
                            SUPREME COURT OF OHIO




       {¶ 2} Both arrangements gave the customer a substantial price discount
on electric service. The commission approved the arrangements and allowed AEP
to collect from other customers most of the revenue forgone to the discounts.
       {¶ 3} The issues resolved below spanned three separate orders, and AEP
appealed all three. We now consolidate the appeals and affirm the orders.
                     Factual and Procedural Background
       {¶ 4} R.C. 4905.31 permits “reasonable arrangement[s]” between
utilities and customers. Parties may propose for commission approval several
types of arrangements, including “[a]ny * * * financial device that may be
practicable or advantageous to the parties interested.” R.C. 4905.31(E). These
financial devices often take the form of negotiated rate schedules tailored to
govern a specific utility-customer relationship.     This case concerns separate
applications filed by Ormet and Eramet to establish reasonable arrangements with
AEP.
       {¶ 5} The first applicant, Ormet, manufactures aluminum.          It is the
largest employer in Monroe County, employing around 1,000 people, and pays
annual wages and salaries of over $56 million.          Manufacturing aluminum
consumes huge amounts of power, “up to 540 MW of electricity 24 hours per day,
365 days per year,” according to Ormet’s president. Ormet is the largest, most
energy-intensive customer that AEP serves in Ohio.
       {¶ 6} Electricity accounts for approximately 35 percent of the cost of
producing aluminum. The price of aluminum is set globally on the London Metal
Exchange, which means that Ormet cannot determine the selling price of its
product. Accordingly, Ormet is vulnerable when the price of aluminum fails to
keep pace with the price of power. In the past decade, Ormet has gone through
bankruptcy reorganization and has shut down and restarted its Monroe County
operations.




                                        2
                               January Term, 2011




        {¶ 7} In February 2009, Ormet asked the commission to approve a
reasonable arrangement linking Ormet’s electric rate to the market price of
aluminum. When the price of aluminum was at a certain benchmark, Ormet was
to pay a set rate for power. If the price of aluminum fell below the benchmark,
Ormet would get a discount on power; if the price of aluminum was above the
benchmark, Ormet would pay a premium.
        {¶ 8} Eramet filed its application four months after Ormet.        Eramet
described its products as “manganese alloys that strengthen and improve the
properties of steel.” Its application was much simpler than Ormet’s. It asked for
a fixed, discounted rate to fund certain upgrades to its Marietta manufacturing
facilities.
        {¶ 9} The amount of the discounts is the difference between what AEP
would have collected under its tariffs and what it actually collects under the
discounts and is known as “delta revenue.” See, e.g., Ohio Adm.Code 4901:1-38-
01(C). A recent amendment to R.C. 4905.31 addresses delta revenue, stating that
a reasonable arrangement “may include a device to recover costs incurred in
conjunction with any economic development and job retention program of the
utility within its certified territory, including recovery of revenue foregone as a
result of any such program.” See 2008 Am.Sub.S.B. No. 221. AEP understood
this language to mean that the commission could approve an application only if
the application allowed AEP to collect from other customers all of the resulting
delta revenue.
        {¶ 10} The commission held hearings in both cases. Numerous parties
intervened, including the Office of the Ohio Consumers’ Counsel (“OCC”) and
Industrial Energy Users–Ohio (“IEU”). Disagreement in both cases substantially
centered on the amount of the discount and who should pay for it.
        {¶ 11} The commission issued the Ormet order on July 15, 2009, and the
Eramet order on October 15, 2009. In both cases, the commission approved the



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basic discount mechanism and, as a condition of receiving the discount, required
the manufacturers to maintain certain employment levels. The orders allowed
AEP to recover most of its delta revenue from other customers, but it did not
allow AEP to continue to receive provider-of-last-resort (“POLR”) charges that
are typically paid by the manufacturers.
       {¶ 12} AEP sought rehearing in both cases, which the commission denied.
Several months after the original orders, in a third proceeding, the commission
authorized AEP to collect the Ormet and Eramet delta revenue, again, without
allowing recovery of POLR charges. AEP appealed all three cases. Ormet and
Eramet have intervened in their respective appeals; OCC and IEU have intervened
in all three. All intervenors have filed briefs in support of the commission.
       {¶ 13} Because the three appeals present nearly identical issues, we
consolidated the cases for oral argument. We now consolidate the cases for
decision.
                                     Analysis
       {¶ 14} As permitted by R.C. 4905.31, Ormet and Eramet each asked the
commission to approve a reasonable arrangement that included a substantial
discount on power; the commission approved the arrangements. The orders of the
commission allow AEP to collect the delta revenue from other customers. The
one exception is that the commission did not allow AEP to collect the amount for
POLR charges that are typically paid by the manufacturers. AEP has contended
throughout the proceedings that other customers should pay in full for the
discount.
       {¶ 15} Leaving aside for the moment AEP’s specific challenges to the
orders, the commission’s decision to disallow POLR charges makes sense. POLR
charges compensate utilities for standing ready to serve “customers who shop and
then return.” Constellation NewEnergy, Inc. v. Pub. Util. Comm., 104 Ohio St.3d
530, 2004-Ohio-6767, 820 N.E.2d 885, ¶ 39, fn. 5. Under the orders, however,




                                           4
                                January Term, 2011




Ormet and Eramet cannot shop. In short, AEP seeks payment of millions of
dollars a year to prepare for the return of two customers even though those two
customers cannot lawfully depart. We conclude that the commission’s decision
was sensible. We now address each of AEP’s arguments in turn.
                                “May” is permissive
       {¶ 16} AEP first argues that the commission erred “in concluding that ‘the
recovery of delta revenues is a matter for the Commission’s discretion’ under
R.C. 4905.31.” We disagree. R.C. 4905.31 does not require full recovery of delta
revenue. The statute clearly contemplates “recovery of revenue foregone” as a
result of discounts, but it speaks only in permissive terms. It states that certain
arrangements “may include a device to recover costs incurred in conjunction with
any economic development and job retention program of the utility within its
certified territory, including recovery of revenue foregone as a result of any such
program.” R.C. 4905.31(E).
       {¶ 17} The statute states that delta revenue “may” be recovered. We
conclude that recovery is permitted but not required. See Fayetteville Tel. Co. v.
Pub. Util. Comm. (1982), 1 Ohio St.3d 167, 170, 1 OBR 199, 438 N.E.2d 128, fn.
8. See also State ex rel. Niles v. Bernard (1978), 53 Ohio St.2d 31, 34, 7 O.O.3d
119, 372 N.E.2d 339 (“usage of the term ‘may’ is generally construed to render
optional, permissive, or discretionary the provision in which it is embodied”).
Not only does the statute use the permissive term “may,” it does not use any
mandatory terms, such as “must” or “shall,” when addressing the commission’s
authority to allow the recovery of delta revenue. Because R.C. 4905.31(E) uses
permissive language in describing whether forgone revenue should be recovered,
it is a matter for the commission’s discretion.
       {¶ 18} AEP’s primary argument is that the permissive words in R.C.
4905.31 cannot be directly applied to the cost-recovery language. AEP contends
that because no permissive words immediately precede “including recovery of



                                          5
                             SUPREME COURT OF OHIO




revenue foregone” in the statute, recovery of delta revenue must be mandatory.
But no mandatory language immediately precedes “including recovery of revenue
foregone” either. Furthermore, the earlier “may” naturally relates to the entire
sentence. AEP’s own choice of words confirms the difficulty of characterizing
R.C. 4905.31(E) as mandatory—AEP uses forms of the word “permit” no fewer
than nine times to describe the relevant provisions of the statute. Indeed, it
concludes its statutory argument with the statement that “the General Assembly’s
manifest intention [was] to permit recovery of economic development costs
‘including revenue foregone.’ ” (Emphasis added.) We agree—but fail to see
how this furthers AEP’s cause.
       {¶ 19} AEP also asserts that if the orders are allowed to stand, the
commission “could disallow recovery of all revenues foregone under a contract
filed unilaterally by a mercantile customer and imposed on the utility by the
Commission.”      But this case does not present that question.          As AEP
acknowledges in Ormet (and does not gainsay in Eramet), the commission
granted AEP “the majority of the revenues foregone.” Whether the commission
could lawfully deny all forgone revenue is a hypothetical question, and we will
not pass on it here. See, e.g., State ex rel. Elyria Foundry Co. v. Indus. Comm.
(1998), 82 Ohio St.3d 88, 89, 694 N.E.2d 459.
       {¶ 20} Finally, AEP devoted nine pages of its brief to explaining how the
commission had decided AEP’s electric-security-plan case, suggesting that the
decisions in that case and this one are inconsistent. AEP cites no authority and
presents no argument suggesting that any inconsistency between the two orders
constitutes an independent legal error. We fail to see the relationship between the
two cases, and accordingly, we do not consider the matter.
       {¶ 21} AEP has not shown that R.C. 4905.31 requires full recovery of
delta revenue. We reject its first proposition of law.
            Exclusive-supplier provisions do not violate public policy




                                          6
                               January Term, 2011




         {¶ 22} Even though AEP argues to the contrary, the orders issued by the
commission do not allow the manufacturers to shop for electric service for the
duration of the arrangement. In Eramet, AEP argues that there is no evidence that
the manufacturer agreed to the exclusive-supplier provision. (No such argument
is made in Ormet.) The order stated that “Eramet cannot shop,” and Eramet did
not appeal any part of the order. Thus, Eramet is now bound by the order.
Further, Eramet represents to this court that “there is an exclusive supplier
agreement,” and we accept its representation. In its second proposition of law,
AEP argues that these exclusive-supplier provisions violate Ohio’s “basic and
central” electric policies: namely, those favoring the development of competitive
markets, retail shopping, and customer choice. For that reason, AEP asks us to
reverse or vacate the adoption of the exclusive-supplier provisions.
         {¶ 23} In response, OCC argues that the state policies of R.C. Chapter
4928 do not apply to reasonable arrangements approved under R.C. 4905.31. See
R.C. 4905.31 (“Chapter[] * * * 4928 * * * do[es] not prohibit” the formation of
“any reasonable arrangement”). We will assume for the sake of argument that the
policy statutes apply here, because even if they do, AEP has not shown that the
commission violated them. According to AEP, the exclusive-supplier provisions
conflict with the policies in favor of “customer choice,” “the right to shop,” and
“retail choice.” But the order advanced the choices of the only customers who
were party to these proceedings.        The customers, after all, proposed the
arrangements, supported them before the commission, and have intervened to
defend them on appeal. Customer choice appears to have been vindicated in these
cases.
         {¶ 24} Nevertheless, AEP responds, allowing Ormet and Eramet to tie up
their accounts might harm the larger competitive market, contrary to state policy.
The company suggests that expert testimony is not necessary to show harm to
Ohio markets, but we find that assertion dubious. Whether and to what extent the



                                         7
                            SUPREME COURT OF OHIO




removal of one or two large customers would adversely affect the entire
competitive market is the sort of matter to which economists and other market
experts could attest. It is a question of fact, but no evidence was provided, and we
will not reverse the commission based on speculation. See, e.g., Elyria Foundry
Co. v. Pub. Util. Comm., 114 Ohio St.3d 305, 2007-Ohio-4164, 871 N.E.2d 1176,
¶ 67. We reject AEP’s second proposition of law.
             Can Ormet or Eramet shop for competitive generation?
       {¶ 25} In its third proposition of law, AEP asserts that the commission
erred when it found that there was “no risk” that the customers “will shop for
competitive generation and then return to AEP-Ohio’s POLR service.” This
finding underpinned the commission’s decision to disallow POLR charges. AEP
asks us to “reverse the Commission’s conclusion that there is no risk that [the
customers] will shop and subsequently return to SSO service from AEP Ohio.”
       {¶ 26} AEP challenges a factual finding, so our review is deferential. See
Ohio Consumers’ Counsel v. Pub. Util. Comm., 117 Ohio St.3d 301, 2008-Ohio-
861, 883 N.E.2d 1035, ¶ 14. We cannot say that the commission erred in finding
that there was no risk that the manufacturers would shop. The commission relied
on the fact that “AEP-Ohio will be the exclusive supplier” to the manufacturers.
As we have already discussed, that is true—the orders require the customers to
take service exclusively from AEP. If they must take service exclusively from
AEP, then it follows that they cannot take it from another supplier. Thus, the
commission reasonably found that the risk of shopping was insufficient to justify
the collection of POLR charges.
       {¶ 27} AEP maintains that there is some risk that Ormet or Eramet could
shop despite the orders, given the commission’s continuing supervisory power
over reasonable arrangements. We consider this issue unripe. If the commission
allows Ormet or Eramet to shop, if that harms AEP, and if the commission fails to




                                         8
                                    January Term, 2011




make AEP whole, AEP may protest before the commission and then appeal to this
court if it remains dissatisfied.
        {¶ 28} Finally,    AEP       argues       that   the   commission   unreasonably
“narrow[ed] the scope of its review” of the risk that manufacturers would shop “to
only three years of the 10-year contract.” AEP did not apply for rehearing on this
ground in the Ormet case, so we lack jurisdiction to consider the issue.
Consumers’ Counsel v. Pub. Util. Comm. (1994), 70 Ohio St.3d 244, 247, 638
N.E.2d 550. AEP preserved this challenge in Eramet, but it lacks merit. Limiting
review of shopping risk to three years was reasonable. The POLR charge was to
expire after three years, and no determination had been made whether it would be
renewed. Recovery of the POLR charge was the only disputed issue in Eramet,
so the commission sensibly limited its review to the period in which that charge
was in effect.
                 Must a utility consent to a reasonable arrangement?
        {¶ 29} In its fourth and final proposition of law, AEP argues that “there
can be no arrangement approved by the Commission if the public utility to be
bound by the arrangement does not agree to its terms.” The statute does not
expressly require the utility’s consent to a reasonable arrangement. AEP attempts
to locate this requirement in two places: the word “arrangement” and the phrase
“practicable or advantageous to the parties interested.”
        {¶ 30} AEP’s primary argument is that the term “arrangement” denotes a
contract to which both parties assent. The argument assumes that “arrangement”
means one of only two things: “either a ‘mutual agreement or understanding’ or ‘a
preliminary step or measure’ ” (emphasis added by AEP), quoting Webster’s
Third New International Dictionary (2002) 120. As the second meaning does not
work, AEP concludes, arrangement must mean “mutual agreement.”
        {¶ 31} We are not persuaded, because the major premise of the argument
is false.   The word “arrangement” has more than two possible definitions.



                                              9
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Webster’s Third gives seven main senses, and AEP’s preferred definition is the
only one denoting any sense of mutual assent. See id., sense 6(b)(1). Many of the
definitions that AEP neglected to mention fit in the context before us, including
the first, which is “the act or action of arranging or putting in correct, convenient,
or desired order.” Id. A rate schedule may be “arranged,” i.e., put in a desired
order, so that sense also works in this context. See, e.g., Atchison, Topeka &
Santa Fe Ry. Co. v. United States (1914), 232 U.S. 199, 221, 34 S.Ct. 291, 58
L.Ed. 568 (stating that the commerce commission “may prescribe the form in
which schedules shall be prepared and arranged”).          This sense of the word
“arrangement” contains no element of mutual assent. Thus, “arrangement” by
itself does not impose a requirement of utility consent.
       {¶ 32} At most, AEP has shown that “arrangement” could mean “mutual
agreement.” But the question is not what “arrangement” could mean in isolation,
but what R.C. 4905.31 as a whole requires. See, e.g., State v. Porterfield, 106
Ohio St.3d 5, 2005-Ohio-3095, 829 N.E.2d 690, ¶ 12 (“Parsing individual words
is useful only within a context”). Reading the statute as a whole, we discern no
support for AEP’s position.
       {¶ 33} First, as may be inferred from AEP’s exertions, the statute does not
expressly require the consent or agreement of the utility.          For the General
Assembly to choose a word that usually does not denote mutual consent would be
an odd and exceedingly subtle way for the General Assembly to impose a mutual-
consent requirement.
       {¶ 34} Second, although R.C. 4905.31 does not expressly require utility
consent, it expressly requires utility compliance. The statute states, “No * * *
arrangement is lawful unless it is filed with and approved by the commission.”
Subsection (E). The next sentence then commands the utility “to conform its
schedules of rates, tolls, and charges to such arrangement”—that is, the
commission-approved arrangement.         Rather than giving utilities the right to




                                         10
                               January Term, 2011




cancel or consent, the statute requires utilities to conform to the approved
arrangement.
       {¶ 35} Third, the fact that R.C. 4905.31 now allows the customer to
propose an arrangement undercuts the notion that the utility must agree to the
terms. Before recent amendments to R.C. 4905.31, see 2008 Am.Sub.S.B. No.
221, only utilities could file reasonable arrangements for commission approval.
This meant that utilities possessed a de facto veto power. If they did not like the
terms of the arrangement, they could refuse to file. That the statute was amended
to allow nonutilities to file arrangements further suggests that AEP’s consent is
not required.
       {¶ 36} Finally, the statute affirmatively gives the commission—not
utilities—final say over arrangements. The final sentence of R.C. 4905.31 states,
“Every * * * reasonable arrangement shall be under the supervision and
regulation of the commission, and is subject to change, alteration, or modification
by the commission.” Thus, the commission may supervise, regulate, change,
alter, and modify arrangements. No comparable power is vested in the utility, and
the power to modify is not conditioned on the agreement of the utility.
       {¶ 37} Taking these factors together, we cannot read the word
“arrangement” to impose a utility-consent requirement.
       {¶ 38} AEP asserts that one other part of the statute requires its consent to
the final order. As noted, R.C. 4905.31(E) permits “financial device[s] that may
be practicable or advantageous to the parties interested.” According to AEP, the
phrase “advantageous to the parties” means that all parties must agree that the
device is advantageous. We disagree. Even assuming that the phrase “practicable
or advantageous to the parties interested” acts as a limit upon the commission, the
General Assembly used the disjunctive term “or.”         Thus, even under AEP’s
reading of the statute, an arrangement need only be “practicable” to survive.
“Practicable” means “reasonably capable of being accomplished; feasible.”



                                        11
                            SUPREME COURT OF OHIO




Black’s Law Dictionary (9th Ed.2009) 1291. AEP has made no showing that this
arrangement is infeasible. Indeed, the commission required other customers to
pay all of AEP’s forgone revenue, except for the POLR charge, and AEP has not
demonstrated that it will actually expend anything to act as provider of last resort
for these customers.
                                   Conclusion
       {¶ 39} For the foregoing reasons, we affirm the orders of the commission.
                                                                   Orders affirmed.
       O’CONNOR, C.J., and LUNDBERG STRATTON, O’DONNELL, LANZINGER,
CUPP, and MCGEE BROWN, JJ., concur.
                              __________________
       Steven T. Nourse and Matthew J. Satterwhite, for appellants, Columbus
Southern Power Company and Ohio Power Company.
       Michael DeWine, Attorney General, William L. Wright, Section Chief,
and Thomas McNamee, Werner L. Margard III, and Thomas G. Lindgren,
Assistant Attorneys General, for appellee, Public Utilities Commission of Ohio.
       Janine L. Migden-Ostrander, Consumers’ Counsel, and Maureen R.
Grady, Melissa R. Yost, and Michael E. Idzkowski, Assistant Consumers’
Counsel, for intervening appellee Ohio Consumers’ Counsel.
       Boehm, Kuntz & Lowry, David F. Boehm, and Michael L. Kuntz, for
intervening appellee Ohio Energy Group.
       McNees, Wallace & Nurick, L.L.C., Samuel C. Randazzo, and Joseph E.
Oliker, for intervening appellees Industrial Energy Users–Ohio and Eramet
Marietta, Inc.
       Sonnenschein, Nath & Rosenthal, L.L.P., Clinton A. Vince, Douglas G.
Bonner, Daniel D. Barnowski, Emma F. Hand, and Keith C. Nusbaum, for
intervening appellee Ormet Primary Aluminum Corporation.
                            ______________________




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