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Wednesday, March 12, 2014

In the Matter of the Fuel Adjustment Clauses for Columbus Southern Power Company and Ohio Power Company, Case no. 2012-1484
Public Utilities Commission of Ohio

In re D.M., a minor child, Case no. 2013-0579
First District Court of Appeals (Hamilton County)

Jeffery D. Belew v. State of Ohio, Case no. 2013-0711
Sixth District Court of Appeals (Lucas County)

Disciplinary Counsel v. Judge Joy Malek Oldfield, Case no. 2013-1623

May PUCO Adjust Electric Company’s 2009 Recovery of Fuel Costs by Value of Buyout Made a Year Earlier?

In the Matter of the Fuel Adjustment Clauses for Columbus Southern Power Company and Ohio Power Company, Case no. 2012-1484
Public Utilities Commission of Ohio


Ohio Power Company, doing business as American Electric Power (AEP), had an electric rate plan in effect from 2006 to 2008. This plan did not include a “fuel adjustment clause,” which is a separate rate component that allows electric companies to recover the difference between the costs they charge customers for fuel and the actual costs they pay for fuel.

AEP stated in its brief to the Ohio Supreme Court that short-term coal prices were highly volatile during these years, reaching all-time highs. (Most fuel costs are generated from the purchase of coal.) In January 2008, AEP entered into a buyout agreement, which was a settlement between AEP and a coal supplier ending a decades-long contract at the end of the year. The power company also entered into a separate contract (production bonus agreement) in February 2008 with a different coal supplier to help the supplier maintain its solvency via the bonus agreement and a temporary increase in coal prices.

The electric company then obtained PUCO approval of an electric security plan (ESP) to provide electric services from 2009 through 2011. The new plan included a fuel adjustment clause, allowing the company to recover fuel costs from customers if they were higher than the rates charged.

In a standard audit in 2010 reviewing AEP’s fuel costs for 2009, the auditor determined that AEP paid nearly $300 million in fuel costs that had not been recovered in its rates for that year. The auditor recommended, however, that the PUCO review whether any of the proceeds from the 2008 buyout agreement should be used to offset the $300 million recovery.

According to AEP, the buyout agreement netted $71.6 million – $30 million in cash and a coal reserve valued at $41.6 million. AEP recorded the buyout as a gain of $58.3 million in 2008 and $13.3 million total in 2009 and 2010.

In 2012, the commission ruled that the full value of the 2008 buyout needed to be credited against the $300 million in under-recovered fuel costs. It later clarified that only the retail share of the gain was to be credited.

The power company exercised its right to appeal the decision to the Ohio Supreme Court.

Attorneys for AEP argue that the 2009 recovery of fuel costs cannot be decreased by a buyout agreement that took place in 2008, outside the audit period. They contend that the commission has improperly confiscated the value of the 2008 buyout, which had already been properly applied in its 2008 accounting. They also assert that the PUCO’s approach violates the Ohio Supreme Court’s ruling in Keco Industries, Inc. v. Cincinnati & Suburban Bell Tel. Co. (1957), which prohibits retroactive rate-making.

AEP’s attorneys dispute the PUCO’s contention that the company would have paid less for fuel in 2009 if it had not entered into the buyout agreement in 2008. The attorneys counter that it is more likely the coal supplier would have defaulted on its contract with AEP, and the company would have paid even higher rates for coal. They also argue that AEP incurred other significant costs from the separate production bonus agreement, also in 2008, which were not included by the commission in its determination. That amounted to a $26.8 million loss, they note.

Nor are ratepayers entitled to the $41.6 million value of the coal reserve, which is a company asset, AEP’s attorneys assert. They maintain that including the coal reserve’s value does not align fuel costs with the benefits AEP gained through its fuel contracts – as the PUCO argues – but, instead, represents an impermissible transfer of ownership of the reserve to Ohio’s ratepayers.

Last, the company’s attorneys claim that all key matters related to the fuel adjustment clause were determined during the initial PUCO hearings considering the company’s application for the 2009-2011 electric security plan. These issues, they assert, cannot be re-litigated now. They conclude that the PUCO has unreasonably and unlawfully conflated two time periods involving two distinct rate plans.

Attorneys for the PUCO contend that in the 2008 buyout, AEP exchanged a cheap coal contract for cash, coal reserves, and a more expensive contract for coal. To determine the “real economic cost” of the coal purchased in 2009, the commission ruled that it must consider the revenues and benefits that AEP received from the buyout agreement. The attorneys also note that the auditor did not recommend that the other contract – the production agreement – be used to adjust fuel costs. The commission found that the price of coal in 2009 was affected by the 2008 buyout agreement, but was not impacted by the 2008 production agreement.

They dispute that the commission engaged in retroactive ratemaking. They argue that Keco does not apply in this case because no refund has been requested, as it had been in that case, and the commission is not trying to change a previous rate. Instead, they assert that in this case the PUCO, as it stated in its order, established a future rate based on the real cost of the coal used by the company to generate electricity in 2009.

They argue that it would have been better for AEP to recognize the gains from the buyout at the same time it accounted for the coal received on a per-ton basis (an accounting principle called “matching”).
They assert that the PUCO’s view of proper accounting methods, not AEP’s, must control.

The purpose of the annual audits, they maintain, is to evaluate fuel costs not known at the time a rate plan is entered into and to account for the true fuel costs and accuracy of the accounting of the costs.

The attorneys note that the commission agrees that ratepayers do not own the coal reserves. However, the value of those reserves was part of the transaction that allowed AEP to purchase the coal, they argue, so it needed to be included in the evaluation of the fuel adjustment.

Industrial Energy Users-Ohio (IEU), a statewide association of manufacturers, has filed a cross appeal, arguing against aspects of the PUCO’s determinations. Some of the information the group submitted to the court was sealed by the PUCO to protect content that may be AEP trade secrets. In a brief not under seal, attorneys for IEU mostly focus on the part of the PUCO order that adjusted the amount to be credited to only the amount allocated to the company’s retail customers.

Attorneys for IEU assert that AEP submitted no evidence to the commission justifying how the 2008 buyout affected the cost to produce each kilowatt hour of electricity from its generation resources, so it did not prove that the buyout raised the cost of fuel for non-retail customers. They argue that AEP’s gains from the 2008 buyout should have been credited fully, rather than partially, to retail customers. The record shows that only retail customers were negatively impacted by the 2008 buyout, they maintain.

On March 6, the Supreme Court approved a variation in oral arguments in this case. AEP will argue first and be allotted 15 minutes. Industrial Energy Users-Ohio will argue second and be given 15 minutes, and the PUCO will argue third for 15 minutes.

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Representing Ohio Power Company/AEP: Steven Nourse, 614.716.1608

Representing the Public Utilities Commission of Ohio: Thomas McNamee, 614.466.4396

Representing Industrial Energy Users-Ohio: Samuel Randazzo, 614.469.8000

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Is Juvenile Entitled to Full Discovery Prior to Probable Cause Hearing?

In re D.M., a minor child, Case no. 2013-0579
First District Court of Appeals (Hamilton County)

ISSUE: During transfer proceedings, does a juvenile have a right to full discovery (access to the evidence) from the state before a probable cause hearing?

In October 2012, the state filed a complaint in juvenile court alleging that a minor, referred to in this case by his initials D.M., had committed an act which, if committed by an adult, would constitute aggravated robbery. The next day, the state asked the court to transfer D.M. for criminal prosecution as an adult.

D.M., who was 16 years old at the time of the alleged offense, was subject to a mandatory transfer if there was probable cause to believe he had committed the act charged. Before the probable cause hearing, counsel for D.M. filed a request for discovery (a procedure used to obtain evidence from the other side before trial). The state provided documents and evidence, but not everything that D.M.’s attorney had asked for.

His attorney then filed another request for additional items, including two police reports. The juvenile court granted the request. The state, however, did not provide the documents, so D.M.’s attorney asked the court to dismiss the case. While hesitant to drop the case because of the serious charges, the court ultimately dismissed it.

The state appealed to the First District Court of Appeals, which reversed the trial court decision. The court of appeals held that before a probable cause hearing, the state only needs to provide a juvenile with any Brady materials (evidence that is favorable to the defendant and could impact the outcome of the defendant’s case) it possesses as well as the evidence it intends to use at the hearing.

D.M. appealed to the Ohio Supreme Court, which agreed to hear the case.

D.M.’s attorney argues that the appeals court erred when it decided that the outcome of transfer proceedings determines whether the rules governing juvenile court proceedings or the rules for adult criminal cases apply and, instead, created its own rule that limited discovery to certain materials (known as Brady material, based on a 1963 U.S. Supreme Court case, Brady v. Maryland) and the evidence the state intends to use at the hearing. According to Juv. R. 1(A), the juvenile rules apply, with a few limited exceptions, to all proceedings in juvenile courts, he maintains. However, D.M.’s attorney also asserts that interpreting Juv. R. 24, which governs discovery in juvenile court, through the lens of Crim. R. 16(B)(6), which specifically allows for the discovery of police reports in adult proceedings, was within the trial court’s discretion.

Citing the Ohio Supreme Court decision in State v. Iacona (2001), D.M.’s attorney also asserts that Juv. R. 24 has previously been applied to probable cause hearings “in the interest of fairness.” The juvenile rules should be applied in this case to determine which materials are discoverable, he argues.

D.M.’s attorney also contends that the First District’s ruling permits far less discovery than other districts in the state. Examining case law from the Sixth and Eighth districts, which allows for juvenile discovery that is coextensive and relevant to the issues, D.M.’s attorney argues that the First District’s rule is too restrictive and violates the due process rights of minors within its jurisdiction. 

He concludes that the First District’s decision does nothing to promote fairness and impedes on a minor’s due process rights, because it allows the state to withhold numerous items relevant to the probable cause hearing.

Attorneys for the state counter that the interpretation by D.M.’s counsel of Juv. R. 24 is overly expansive. In their brief to the court, the state’s attorneys assert that a probable cause hearing is limited in scope, and a minor is not entitled to “full, unfettered discovery.”

They also maintain that it is incorrect to apply Crim.R. 16 to juvenile court discovery issues, because adult criminal proceedings are distinctly different from juvenile proceedings. And, unlike Crim. R. 16, Juv. R. 24 has no specific provision regarding police reports, so the trial court erred when it ruled the reports were discoverable, they contend.

The state’s attorneys also argue that the cited case law from the Sixth and Eighth districts does not actually support an expansive treatment of discovery. They maintain that each court acknowledged that while a minor is entitled to discovery before a probable cause hearing, this discovery is limited in scope.

Citing the U.S. Supreme Court case Pennsylvania v. Ritchie (1987), the state’s attorneys conclude that the state decides which information must be disclosed under Brady. They assert that the state disclosed all material it intended to use during the probable cause hearing, and it informed D.M. that no Brady material or other evidence favorable to the minor was known.

An amicus curiae (friend of the court) brief supporting D.M.’s position has been submitted collectively by the Children’s Law Center, Inc.; National Juvenile Defender Center; and Ohio Public Defender.

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Representing D.M.: Gordon Magella, 513.946.3846

Representing the state of Ohio from the Hamilton County Prosecutor’s Office: Philip Cummings, 513.946.3200

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Do Courts Need to Consider PTSD and Other Service-Related Disabilities as Mitigating Factors When Sentencing Military Veterans?

Jeffery D. Belew v. State of Ohio, Case no. 2013-0711
Sixth District Court of Appeals (Lucas County)

ISSUE: Does a trial court need to consider credibly diagnosed post-traumatic stress disorder and other service-related disabilities as mitigating factors when sentencing combat veterans who commit crimes?

When Oregon, Ohio, police officers responded to an early morning domestic disturbance in April 2011, Jeffery Belew, a military veteran, fired his gun toward the officers. Belew, who was extremely intoxicated, ignored orders to stop, continuing to shoot at the officers until they incapacitated him by shooting him in the chest.

Belew was charged with two counts of felonious assault with firearm specifications and two counts of attempted aggravated murder. Belew pled guilty to the felonious assaults with firearm specifications, and, in return, the prosecutor dropped the attempted murder charges.

Prior to pleading guilty, Belew was evaluated by two psychologists, Dr. Charlene Cassel and Dr. Wayne Graves. The doctors determined that Belew’s alcohol abuse and troubles with authorities started before he enlisted in the Marines after high school, but his experiences in the military seemed to have aggravated his problems.

Belew served three-plus years in the Marines but received a bad conduct discharge after joy-riding in a government vehicle while intoxicated. His evaluations revealed that he began abusing other substances during his service in Iraq, and when he returned to the United States, his alcohol use increased significantly. Belew struggled to adjust back to civilian life, often drinking to the point of passing out or blacking out.

Belew’s evaluations also showed that he suffered from nightmares and was easily startled. Cassel reported Belew was depressed and showed symptoms of a personality disorder, but she did not specify which disorder. Graves, building on Cassel’s report, found Belew to be frightened and significantly depressed, and he testified that Belew suffered from “persistent” major depression, post-traumatic stress disorder (PTSD), and alcohol dependence. Graves also testified that he believed Belew was hoping to die during his confrontation with the police officers.

After pleading guilty, Belew was sentenced to 27 years in prison: 10 years for each count of felonious assault and concurrent 7-year terms for the firearm specifications. Belew appealed the decision to the Sixth District Court of Appeals.

The court of appeals affirmed the lower court decision, holding that the trial court appropriately weighed Belew’s PTSD, depression, and substance abuse when imposing his 27-year sentence.

Belew then filed a notice of appeal with the Ohio Supreme Court, which agreed to hear the case.

In their brief to the court, Belew’s attorneys argue that the trial court abused its discretion because it based its sentence on “fundamental misunderstandings of how military service and combat affect people with pre-existing problems.” They assert that just because Belew had issues prior to and during his time as a Marine, it does not mean the time he spent in the service did not heavily influence his behavior on the day of the incident.

Belew’s attorneys contend that Belew’s actions were tied to his PTSD because his heightened responses, including irritability and anger, and his exacerbated alcoholism caused him to react in a manner he would not have otherwise. They maintain that his military training and experiences in Iraq worsened his problems, especially his alcoholism. In particular, they note that Belew began treating his PTSD with alcohol while still in the Marines, and this self-medication continued after his discharge. The PTSD and his alcoholism should have been weighed by the court as substantial mitigating factors, they assert.

Citing the Ohio Supreme Court decision in State v. Lawrence (1989), which stated that a defendant’s mental disorder does not excuse his conduct, but it is a relevant mitigating factor, Belew’s attorneys argue that the trial court erred by not considering Belew’s mitigating mental health and substance abuse issues and instead finding that his PTSD did not excuse his behavior. Belew’s attorneys state that he accepted responsibility for his actions by pleading guilty to the charges, and he apologized for his actions at sentencing.  He asked the court to consider the relevant evidence only to temper his sentence, not to justify his behavior, they maintain.

Attorneys for the state counter that the trial court took the mitigating factors into consideration and balanced these against the seriousness of the crime and the likelihood Belew would repeat this behavior. The state’s attorneys argue that Belew’s previous juvenile and adult misdemeanor convictions, numerous dismissed charges, and the crimes Belew committed in the military all indicate that the trial court gave substantial weight to the probability that Belew would repeat his actions.

The state’s attorneys also assert that the consecutive felonious assault sentences were appropriate given the gravity of Belew’s crime. They contend that the trial court’s belief that Belew’s actions were particularly serious is supported by the increased penalties given for felonious assaults committed against police officers. His tough sentence results from the great potential to harm the responding police officers as well as innocent members of the public, they conclude.

An amicus curiae (friend of the court) brief supporting Belew’s position has been submitted collectively by Ohio Suicide Prevention Foundation, Disability Rights Ohio, National Disability Rights Network, National Alliance on Mental Illness of Ohio, and Ohio Empowerment Coalition. The Arms Forces has also filed an amicus brief supporting Belew.

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Representing Jeffery D. Belew: Stephen Hardwick, 614.466.5394

Representing the state of Ohio from the Lucas County Prosecutor’s Office: David Cooper, 419.213.4700

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Attorney Discipline

Disciplinary Counsel v. Judge Joy Malek Oldfield, Case no. 2013-1623

The Board of Commissioners on Grievances & Discipline has recommended that an Akron Municipal Court judge be publicly reprimanded for violating two judicial conduct rules and one professional conduct rule in connection with the arrest in February 2012 of a lawyer who practiced in her courtroom.

In its report to the Supreme Court, the board stated that Judge Joy Malek Oldfield attended a party on February 4 with her husband. A public defender, Catherine Loya, who was assigned to the judge’s courtroom, also attended. Oldfield’s husband asked Loya to drive Oldfield home, and he left the party. Afterward, in the early morning hours of February 5, Loya and Oldfield were parked in a shopping center lot when police approached the car. Loya refused to take a field sobriety test, and she was arrested.

Oldfield asked officers to transport her to the police station where Loya had been taken. Once Loya’s booking was complete, an officer drove Loya and Oldfield to Oldfield’s house. Loya remained at the Oldfields’ residence for the rest of the night, and she stayed with the family until February 8.

Oldfield and Loya both contacted the prosecutor working in Oldfield’s courtroom and Loya’s boss and told them about the arrest and that Loya was staying temporarily with the judge. No one raised any concerns. Loya continued as public defender in Oldfield’s courtroom for two more weeks, when she was moved as part of a normal rotation to another courtroom.

The disciplinary board concluded in its report that the Disciplinary Counsel, which filed the charges against Oldfield in this case, did not prove that the judge attempted to use her judicial office or title to prevent Loya’s arrest. The board recommended dismissal of this alleged violation. However, the board determined that, after Loya’s arrest, Oldfield should have disqualified herself from cases in which Loya was the public defender, and the board recommended a public reprimand in this matter.

The Disciplinary Counsel has objected to the board’s decision to dismiss the charge that the judge used her office to help Loya. The Disciplinary Counsel asserts that the board used a subjective standard in dismissing this complaint when the judicial rule requires an objective view. The board gave weight to one officer’s testimony that Oldfield did not give him the sense that she was using her judicial title to try to get Loya out of trouble. However, the Disciplinary Counsel notes that Oldfield repeatedly stated that she was a judge during the arrest, in the cruiser on the way to the police station, and while at the station, yet she tried to qualify her statements by saying that she did not want any special treatment because she was a judge.

“[Oldfield’s] caveat was nothing more than a backdoor way of using her status to obtain special treatment,” counsel states in its objections to the court. “Once [Oldfield] identified herself as a judge, she had a duty to refrain from any additional involvement and let the process run its natural course. Instead, [she] repeatedly — and ostensibly — reminded [the officer] that she was not trying to use her position as a judge, but that she wanted to help her friend.”

Counsel concludes that each time Oldfield mentioned that she was a judge, she was reminding the officers that they were dealing with a judge, rather than an ordinary citizen – a violation of the judicial conduct rule.

Attorneys for Oldfield have responded to these objections. They contend that Oldfield did not voluntarily tell the officers initially that she was judge until one of the officers asked her whether she was a lawyer. She felt compelled to respond honestly to the question. The officer then repeatedly and sarcastically referred to her as a judge, they argue. Because of the officer’s tone and continual reference to her as a judge, Oldfield’s attorneys maintain that Oldfield felt forced to qualify to him that she did not want any special treatment because of her position.

Her attorneys argue that the judicial conduct rule does not demand an objective standard. Instead, they assert that the rule requires some intent on the part of the judge to use her title to gain an advantage or deferential treatment – something they claim the evidence in this case does not show.

They contend that an objective standard is unworkable because it would mean, for example, that a judge who merely states his or her title in certain situations would have violated the rule.

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Representing the Office of Disciplinary Counsel: Joseph Caligiuri, 614.461.0256

Representing Judge Joy Malek Oldfield: George Jonson, 513.241.4722

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These informal previews are prepared by the Supreme Court's Office of Public Information to provide the news media and other interested persons with a brief overview of the legal issues and arguments advanced by the parties in upcoming cases scheduled for oral argument. The previews are not part of the case record, and are not considered by the Court during its deliberations.

Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.