FERC approves Cleveland Power Agency Wheeling Order

The Federal Energy Regulatory Commission (FERC) added some clarity to its distinction between legitimate municipal wheeling requests and "sham transactions" in a declaration that the Cleveland Electric Illuminating Company (CEI) must provide wheeling to Cleveland's Public Power Agency (CPP) [EL96-9 & El96-21].

William T. Zigli, Chief Assistant Director of Law for the city, said that CEI and CPP have been competing for customers within Cleveland since 1907. The municipal system has had the right to wheel outside power through CEI's system since 1978 under a Nuclear Regulatory Commission mandated "antitrust licence condition." Since that time, competition between the public power system and the investor-owned utility has intensified. Starting in 1994, CPP got transmission access to low cost power from the Power Authority of the State of New York, which makes its power available speicifically to municipal systems. That same year, the Medical Center Company (MEDCO), a non-profit electric distribution network serving not for profit member hospitals and universities, and one of CEI's largest customers (50MW), requested bids from CEI and CPP to serve their load. CPP won the bidding with a 5 year contract. When CPP signed a 5 year contract with a low cost supplier, Ohio Power, and requested wheeling from CEI, they refused, calling it a "sham transaction," filed a complaint with the FERC, and accused Ohio Power of a conspiracy with MEDCO to violate CEI's service territory before the Public Utilities Commission of Ohio (PUCO).

With little deliberation, FERC ordered CEI to wheel the power, ruling the city's request legitimate on the basis that Cleveland Public Power has competed for decades with Cleveland Electric to provide retail service. Unlike Palm Springs, Cleveland Public Power's request was based on an existing transmission agreement. FERC ruled that "even if the sham wholesale wheeling provision applies, Cleveland Public Power would not violate it because it will deliver power to end users over its own 138 KV transmission line." Two days later, PUCO threw out the case without a hearing. On August 21 the State Supreme Court sent the case back to PUCO saying the accusation of conspiracy must be heard.

According to Zigli, Cleveland Public Power's residential rates are 30% lower than CEI's. Its commercial and industrial rates are 15% to 20% lower.