The Public Utilities Commission of Ohio (PUCO) had no right to allow Dayton Power & Light Company to retain $61.1 million in significantly excessive earnings as an offset for the company’s commitment to make future investments in its grid-modernization plan for the Dayton area, the Supreme Court of Ohio ruled today.

In a unanimous opinion, the Supreme Court found that significantly excessive earnings must be returned to customers. The PUCO had determined that Dayton Power & Light Company (DP&L), which does business as AES Ohio, had significantly excessive earnings in 2018 and 2019. Instead of requiring a refund of the money, however, the commission allowed DP&L to retain the $61.1 million for its proposed $267.6 million “Smart Grid Plan Phase 1.”

Writing for the Court, Chief Justice Sharon L. Kennedy stated that the PUCO must follow R.C. 4928.143(F), which requires significantly excessive earnings to be returned to customers. She noted that the word “offset” does not appear in the statute, and that no language in R.C. 4928.143(F) authorized the PUCO to allow DP&L to retain the significantly excessive earnings. She cited the Court’s 2014 In re Application of Columbus S. Power Co. decision when noting that the commission has no authority other than what is granted by state law.

“Had the General Assembly intended to give the commission the authority to offset significantly excessive earnings against the electric utilities’ future committed investments, ‘it would have chosen words to that effect,’” she wrote.

The Court remanded the case to the commission to conduct a new significantly excessive earnings test that comports with the requirements of R.C. 4928.143(F).

Justices Patrick F. Fischer, R. Patrick DeWine, Jennifer Brunner, Daniel R. Hawkins, and Megan E. Shanahan joined the chief justice’s opinion. First District Court of Appeals Judge Marilyn Zayas, sitting for Justice Joseph T. Deters, also joined the opinion.

Consumer Advocates Challenge Regulator’s Decisions
The Court consolidated three cases in which the Office of the Ohio Consumers’ Counsel (OCC) challenged PUCO rulings concerning DP&L. Two cases involved whether the company's electric security plan (ESP) resulted in significant excessive earnings in 2018 and 2019. The third case addressed whether DP&L would continue to operate under its current ESP for more than three years, thereby requiring a review of the terms of the ESP. An ESP is one way an electric utility can establish a standard service offer—the generation rate charged to customers who do not purchase electric-generation services from a competitive retail electric-service provider.

OCC and DP&L attempted to negotiate a settlement concerning, in part, the significantly excessive earnings. When a settlement could not be reached, the Court heard OCC’s appeal in April 2025.

Supreme Court Analyzed Significantly Excessive Earnings Law
The PUCO determined that DP&L had $3.7 million in excessive earnings in 2018 and $57.4 million in excessive earnings in 2019, for a total of $61.1 million.

The commission also recognized that DP&L’s parent company, AES Corporation, had committed to making “substantial capital expenditures” to improve service in the Dayton area. AES Corporation announced it was making a $300 million investment into DP&L, including $267.6 million for the grid-modernization project.

As a result, instead of refunding the significantly excessive earnings, the commission allowed DP&L to offset the costs of the capital improvements using the $61.1 million. The commission determined that under R.C. 4928.143(F), it had the authority to apply the significantly excessive earnings as an offset against the future committed investment for the grid-modernization plan.

OCC argued that the plain language of the statute does not allow the commission to deny the return of significant excessive earnings to consumers.

Chief Justice Kennedy explained that R.C. 4928.143(F) requires the commission to determine whether the utility’s annual earnings are significantly excessive when compared over the same period of time to other publicly traded companies, including utilities, that face comparable business and financial risks. The chief justice noted, however, that a second sentence in R.C. 4928.143(F) requires the commission to also give consideration “to the capital requirements of future committed investments in this state.”

The commission read the second sentence as a separate step after DP&L’s earnings are measured against similar businesses. It reasoned that because AES Corporation was making capital investments into DP&L, it could apply any significantly excessive earnings to these future committed investments.

The Court disagreed, finding that the second sentence relates to the first sentence’s required analysis, and that it instructs the PUCO on how to measure excessive earnings. The consideration of future committed investments is accounted for before the determination is made as to whether there are significantly excessive earnings, the Court stated.

The law does not give the PUCO permission to limit or eliminate refunds of significantly excessive earnings. And the law does not give the commission discretion on how to consider future committed investments in the context of a significantly excessive earnings analysis, the Court stated.

2021-1473. In re Dayton Power & Light Co., Slip Opinion No. 2025-Ohio-2953.

View oral argument video of this case.

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