The Public Utilities Commission of Ohio sought comment on various tests it proposes to use to determine if landlords or other entities engaged in submetering fall within the definition of public utility and shall be subject to PUCO regulation.

Notably, one of the tests is proposed to be: if the total customer bill exceeds the bill that would have applied under default service by a yet-to-be-determined threshold, then there is a rebuttable presumption that the landlord is a utility

Among other tests, PUCO proposed that, "if a landlord or other entity resells or redistributes utility services and charges an end use customer a threshold percentage above the total bill charges for a similarly-situated customer served by the utility's tariffed rates, an electric utility's standard service offer, or a natural gas utility's standard choice offer, then it will create a rebuttable presumption that the provision of utility service is not ancillary to the landlord's or entity's primary business," and therefore subject to PUCO regulation

"[W]e will apply a rebuttable presumption that the provision of utility service is not ancillary to the landlord's or other entity's primary business if the landlord or other entity charges the end use customer a certain percentage, to be determined by the Commission, above the total bill charges for a similarly-situated customer served by the utility's tariff rates, an electric utility's standard service offer, or a natural gas utility's standard choice offer," PUCO proposed.

"The appropriate threshold percentage will be determined by the Commission in this proceeding," PUCO said

It was unclear how often the bill comparison would be tested. Certainly, in months such as those seen in the polar vortex, landlords and other property managers who were engaged in submetering, with supply provided by a competitive retail supplier, could have legitimately seen their costs increase above the utility standard offer rate. If a snapshot view is taken, this could result in submeterers falling within PUCO jurisdiction even when they are not marking up their cost (which is the concern prompting PUCO's proposal).

As such, in order to avoid PUCO intrusion into their activities, PUCO's test against the default service rate could result in landlords having a bias to default service, and eschewing competitive supply because, especially given the static nature of Ohio electric default service rates, landlords could risk being subject to PUCO regulation if their competitive supply costs exceed the default service rate in some months (even where, overall, their competitive supply contract is a better deal over time)

This could be particularly troublesome on the natural gas side, where the Standard Choice Offer is much more competitive with market rates versus the electric default service rates, and where the Standard Choice Offer has been criticized by suppliers for not being reflective of all the costs borne by competitive retail suppliers (such as due to the lack of acquisition costs).

See PUCO's proposal here