Ohio renters say utility bills are too high due to submetering. Lawmakers want to change it

For years, Ohio renters have accused utility middlemen of price gouging, and state lawmakers have done little to curb the practice.

Now, a bipartisan pair of legislators wants to change that.

Reps. Tex Fischer, R-Boardman, and Sean Patrick Brennan, D-Parma, want to regulate these middlemen like utilities, subjecting them to the same rate reviews and giving their customers access to the same consumer protections.

"Our constituents should not lose their rights just because their electricity, gas or water comes from a submeter instead of a utility pole," Brennan said.

What is submetering?
Here's how submetering works: The owner of an apartment complex, condominium or mobile home park purchases electricity, water or another utility from a company like American Electric Power, Duke Energy or FirstEnergy. Then, the landlord resells that service to tenants using a submeter.

Submeters like American Power and Light and Nationwide Energy Partners have faced criticism for jacking up rates or adding charges to pay for common spaces like hallways. And they don't face the same scrutiny as companies like AEP and Duke, whose rates are subject to Public Utility Commission of Ohio review.

 
"At my core, I'm a free-market conservative," Fischer said. "What I don't believe in is businesses that are selling the same product to customers while playing by a completely different set of rules."

Mark Whitt, an attorney in a submetered property, said Nationwide Energy Partners disconnected his electricity during a moratorium that would have prevented AEP from taking the same action. He estimated about 30,000 Ohioans pay utilities to a submeter, a practice that's increasingly popular in central Ohio, Cincinnati and Cleveland.

Nationwide Energy Partners says it "has been supportive of consumer protections," but this proposal is not the right solution, according to a statement from Teresa Ringenbach, senior vice president corporate affairs for NEP.

"If a service that provides property developers, owners, and residents living in multifamily communities with a multitude of benefits that lower costs and increase efficiencies is declared a public utility, businesses offering those services will be put out of business, and the benefits will disappear," Ringenbach said.

A 2013 Columbus Dispatch investigation revealed that residents paid 5% to 40% more when their landlords worked with third-party submetering companies. Then-Ohio Attorney General Mike DeWine said leaving a minority of consumers without protections "would raise a lot of questions."

"We've been out there fighting for this issue it seems like for years," Ohio Consumers' Counsel Maureen Willis said. "We fought it at the PUCO. We fought it at the courts. We're now at the Legislature."

But Willis is hopeful that bipartisan support will finally solve the problem. Brennan said there's momentum after lawmakers passed a sweeping energy law, House Bill 15, with support from Democrats and Republicans alike.

AEP supports the legislation.

The Columbus City Council is considering a change that would ban most utility reselling in multi-family buildings and penalize violations with a misdemeanor charge. Ohio lawmakers said they don't want to end submeters, but consumers need more protections than they have right now.

“We’re not trying to put anybody out of business, but it must be done in a transparent, fair and accountable method," Brennan said.