Consumer protection for utility customers sometimesstops at the apartment door in Ohio. • Unlike moststates, Ohio allows unregulated, third-party “sub-meter” companies to make big profits by reselling

electricity and water to residents of apartments and condomi-niums. • “They pretty much told me that I don’t have a choiceand this is how it is,” said Rachelle Sexton, who rents at theEnclave at Albany

DISPATCH INVESTIGATION / Day 1 of 3

JABIN BOTSFORD DISPATCH

At the Enclave at Albany Park, renter Rachelle Sexton pays 30 percent more for electricity than the regulated price.

Shocking costSome renters pay

inflated utility billsfrom unregulatedmiddle men who

charge more thanthe going rate

By Dan Gearino • THE COLUMBUS DISPATCH

See Shocking cost Page A11

Inside:Couponsworth upto $77Coupon values vary by delivery zone.

Every middle- and high-school student in ColumbusCity Schools would get a por-table computer that might be-come a take-home device toassist in their learning if voters

approve a 9.01-mill levy on theNov. 5 ballot.

The $6.8 million per year inproperty taxes dedicated for theeffort would be stretched thin inthe later years of the five-yearprogram, and might eventuallyrequire tapping the school dis-trict’s general fund to cover

some of the costs. According to the plan, Colum-

bus schools will lease almost30,000 computers, mostly lap-tops or tablets. That would allowthe district to purchase them for$1 each at the end of the lease in

Your schools

Students would get computersBy Bill BushTHE COLUMBUS DISPATCH

See Levy Page A14

WASHINGTON — From thebeginning, it was one of theworst-kept secrets in Washing-ton: House Speaker John Boeh-ner and many other seniorRepublicans thought any effortthis year to end financing of thenew health-care law could notsucceed.

They pointed out that therewas no chance that Sen. Ted

Congress

Boehner,GOP seesome goodBy Jack Torry and Jessica WehrmanTHE COLUMBUS DISPATCH

See Boehner Page A14

Columbus leaders are plan-ning to change the way the cityhires police officers and fire-fighters to get more minoritiesand women in uniform.

Those changes, according torecords obtained by The Dis-patch, include modifying thestandards for police and firebackground checks and testingmore frequently to cut down onthe time candidates wait to gethired. The city’s Civil ServiceCommission has identifiedthose as hurdles to hiring wom-en and minorities during meet-

Public safety

City to tweakhiring rulesfor diversityBy Lucas SullivanTHE COLUMBUS DISPATCH

See Diversity Page A4

DISPATCH.COM

�

$2.00 SUNDAY, OCTOBER 20, 2013

High: 60 • Low: 44Details on Page B10

BREAKINGDOWNTHE LEVYAn in-depth look at aspects of Issue 50, the Columbusschools levy request.Today: Technology upgradesRead more about the levyat Dispatch.com/education

Communitymourns Iraqifamily killedin car crash Metro, B1

Families hurtafter plant’sclosing kills900 jobsBusiness, E1

Ohio Statebeats Iowa34-24 aftershaky startFootball, D1

Park in Westerville.Her August bill was $176.24,

which was 30 percent more thanshe would have paid for thesame usage at regulated prices.

A 10-month investigation byThe Dispatch found that resi-dents pay markups of 5 percentto 40 percent when their land-lords enter into contracts withcertain submeter companies. Ifthe customer fails to pay, thecompanies sometimes resort tocollection tactics that would beillegal for regulated utilities,including shutting off heat inwinter and even eviction.

The problems stem from anabsence of regulation, a blindspot in Ohio law that affects anestimated 18,000 to 20,000 hous-ing units in the Columbus area,and that has the potential toaffect any of about 3 millionOhioans who live in apartmentsor condominiums.

“What it gets down to is theindividual consumer,” said OhioAttorney General Mike DeWinein response to the Dispatchfindings. “We made a public-policy decision years ago in thisstate that we were going to putin place certain protections forthe individual utility consumer.

“It seems to be a problemwhen you have a small minorityof consumers who do not havethose protections. That, to me,would raise a lot of questions.”

Yet no state agency has theauthority to respond. Thatwould require action by theOhio legislature, DeWine said.

Here’s how it works: A sub-meter company buys the utilitymeters and distribution systemwithin an apartment complex. Itthen buys electricity or water, orboth, from utilities and sellsthem to tenants, often at in-flated prices and with fees.

In some cases, the submetercompanies are owned by princi-pal owners of the apartmentcomplexes. And the submetercompanies have names thatsound like big, well-knownbusinesses — names such asNationwide Energy Partners andAmerican Power & Light.

Complaints and questionsabout these companies are onthe rise, with 5,137 inquiries tothe Central Ohio Better BusinessBureau about submeter compa-nies since October 2012, up33 percent from the year before.

The most-common com-plaints are about high bills andunresponsive customer service,said Joan Coughlin, a vice presi-dent in the office. “We had con-sumers state that they movedfrom a larger residence to asmaller apartment and had theirutility costs increase,” she said.

And, when a building isserved by a submeter company,tenants are not eligible for mon-ey-saving programs available tomost Ohioans. This includes the“choice” program, which allowscustomers to select a utilityprovider from among several.Instead, the submeter companyis the only option.

Submeter customers also areineligible for PIPP Plus, a feder-ally funded subsidy for low-income residents available toanyone served by a state-regu-lated utility. The program served41,160 households in FranklinCounty last year.

“We’re being victimized,” saidDustin Flowers, who rents atNorthpark on the Far NorthSide. His most-recent bill was 23percent more than it would havebeen at the regulated price.

He said high bills have thrownoff his budget and forced him tocut back on spending in otherareas. “I’ve lost sleep over this.”

In many other states, this typeof utility resale is banned by law

or rule. That leaves just a fewother states where it is allowed:Alabama, Georgia, Kansas,Pennsylvania, South Carolina,Utah and Washington.

What those states do not haveis evidence that companies areusing gaps in the system on alarge scale. In this way, Ohio isunique, with companies whosebusiness models depend on thelack of rules.

“Allowing markups for sub-metering is just bad policy,” saidJanine Migden-Ostrander, the

former Ohio Consumers’ Coun-sel who is now a principal at theRegulatory Assistance Project, anational nonprofit group thatadvises regulators on utilitypolicy. “They aren’t providingthe customer with any realservice that they wouldn’t other-wise get from the utility com-pany. There is no value addedfor the customer.”

Made in central OhioThe Dispatch investigation

focuses on two central Ohiocompanies: American Power &Light and Nationwide EnergyPartners. They sell services toproperty owners, read metersand handle billing and collec-

tions.By acting as intermediary

between utility and resident, thebusinesses perform functions ofa utility without regulation.

Both companies have closeties to large apartment ownersin the region, serving their ten-ants and others. American Pow-er is part of a group that in-cludes Ardent Property Manage-ment, and Nationwide Energywas founded by the chief exec-utive of Lifestyle Communities.

While there are many simi-larities, the companies havesome big differences. Nation-wide Energy provides a detailedexplanation of its fees, and it hasa call center to respond to cus-tomers. It also works to resolvecomplaints and help thoseunable to pay, customers said.

In contrast, American Poweris less responsive to customersand consumer groups, and it ismore aggressive in collections. Itgets a grade of D from the BetterBusiness Bureau, comparedwith a B- for Nationwide Energy.

“We are moving toward com-plete transparency with theresidents and the developers,”said Mike Palackdharry, Nation-wide Energy’s president, in-terviewed at the company’sArena District offices.

He said his company deliversvalue that justifies the costs,including the convenience of acombined bill for water andpower, and helping consumersreduce energy use.

“We are trying to do things theright way and to bring a positiveimpact to our residents,” hesaid.

When presented with exam-ples of customers paying morethan the regulated price, Pa-lackdharry said it was not a faircomparison, because his com-pany’s bills include charges forelectricity use in common areas,such as hallways. If the tenantswere not served by his company,those costs would lead to higherrents, he said.

After not responding to re-quests for an interview, BillFinissi, American Power’s vicepresident, provided The Dis-patch with emailed responses toquestions.

“(A)ll tenants enter intoagreements with our companywith eyes wide open and withfull knowledge of the leasingcontract provisions,” he said.

“Our costs also include ashare of common-area electricalusage, and a charge for sub-metering and administration,”he said. “This is our businessmodel which prospective ten-ants have complete freedom toaccept or not. By the way, if wedidn’t do it this way, these extracosts, which are essential costsof providing apartment housing,would need to be included inthe rent.”

Consumer advocates say theywould prefer that such chargeswere included in rent to make iteasier for tenants to see the truecosts when they shop for hous-ing, as opposed to being sur-prised by high utility bills.

SHOCKING COST

Silas HansenOlentangy Village, Clintonville

Rachelle SextonEnclave at Albany Park, Westerville

Dustin FlowersNorthpark, Far North Side

NEP

CUSTOMER/APARTMENT COMPLEX BILL DATE BILL AMOUNT DIFFERENCE

KILOWATT-HOURUSAGE

Paying extraThe Dispatch reviewed more than 100 utility bills from submeter companies and looked at how much the same electricity usage would cost if the provider were the regulated utility, American Electric Power. Four examples from two different submeter companies that illustrate the difference:

Note: The submeter bills have the same base rate as the utility, plus a series of extra fees. For example, Gabriel Santiago’s submeter bill below has a total that includes a $10.99 “community charge” for electricity in common areas such as hallways, and a $2 billing fee.

THE COLUMBUS DISPATCH

NATIONWIDE ENERGY PARTNERS (NEP)

AMERICAN POWER & LIGHT (AP&L)

$130.84

AEP $117.78March 20 801

Gabriel SantiagoVillages at Waggoner Park, Blacklick 11%

NEP $41.68

AEP $29.67April 16 164 40%

AP&L $176.24

AEP $135.48Sept. 9 903 30%

AP&L $156.40

AEP $123.88Aug. 21 843

RANGE OFDIFFERENCESFOR ALL BILLS

ANALYZED

11% to 17%

33% to 43%

23% to 31%

17% to 26%26%

Submeter company

BILL AMOUNT

If AEP had been used

Base rate

Common-area charge, for electricity used in hall lighting and other common spaces. This money goes to the property owner.

Distribution recovery charge, which pays for the meters and other infrastructure that the submeter company needs to buy to replace AEP’s service on the apartment grounds.

Billing fee, which covers the cost of billing, collections and customer service.

TOTAL BILL PER UNIT

$12

$10

$2

$138

$114

Using these examples, each customer is paying $26, or 21 percent more, to the submeter company than he or she would to AEP. The submeter company’s final bill to each tenant is 94 percent more than the company’s actual cost to buy electricity on the market.

The customer cannot file a complaint about this with the PUCO, because Ohio does not regulate the prices or service quality of submeter companies.

These comparisons do not include late fees; AEP does not charge a late fee to residential customers, while the submeter companies do.Note: Figures are based on a hypothetical apartment complex at AEP’s August rate, with a load factor of 50 percent. The commercial rate has a generation charge of 6.5 cents per kwh, which is available on the market in central Ohio.

Source: AEP, Dispatch research

BILLING BY REGULATED UTILITYIf the residents are customers of AEP, central Ohio’s regulated utility, and they use 750 kilowatt hours per month under current rates, this is how much they pay:

PER UNIT

$114ENTIRE COMPLEX

$11,357

PER UNIT

$85ENTIRE COMPLEX

$8,556

PER UNIT

$71ENTIRE COMPLEX

$7,093

Because the utility is regulated, customers can file complaints about pricing or service with the Public Utilities Commission of Ohio, and the landlord cannot put any extra charges on the bill.

BILLING WITH A SUBMETER COMPANYIf the complex uses a submeter company to handle meters and billing, here’s how it often works, based on published rates and Dispatch research:

1. The building gets a commercial rate: The utility provides the power to the building as a whole, as oppposed to the 100 customers individually. This means there is one big customer instead of 100 small ones, and the building can then qualify for a commercial rate, which is less than the residential rate. The total bill, based on 750 kwh usage per unit, using AEP’s medium-commercial rate:

2. The submeter company can then shop for a cheaper rate: The company can shop Ohio’s electricity market to get a cheaper price for a portion of its bill. Based on current offers, the building would see its bill decrease to:

This would seem to be good news for the tenants, but the submeter company often absorbs all of the savings by charging the customer AEP’s full residential rate plus fees that AEP doesn’t charge. The types and amounts of fees vary. Here’s an example, based on the types of monthly fees being paid in central Ohio:

The difference means that the total bill at the regulated residential price would be 60 percent more than the costs of the same amount of power at the commercial rate.

Differences in billingTo show how submeter companies can do business in Ohio, The Dispatch looked at a hypothetical 100-unit apartment complex.

Shocking costFROM PAGE A1

On the Web� See a video of tenants discussingtheir utility bills at Dispatch.com.

Continued on Page A12

� THE COLUMBUS DISPATCH TODAY’S TOP STORIES SUNDAY, OCTOBER 20, 2013 A11

In the early 1980s,Harry Apostoloslooked at the wayapartment owners

paid for utilities and hesaw a textbook case ofmarket inefficiency.

Most owners paid tenants’water bills as part of the rent,and that left the residents withno incentive to conserve. Apos-tolos, who had just earned amaster’s degree in economicsfrom Ohio State University,decided to start a business thatwould provide what he saw as abetter option.

“We were able to transmit aprice signal that elicited achange in behavior that resultedin a drop in consumption,” hesaid.

In 1983, he co-founded thecompany now called GuardianWater & Power. He sold propertyowners on the idea of “sub-metering,” which meant hewould install meters and handlebilling, shifting the cost of theresource to the end user.

Guardian has 40 employees atits Grandview Heights officesand customers in 30 states. It is afamily business, with Patricia,Harry’s wife, serving as the com-pany president.

The company is one of about50 businesses in the mainstreamof the submetering industry inthe United States, many of

which are members of the Util-ity Management and Conserva-tion Association. These busi-nesses have models that are incontrast with two other centralOhio submeter companies,American Power & Light andNationwide Energy Partners,that make a profit by marking upthe cost of electricity or water.Such markups are against thelaw in most states, but not inOhio.

Guardian is an example ofhow a typical submeter compa-

ny makes its money. Aboutthree-fourths of Guardian’sannual sales come from a ser-vice fee of about $3 per custom-er bill, Apostolos said. The otherone-fourth comes from sellingand installing metering equip-ment.

“We don’t make a profit off ofcommodities,” he said. “We’re abilling service.”

For submeter companies suchas Guardian that operate inmultiple states, one of the most-complicated parts of doing

business is following a multi-tude of state and local rules.

For example, North Carolinasays a submeter company cancharge a billing fee of no morethan $3.75 per month; in Con-necticut, submeter companiesmust register with the stateutility commission; and sub-metering is essentially bannedin North Dakota.

Apostolos and his colleaguesin the trade association wouldprefer it if there were few, if any,regulations and if the compa-

nies were allowed to policethemselves.

But this only works if every-one is meeting some basic in-dustry standards, said ArthurBlankenship, president of thetrade group and owner of asubmeter company in the Atlan-ta area. One of the most-impor-tant rules is that the submetercompany must pass throughcosts to the consumer, with nomarkup other than the billingfee.

Blankenship said he expectsthat market forces will eventu-ally weed out the companieswith less consumer-friendlybusiness models. “If you markup your utilities too much, thecompetition uses that againstyou and your occupancy ratedrops,” he said.

Apostolos is confident that hisbusiness model would not haveto change much if Ohio respon-ds to the markups here by pass-ing new rules.

But that is not a top concern.He is much more focused on themechanics of metering and howto improve it.

“There is a never-endingchallenge of technology chang-es, to adapt our business to thattechnology,” he said.

dgearino@dispatch.com@dispatchenergy

SHOCKING COST

Business has standards despite few rulesBy Dan GearinoTHE COLUMBUS DISPATCH

JABIN BOTSFORD DISPATCH PHOTOS

Guardian Water & Power plumber Bruce Burson installs fittings for a water meter in Pickerington.

CEO HarryApostolos saidGuardian Water& Power makesmoney fromfees, not ratemarkups.

While submetering is legalthroughout Ohio, the large ma-jority of consumer complaintsare in the Columbus area. Whynot in other places? Consumeradvocates can only guess. Theypoint to a lack of well-organizedtenants’-rights groups and thefact that Nationwide Energy andAmerican Power happen to bebased in the area.

Ohio’s unique regulatorystructure means that the busi-ness model easily could spreadacross the state. The model alsocould spread to other states witha similar lack of rules.

“Columbus is absolutelyground zero for these rebillingschemes,” said Spencer Wells, aformer tenant-outreach coor-dinator for the Coalition onHomelessness and Housing inOhio, an advocacy group.

If residents are late with pay-ments, American Power willsometimes evict them, even ifthe consumer’s rent is up to dateand even though AmericanPower is not the landlord.

“Once you enter this slipperyslope, where a third party hasthe ability to order evictions,that’s shocking,” said EmilyCrabtree, a lawyer with Colum-

bus Legal Aid who has defendedAmerican Power customers.

American Power initiated 51eviction cases last year, accord-ing to Franklin County Munici-pal Court records. The companyhas opened 159 of the casessince 2010. Nationwide Energyopened 278 such cases from2002 to 2011, but none since.

No connection to AEPDespite familiar-sounding

names, Nationwide Energy andAmerican Power are not affil-iated with two of Columbus’most-prominent companies,Nationwide Insurance andAmerican Electric Power.

Housing-rights advocates sayAmerican Power’s name is con-fusing for tenants who thinkthey are dealing with the localutility, AEP. It’s not as much ofan issue for Nationwide Energybecause Nationwide Insurancedoesn’t sell electricity.

Many of their practices wouldbe illegal if the provider was astate-regulated utility like First-Energy or AEP.

In central Ohio, AEP sellselectricity to the submeteredcomplexes. The difference isthat it sells in bulk to the prop-erty owner or submeter compa-ny, instead of to the end user.

Although AEP does not direct-ly serve submeter customers,the company still gets calls fromconfused residents. AEP wouldprefer it if those customers werehooked up to AEP meters, butthe company understands thatsubmeter companies are follow-ing Ohio law, said spokeswom-an Terri Flora.

“As people make choices torent in an apartment, they needto be fully aware of what thatchoice involves,” she said of thepossibility of paying higher

prices with a submeter compa-ny. “It’s a different environmentthan consumers are used to.”

According to AEP, there areabout 130 submetered apart-ment or condominium com-plexes in central Ohio. Whenasked to estimate how manyunits are in the complexes, AEPsaid it is likely 18,000 to 20,000.

The state regulatory systemwas developed early in the lastcentury to stop utilities fromabusing local monopolies overthe meters, wires and other

delivery systems. Submetercompanies did not exist then.

“As a matter of policy, wewant all customers to be treatedfairly and equally,” said ToddSnitchler, chairman of the Pub-lic Utilities Commission of Ohio,which regulates utilities and isthe type of agency that overseessubmetering in many states.

While that might be the aimof Ohio’s regulation, his agencylacks jurisdiction over submetercompanies. He said that theOhio General Assembly wouldneed to take action for thePUCO to assert authority.

“That’s a policy call for themto make,” he said.

Customer bills tell storyWhen a customer questions

the rates of Nationwide Energyor American Power, the compa-nies reply that the charges arethe same as those charged bythe local utility. But that’s notaccurate, based on a Dispatchanalysis of bills from a widevariety of customers.

In each case, the bills arebased on the equivalent ratesthat would be charged by regu-lated utilities, except with addedfees. When you include fees,

Continued on Page A13

JABIN BOTSFORD DISPATCH

Lindsay Wilmes and her boyfriend, Dustin Flowers, talk withneighbors about bills at Northpark apartments in Columbus.

Continued from Page A11

A12 THE COLUMBUS DISPATCH TODAY’S TOP STORIES SUNDAY, OCTOBER 20, 2013 �

customers are paying an extra5 to 40 percent.

At the same time, the bills donot give customers the benefitof bulk-buying discounts andother savings that the submetercompanies use to make theirwholesale cost much lower thanthe regulated price.

To illustrate this, The Dispatchlooked at a hypothetical 100-unit apartment complex inwhich each tenant used 750kilowatt-hours of electricity in amonth, which experts say istypical. At AEP’s central Ohioregulated price, each householdwould get a bill for $113.57, afigure confirmed by the utility.

However, if a submeter com-pany bought the same amountof electricity for all 100 units, itwould qualify for a commercialrate and it could also shop for abulk-buying deal on Ohio’s openmarket. Based on the commer-cial prices available in centralOhio, the complex could obtainthe power for the equivalent of$70.93 per unit.

By reselling power to thetenant at the full AEP rate of$113.57, the submeter compa-ny’s rate is 60 percent higherthan its own wholesale powercost. And that doesn’t include ahost of submeter fees, whichcan easily exceed $30 a month.

When presented with this,Palackdharry said the exampleoverstates the potential profitbecause it does not take intoaccount seasonal factors andother technical issues.

His boss, Nationwide Energyfounder and CEO Mike DeAs-centis Jr., went into great detailabout the business model in a2010 presentation to investors.“How we make money is we buypower at a commercial rate andwe resell it at the residential rateand there is arbitrage in the ratestructure,” he said, according toa transcript obtained by TheDispatch.

DeAscentis is also the CEO ofLifestyle Communities, anapartment developer. He is theson of that company’s founderand chairman, Mike DeAscentisSr. Nationwide Energy providesits services to Lifestyle Commu-nities and other large propertymanagers, such as CrawfordHoying, which is owned byBrent Crawford and formerOhio State football player BobHoying.

Property owners are willing tosign these contracts becausesubmeter companies oftencover costs of setting up meters.Also, the submeter companywill bill customers for electricityand water used in commonareas and pass the money to theproperty owner. A regulatedutility will not handle suchpayments.

“Our philosophy here is weare a real-estate company,” saidDave Carline, president ofCrawford Hoying’s apartmentdivision, explaining why hiscompany hired NationwideEnergy. “We really wanted to getout of any energy business. Wewanted to allow energy compa-nies to do their own thing andlet customers deal directly withthem.”

Nationwide Energy began in1999 by installing its meteringsystems in newly built apart-ments. It later expanded to alsoserve older properties, includingsome in which tenants previ-ously had individual meters andbilling from the utility, and hadno choice but to switch to thenew provider. The company hasabout 40 employees.

“NEP is the new utility,”DeAscentis said in the 2010presentation. “We do everythingthat a utility does except gener-ate power. NEP builds electrical-distribution systems for resi-dential communities, and wewere very deliberate when westarted the business 10 years agoto put it in a place where it wasnot regulated.”

He spoke of plans to expandinto Pennsylvania, New Yorkand the Washington, D.C., area.The company is now active in

Pennsylvania.“Our business is very unique,”

he said. “As we went across thecountry and did managementpresentations of people who see300 or 400 deals a year in theenergy space, no one ever saw abusiness that had a model likeours and what we were doing.”

American Power was foundedin 2003 by developer Donald R.Kenney Sr. It shares office spacewith many of his other ventures,including Ardent Property Man-agement, Village Communitiesand Metro Development. Hiscompanies have built more than35,000 apartments or condomi-nium units, according to theMetro website.

Outside the mainstreamThere are reasons other com-

panies have not tried this. It isillegal in most states, and estab-lished submeter companies say

that such a model has a highrisk of lawsuits, intervention byregulators and blowback fromangry consumers.

The submeter industry hasbeen around for decades andhas customers across NorthAmerica and Europe. Most ofthese companies make moneyby selling equipment and ser-vices, and they comply withindustry standards that say it isunethical to charge a markup onthe cost of electricity or water.

“When you start trying to getcreative (with pricing), youcreate problems for the entireindustry, and we don’t wantthat,” said Matt White, presi-dent of Meter Technology Worksof Tampa, Fla. He sells meters tosubmeter companies and is pastpresident of the national sub-meter trade group, the UtilityManagement and ConservationAssociation.

The current president, ArthurBlankenship, owner of ArgenBilling, an Atlanta-area sub-meter company, said he is con-cerned by reports of “roguecompanies” in Ohio.

“Our industry doesn’t haveanything to hide, and if thereare companies out there doingsomething dubious, that needsto be addressed,” he said.

Neither Nationwide Energynor American Power is a mem-ber of the trade group. But an-other local submeter company,Guardian Water & Power ofGrandview Heights, is a long-time member.

Founded in 1983, Guardianhas customers in 30 states. Forits Ohio customers, Guardiantypically charges about a $3-per-month service fee for eachapartment served, which thelandlord can pay or pass alongto the tenant. The companymakes no profit from markingup water or power, and it hasnever evicted anybody.

Harry Apostolos, Guardian’sfounder and co-owner, declinedto comment specifically aboutNationwide Energy or AmericanPower, which he said are com-petitors.

In general, he said, somecompanies have chosen busi-ness models that go againstindustry best practices, andthey have “created a black eyefor the industry in centralOhio.”

State officials no help Consumers often do not

know what is happening. Whenthey find out, they are shockedthat this is legal in Ohio.

“It was inexplicable,” saidGabriel Santiago of Reynolds-burg, a former NationwideEnergy customer who movedout of his apartment this yearbecause of what he saw as ex-cessive electricity charges.

Guy Fulcher, a former Amer-ican Power customer who nowlives in Galena, was fed up withthe response when he tried tofile a complaint.

“The attorney general backthen was Richard Cordray, andhis office just rolled over andsaid, ‘We don’t regulate that,’”he said. “They said to go toPUCO. PUCO said, ‘We don’tregulate that.’”

Consumer advocates say thatthese extra charges, and the factthat they are legal in Ohio,should be a source of shame.

They would like to see theOhio General Assembly orPUCO rein in the most-abusiveof the practices. But first, theysay, there must be awarenessthat a problem exists.

dgearino@dispatch.com@dispatchenergy

VT. MAINE

OHIO

MI.

MINN.

N.M.OKLA.

KAN.

NEB.

S.D.

N.D.MONT.

WYO.N.Y.

COLOUTAH

IDAHO

ARIZ.

NEV.

WASH.

CALIF.

ORE. MASS.

R.I.

CONN.

N.J.

DEL.

MD.TENN.

KY

S.C.

N.C.

VA.

PA.

ALA.MISS.

ARK.

LA.

MO.

IOWA

GA.

W.VA

TEXAS

FLA.

IND.ILL.

WIS.

N.H.

ALASKA

HAWAII

THE COLUMBUS DISPATCH

Submetering and the statesA submeter company would be breaking the law in most states if it did what happens routinely at many central Ohio apartments and condominiums. The Dispatch contacted officials in all 50 states and the District of Columbia, along with utility companies and trade groups, to determine each state’s laws and how they compare to Ohio’s.

Submetering markuppermitted

Submetering markupnot permitted

Incompleteinformation

Eight states, including Ohio, have no laws that forbid a submeter company from earning a profit on the markup of electricity or water.

In 29 states, some aspect of the business model being used in Ohio is illegal.

Fourteen states have laws that are not clear in how they would treat a submeter company, often because of conflicting or vaguely worded statutes that have not been tested in court.

Continued from Page A12

Bottom lineAt one time, apartment rent included just about every utility except the tele-phone. Gradually, property owners have switched to having tenants pay sep-arate bills for the services. This often means tenants have individual metersfor electricity, natural gas and water. Sometimes, however, the property ownershire a “submeter” company to install meters in each unit and handle billing.For the tenants, the submeter company functions much like a utility.

INVESTIGATION FINDINGS� Lack of regulation allows Ohiosubmeter companies to chargeresidents more for electricity thancustomers would pay to a regu-lated utility — currently, from 5 to40 percent more.� One local submeter company,American Power & Light, uses thethreat of eviction as a tool to helpwith collections, going far beyondmethods available to regulatedutilities.� No Ohio agency, including thePublic Utilities Commission of Ohioand the Ohio attorney general’soffice, has any authority oversubmetering. The PUCO and at-torney general often refer calls tothe Better Business Bureau, which

has seen a dramatic increase ininquiries about the companies.� The submeter business model islegal only in the following states:Alabama, Georgia, Kansas, Ohio,Pennsylvania, South Carolina,Utah and Washington. There is noevidence that similar companiesare using the model on a largescale in any of those states.� The national trade group forsubmeter companies says twocentral Ohio companies, Nation-wide Energy Partners and Amer-ican Power & Light, are outsidethe industry mainstream andpushing the envelope with theirbusiness practices. The two Ohiocompanies are not members ofthe group.

HOW WE DID ITThe Dispatch interviewed resi-dents at apartment and condo-minium complexes across theregion, analyzing their bills andreviewing their claims of unfairtreatment. Interviews also in-cluded state officials, consumeradvocates and energy-companyexecutives.The bill analysis was done withthe assistance of RiversideEnergy of Dublin, a companythat advises businesses on howto manage energy costs. Amer-ican Electric Power also reviewedand confirmed the figures. Thesource documents were custom-ers’ bills and AEP’s rate sched-ules.The information about state lawsis based on interviews withofficials in each state, andassistance from the Utility Man-agement and ConservationAssociation, a national tradegroup for submeter companies.

Gearino on 10tv� Business reporter Dan Gearinowill talk more about submetering on10tv at 7:15 a.m. today and between6:30 and 7 a.m. on Monday.

� THE COLUMBUS DISPATCH TODAY’S TOP STORIES SUNDAY, OCTOBER 20, 2013 A13