By Mike Boyer
The Cincinnati Enquirer

Efforts to bring lower-cost electricity to the Village of Indian Hill are facing a possible legal challenge from Cincinnati Gas & Electric Co.

The Cinergy Corp. unit said Tuesday that it will decide as soon as this week whether to ask the Ohio Supreme Court to hear its objections to Indian Hill's plan to offer electric service to its 2,200 residents through a buying pool supplied by a unit of Dominion Resources Inc., one of the nation's largest energy providers.

The Public Utilities Commission of Ohio Tuesday refused to reconsider its decision last month approving Indian Hill's application to offer the service, called municipal aggregation, and rejecting CG&E's objections. Spokesman Steve Brash said the utility was reviewing the PUCO's seven-page decision and could decide to appeal "relatively shortly,'' possibly this week.

If the CG&E does appeal to the Ohio Supreme Court and prevails, the decision could have major repercussions for Ohio's 3-year-old electric deregulation law, which allows municipalities to form buying pools so residents can negotiate lower electric rates.

Although aggregation has been popular in northern Ohio, where hundreds of communities have formed buying pools to obtain lower electric rates, Indian Hill would be the first in Cinergy Corp.'s southwestern Ohio service area to do so.

A consultant hired by Indian Hill estimated that the plan would allow residents to save an average of $183 annually on their electric bills.

"It's very frustrating,'' Indian Hill City Manager Mike Burns said. "We met with Cinergy three years ago to talk about the potential of aggregating, and they were not at all opposed to it.''

He said the utility didn't raise objections until the city filed its application with the PUCO in May.

"It was a significant surprise to us,'' Burns said. Coincidentally, James Rogers, Cinergy's chairman, lives in Indian Hill.

The basis of CG&E's objection is that both Indian Hill and Dominion are required by state law to provide a financial guarantee in the event Dominion can't supply electricity for Indian Hill customers. Under aggregation, the community contracts with an outside supplier for the power, but the incumbent utility, such as CG&E, continues to be responsible for power delivery, service and billing.

PUCO chairman Alan Schriber, who has been pushing aggregation, said CG&E is the first utility to argue that both the municipality and the power supplier should provide a financial guarantee.

CG&E's Brash said, "We believe it's required by the law. ... It provides an additional level of protection for the rest of ratepayers.''

Burns said estimates are that the additional financial guarantee would cost the city $5 million, more than wiping out the projected savings from aggregation.

In a letter to the PUCO, the Northeast Ohio Public Energy Council, which has aggregated electricity for almost half a million consumers near Cleveland, said CG&E's demand was an attack on electric aggregation.

"This is precisely the kind of non-price barrier to competition that this commission must prevent if Ohio's electric deregulation is to score any potential successes in Southern Ohio,'' said Dan DiLiberto, council chairman.

E-mail mboyer@enquirer.com