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The Associated Press March 17, 2011, 5:32PM ET

Ohio gov seeks to halve utility watchdog funding

Ohio Gov. John Kasich's proposed budget would cut more than half the funding to a state agency that advocates for residential phone, gas and electric customers at a time when another utility watchdog agency is rescinding some of its rules.

The proposed cuts to funding for the Office of Consumers' Counsel are being criticized by Janine Migden-Ostrander, the lawyer who leads the operation.

She said Wednesday that trimming the office's funding from $8.5 million this fiscal year to $4.1 million for each of the next two years would not help patch the state's massive budget hole because the agency isn't funded by tax dollars. It's funded from a fee on utility companies.

"If you cut our budget, that money goes back into the pockets of the utilities," she said. "It does not go back to the citizens of Ohio."

The independent consumers' counsel office, created in 1976 following a national energy crisis to play a watchdog role for utility customers, has a staff of about 70 and is funded by a fee on electric, gas, water and phone companies -- amounting to about $1 a year per household. It gets involved in about 200 cases annually, often defending consumers against rate hikes.

Migden-Ostrander said that the number of people the office helps would fall if its budget were halved. She also predicted agency layoffs.

Migden-Ostrander argued that the cuts don't make sense because the office saves residents much more than it costs them.

Over the last two years, the OCC's advocacy has directly saved customers more than $54 million, and its work with partner organizations saved residents millions more, Migden-Ostrander said.

"That something might be a worthy cause or important program doesn't change the fact that Ohio's broke," Kasich spokeswoman Connie Wehrkamp said in an e-mail. "If we want to start creating jobs we have to stop believing we can balance the budget with imaginary money and once again respect the honesty of hard choices."

Asked how cutting OCC's budget helps fix Ohio's financial problems, she replied: "It's all taxpayer money."

According to Kasich's two-year spending proposal, the cut is aimed at avoiding "redundancy with the mission of the Public Utilities Commission (of Ohio)," which is funded primarily by assessments on the utility companies that are usually passed on to customers. The commissioners are appointed by the governor to regulate utilities.

Migden-Ostrander challenged the argument, saying the OCC and PUCO fill different roles: OCC focuses solely on defending residents, while PUCO tries to balance multiple interests, including those of utilities, customers and the environment.

Kasich's budget also cuts PUCO's budget by 5.5 percent in the first year, and 18.1 percent in the second.

Migden-Ostrander said cuts to her office could further affect PUCO, because the consumer's counsel provides support to the commission, and could hurt Ohio's business environment because OCC's work has ripple effects that help keep down energy costs for commercial and industrial customers.

Catherine Turcer of Ohio Citizen Action, a government and utility watchdog group, said Kasich's proposed cuts will hamstring the Consumers' Counsel.

"Gov. Kasich has slipped an outrageous gift to utilities into his proposed budget," she said in a statement Thursday.

Invoking Kasich's now-famous remark that if "you're not on the bus, we will run over you with the bus," Turcer said: "We just found out that not only did the utilities get on the bus, they are now driving the bus."

On Wednesday, Kasich-appointed PUCO Chairman Todd Snitchler announced the commission was rescinding administrative rules applying to private commercial motor vehicles with a gross vehicle weight between 10,001 and 26,000 pounds operating in intrastate commerce.

He said the regulatory change followed feedback from the industry and lawmakers.

"It is important for the PUCO to operate at the speed of business and implement regulations that promote safety while at the same time allow businesses to compete and operate efficiently," Snitchler said in a statement, borrowing a phrase from Kasich. "Today's decision is a step in that direction."

The rules, intended to take effect Jan. 1, required drivers of the vehicles to maintain log books and medical certificates and subjected them to state inspections and PUCO safety compliance audits.

Several Republican state representatives, including Cheryl Grossman of Norwalk, applauded the move.

"At a time when we need to be reviewing the way our state does business and ensure that our small businesses are not drowning in red tape, I'm very pleased to see the PUCO reverse its decision," Grossman said Thursday in a statement.

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