Jeff Jacobson didn’t hold back in slamming FirstEnergy. The representative of the Ohio Consumers’ Counsel told the members of the House Finance Committee last week that the Akron-based power company wanted to engage in “price gouging.” He added that a provision in the House version of the proposed two-year state budget would “protect FirstEnergy from refunding significantly excessive monopoly profits to a million Ohio Edison customers.”

Could the provision really be so bad? The company does know how to pursue its way at the Statehouse. Its political action committees and executives put up roughly $1.3 million in contributions to Ohio candidates in the most recent election cycle, the donations largely flowing to Republicans who command just about everything at the Statehouse. Yet the circumstances surrounding the provision aren’t as simple as the criticism suggests.

The 2008 overhaul of the way the state regulates power companies includes something called the “significantly excessive earnings test.” This was designed as a check against profits that far exceed what the state Public Utilities Commission allows under a utility rate plan. The commission constructed a formula to serve as the test. In that way, nothing would change as a result of the proposed budget provision. The test would remain, the commission with the authority to return excessive earnings to customers.

What’s different is how FirstEnergy would be evaluated. As things now stand, each of the company’s three operations in Ohio, Toledo Edison, Cleveland Electric Illuminating and Ohio Edison, submits to the excessive earnings test on its own. Yet the company files its rate plan under one FirstEnergy umbrella. For a while, the company has argued for consistency. And that is what the budget provision would achieve: The three would face the earnings test as one.

Is there an odious factor at work? The consumers’ counsel and others worry that the door would be open to FirstEnergy using the lower-performing Toledo Edison and CEI to cover, and thus keep, the excessive profits of Ohio Edison. Critics also don’t like how the test has been designed, arguing that substantial FirstEnergy earnings are excluded. For instance, they cite the “distribution modernization rider,” a revenue stream the PUCO approved to help the then financially stretched utility finance upgrades to the transmission grid.

That revenue does not count against the test because the formula makes allowances for one-time or out-of-the-ordinary episodes. Such an approach appears reasonable.

What deserves particular attention is how the three FirstEnergy operations have performed on the excessive earnings test the past decade. The year 2017 is fairly typical. Toledo Edison had a profit margin of 6.3 percent, with CEI at 4.2 percent. Ohio Edison posted a 12.2 percent profit. The three translated to 7.4 percent for the company as a whole. So, as permitted in the House budget, the company would stand further from the significantly excessive earnings threshold.

And what is viewed as significantly excessively? Currently, the formula puts the number at 19 percent, or some distance from the profit of Ohio Edison, that 12.2 percent equaling its best number for the decade. Would it be closer if the excluded revenue under formula was taken into account? No doubt, and that is what annoys critics.

Which gets to the oversight role of the Public Utilities Commission. It still would conduct and apply the formula, and the data for its decision-making would be available. The commission and lawmakers could re-evaluate the formula. As it is, FirstEnergy is neither price gouging nor making an extravagant request. It argues the change will result in needed flexibility as it decides how to deploy company resources. That seems fair as long as others are watching carefully.