Ag Processing v. Public Service Com'n, No. SC 85352.

CourtUnited States State Supreme Court of Missouri
Writing for the CourtRonnie L. White
Citation120 S.W.3d 732
PartiesSTATE ex rel. AG PROCESSING, INC., Appellant, v. PUBLIC SERVICE COMMISSION OF THE STATE of Missouri and Aquila, Inc., f/k/a/ UtiliCorp United, Inc., Respondents.
Docket NumberNo. SC 85352.
Decision Date28 October 2003
120 S.W.3d 732
STATE ex rel. AG PROCESSING, INC., Appellant,
v.
PUBLIC SERVICE COMMISSION OF THE STATE of Missouri and Aquila, Inc., f/k/a/ UtiliCorp United, Inc., Respondents.
No. SC 85352.
Supreme Court of Missouri, En Banc.
October 28, 2003.

[120 S.W.3d 733]

Stuart W. Conrad, Jeremiah D. Finnegan, Kansas City, for Appellant.

Steven Dottheim, Dana K. Joyce, Paul A. Boudreau, Sondra B. Morgan, Jefferson City, for Respondents.

RONNIE L. WHITE, Chief Justice.


I.

AG Processing, Inc. ("AGP"), appeals the judgment of the circuit court affirming the decision of the Missouri Public Service Commission ("PSC" or "Commission") approving the merger of UtiliCorp United, Inc. ("UtiliCorp," now renamed Aquila, Inc.) and St. Joseph Light & Power Company ("SJLP").1 Reversed and remanded.

UtiliCorp and SJLP (collectively "Applicants") entered into a merger agreement and, with shareholder consent, filed a joint application with the PSC seeking approval.2 The Applicants submitted a five-year regulatory plan providing, inter alia, a five-year rate moratorium on rate increases, barring catastrophic circumstances, in return for which the PSC would order no rate decreases during the same five years. The plan also addressed recovery of the $92,000,000 acquisition premium associated with the merger.

The PSC conducted an evidentiary hearing on the proposed merger and regulatory plan. AGP intervened seeking disapproval of the merger or conditional approval

120 S.W.3d 734

assuring that the ratepayers of SJLP would be shielded from any possible detriment and would receive the full benefit of the merger's resulting savings as opposed to having those benefits retained by the surviving corporate entity during the rate moratorium.3

In addition to the evidence offered by AGP at the hearing, PSC staff testified that they opposed the merger and recommended its rejection as being against the public interest. Staff members testified that the proposed recovery of the acquisition adjustment would require customers to inappropriately pay for costs properly assignable to the shareholders and that the ratepayers would receive an insignificant portion of total merger savings with the majority of the savings being retained by UtiliCorp.

Other objections raised by the PSC staff and the intervenors included claims that the merger would result in UtiliCorp acquiring an undue and anti-competitive concentration of market power detrimental to ratepayers. It was also asserted that the credit rating of the surviving entity would be the lower triple-B rating of UtiliCorp as opposed to the A rating of SJLP, resulting in higher interest rates on the debt held by the merging corporations, a financial risk for SJLP ratepayers. A further objection concerned Applicants' Exhibit 503, a worksheet prepared by the Applicants in response to a data request from AGP, pursuant to 4 CSR 240-2.090(2), asking that UtiliCorp provide a description of the method used for the allocation of the acquisition premium. Exhibit 503's allocation of costs and premiums from the merger projected an annual detriment of $34,000 to SJLP's steam customers and $35,000 to its natural gas customers.

PSC approved the merger, but rejected Utilicorp's proposed regulatory plan. On appeal, the circuit court affirmed, finding the PSC's approval order to be both lawful and reasonable. Transfer was granted after opinion by the Court of Appeals, Western District, Mo. Const. art. V, section 10.4

II.

Pursuant to section 386.510, the appellate standard of review of a PSC order is two-pronged: "first, the reviewing court must determine whether the PSC's order is lawful; and second, the court must determine whether the order is reasonable."5 The burden of proof is upon the appellant to show that the order or decision of the PSC is unlawful or unreasonable.6 The lawfulness of a PSC order is determined by whether statutory authority for its issuance exists, and all legal issues are reviewed de novo.7 An order's

120 S.W.3d 735

reasonableness depends on whether it is supported by substantial and competent evidence on the whole record, and the appellate court considers the evidence together with all reasonable supporting inferences in the light most favorable to the Commission's order.8 The Commission's factual findings are presumptively correct, and if substantial evidence supports either of two conflicting factual conclusions, "the Court is bound by the findings of the administrative tribunal."9 The procedure provided for judicial review in section 386.510 is exclusive and jurisdictional.10

III.

There is no dispute that the Applicants are regulated utilities under chapter 393.11 Section 393.190.1, requiring the issuance of a merger approval order from the PSC, provides the lawful authority for the PSC's decision.12 Having found the PSC's decision to be lawful, the Court must examine its reasonableness. Reasonableness turns on the standard used to evaluate a merger subject to approval by the PSC, which is whether or not the merger would be "detrimental to the public."13

AGP raises three points on appeal in its attempt to establish that the merger is a detriment to the public. AGP claims that the PSC's approval of the merger was not supported by competent and substantial evidence upon the whole record because: (1) when determining that the merger was not detrimental to the public, the PSC rejected the unrefuted and contrary evidence of its own staff and refused to consider the recoupment of the acquisition premium; (2) the PSC impermissibly shifted the burden of proof of section 393.150 from the applicants to the intervenors by failing to require the applicants to prepare and submit a market power study; and (3) the applicant's own evidence established the merger was a public detriment because...

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39 practice notes
  • State Ex Rel. Praxair Inc. v. Mo. Pub. Serv. Comm'n, No. SC 91322.
    • United States
    • United States State Supreme Court of Missouri
    • August 30, 2011
    ...and second, the court must determine whether the order is reasonable.’ ” State ex rel. AG Processing, Inc. v. Public Serv. Comm'n, 120 S.W.3d 732, 734 (Mo. banc 2003), quoting, State ex rel. Atmos Energy Corp. v. Public Serv. Comm'n, 103 S.W.3d 753, 759 (Mo. banc 2003). “The burden of proof......
  • State ex rel. Mo. Office of Public Counsel v. Public Serv. Com'n., No. SD 29278.
    • United States
    • Missouri Court of Appeals
    • August 28, 2009
    ...conclusions, `[we are] bound by the findings of the administrative tribunal.'" State ex rel. AG Processing, Inc. v. Pub. Serv. Comm'n, 120 S.W.3d 732, 735 (Mo. banc 2003) (quoting Amway Corp. v. Dir. of Revenue, 794 S.W.2d 666, 668 (Mo. banc 1990)). The determination of witness credibility ......
  • State ex rel. Union Elec. Co. v. Pub. Serv. Comm'n of State, Nos. WD 75403
    • United States
    • Court of Appeal of Missouri (US)
    • May 14, 2013
    ...principle that we review all legal issues presented by a PSC order de novo. See State ex rel. AG Processing, Inc. v. Pub. Serv. Comm'n, 120 S.W.3d 732, 734 (Mo. banc 2003) (“[A]ll legal issues are reviewed de novo.”); Laclede Gas Co., 156 S.W.3d at 521. When de novo review of a legal issue ......
  • State ex rel. Mogas Pipeline LLC v. Mo. Pub. Serv. Comm'n, No. SC 91968.
    • United States
    • United States State Supreme Court of Missouri
    • April 17, 2012
    ...the court must determine [366 S.W.3d 496]whether the order is reasonable.’ ” State ex rel. AG Processing, Inc. v. Pub. Serv. Comm'n, 120 S.W.3d 732, 734 (Mo. banc 2003), quoting State ex rel. Atmos Energy Corp. v. Pub. Serv. Comm'n, 103 S.W.3d 753, 759 (Mo. banc 2003). “The lawfulness of a ......
  • Request a trial to view additional results
39 cases
  • State Ex Rel. Praxair Inc. v. Mo. Pub. Serv. Comm'n, No. SC 91322.
    • United States
    • United States State Supreme Court of Missouri
    • August 30, 2011
    ...and second, the court must determine whether the order is reasonable.’ ” State ex rel. AG Processing, Inc. v. Public Serv. Comm'n, 120 S.W.3d 732, 734 (Mo. banc 2003), quoting, State ex rel. Atmos Energy Corp. v. Public Serv. Comm'n, 103 S.W.3d 753, 759 (Mo. banc 2003). “The burden of proof......
  • State ex rel. Mo. Office of Public Counsel v. Public Serv. Com'n., No. SD 29278.
    • United States
    • Missouri Court of Appeals
    • August 28, 2009
    ...conclusions, `[we are] bound by the findings of the administrative tribunal.'" State ex rel. AG Processing, Inc. v. Pub. Serv. Comm'n, 120 S.W.3d 732, 735 (Mo. banc 2003) (quoting Amway Corp. v. Dir. of Revenue, 794 S.W.2d 666, 668 (Mo. banc 1990)). The determination of witness credibility ......
  • State ex rel. Union Elec. Co. v. Pub. Serv. Comm'n of State, Nos. WD 75403
    • United States
    • Court of Appeal of Missouri (US)
    • May 14, 2013
    ...principle that we review all legal issues presented by a PSC order de novo. See State ex rel. AG Processing, Inc. v. Pub. Serv. Comm'n, 120 S.W.3d 732, 734 (Mo. banc 2003) (“[A]ll legal issues are reviewed de novo.”); Laclede Gas Co., 156 S.W.3d at 521. When de novo review of a legal issue ......
  • State ex rel. Mogas Pipeline LLC v. Mo. Pub. Serv. Comm'n, No. SC 91968.
    • United States
    • United States State Supreme Court of Missouri
    • April 17, 2012
    ...the court must determine [366 S.W.3d 496]whether the order is reasonable.’ ” State ex rel. AG Processing, Inc. v. Pub. Serv. Comm'n, 120 S.W.3d 732, 734 (Mo. banc 2003), quoting State ex rel. Atmos Energy Corp. v. Pub. Serv. Comm'n, 103 S.W.3d 753, 759 (Mo. banc 2003). “The lawfulness of a ......
  • Request a trial to view additional results

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