Citizens Action Coalition of Indiana, Inc. v. Public Service Co. of Indiana

• Decision Date: 20 June 1983
• Docket Number: No. 2-582A142,2-582A142
• Parties: CITIZENS ACTION COALITION OF INDIANA, INC., Appellant (Intervenor Below), v. PUBLIC SERVICE COMPANY OF INDIANA, Northern Indiana Public Service Company, Indiana & Michigan Electric Company, Southern Indiana Gas & Electric Company, Indianapolis Power & Light Company, Richmond Power & Light, Indiana Retail Council, the Public, American Cyanamid Company, Jones & Laughlin Steel Corporation, National Steel Corporation, Midwest Steel Division, International Harvester Company, Inland Steel Company, Union Carbide Corporation, Eli Lilly and Company, General Motors Corporation, Bethlehem Steel Corporation, City of Fort Wayne, Indiana, U.S. Steel, Appellees (Respondents and Intervenors Below).
• Court: Indiana Appellate Court

Page 98

450 N.E.2d 98

29 A.L.R.4th 606

CITIZENS ACTION COALITION OF INDIANA, INC., Appellant (Intervenor Below), v. PUBLIC SERVICE COMPANY OF INDIANA, Northern Indiana Public

Service Company, Indiana & Michigan Electric Company,

Southern Indiana Gas & Electric Company, Indianapolis Power

& Light Company, Richmond Power & Light, Indiana Retail

Council, the Public, American Cyanamid Company, Jones &

Laughlin Steel Corporation, National Steel Corporation,

Midwest Steel Division, International Harvester Company,

Inland Steel Company, Union Carbide Corporation, Eli Lilly

and Company, General Motors Corporation, Bethlehem Steel

Corporation, City of Fort Wayne, Indiana, U.S. Steel,

Appellees (Respondents and Intervenors Below).

No. 2-582A142.

Court of Appeals of Indiana,

Fourth District.

June 20, 1983.

Jay Lauer, Legal Services Program of Northern Ind., Inc., South Bend, for appellant.

Fred E. Schlegel, Michael J. Huston, Mary M. Stanley, Baker & Daniels, Jerry P. Belknap, John J. Metts, Barnes & Thornburg, Indianapolis, for appellees.

YOUNG, Presiding Judge.

Appellant Citizens Action Coalition, Inc. (CAC) appeals from an order of the Public Service Commission of Indiana declining to require Indiana electric utilities to offer "lifeline" rates to their customers. Lifeline rates would provide residential customers an amount of electricity deemed necessary to meet their "essential needs" at a price below the actual cost of providing the electric service. The Commission found that a "targeted" lifeline rate, which would provide a below-cost electric rate to specific income or demographic groups of residential customers for their essential needs, is prohibited by law. The Commission also found that a "general" lifeline rate structure, which would provide a below-cost rate to all residential customers for their essential needs, is not an effective and equitable means of providing assistance to low-income residential customers and should not be required.

This case arose under the Public Utility Regulatory Policies Act (PURPA), 16 U.S.C.A. Secs. 2601-45 (Supp.1982), enacted by Congress in 1978. Under PURPA, all state utility regulatory agencies were required to consider, and adopt or reject, various rate design and service standards for electric utility service, set out in Secs. 111-15 of PURPA. 16 U.S.C.A. Secs. 2621-25 (Supp.1982). Section 111(d)(1) of PURPA, 16 U.S.C.A. Sec. 2621(d)(1) (Supp.1982), provides that generally "[r]ates charged by any electric utility for providing electric service to each class of electric consumers shall be designed, to the maximum extent practicable, to reflect the costs of providing electric service to such class ...." ¹ Section 114, 16 U.S.C.A. Sec. 2624 (Supp.1982), however, mandated state utility regulatory agencies to conduct evidentiary hearings to determine the desirability of adopting rate structures which would provide residential customers with enough electricity to meet their essential needs at a rate below the cost of providing the electric service, i.e., lifeline rate structures. To comply with the congressional mandate, the Commission held a generic hearing to consider the propriety of implementing lifeline rates. The proceeding, which included all affected electric utilities and a large number of intervenors, was to consider two issues:

1. The definition of "essential needs;" ² and

2. The desirability of fixing, approving, or allowing to go into effect a rate for "essential needs" of residential electric customers, which is lower than a rate under the standard referred to by Sec. 111(d)(1) (16 U.S.C.A. Sec. 2621(d)(1) (Supp.1982)) of PURPA.

After the hearing, the Commission issued its order rejecting the implementation of lifeline rates. CAC appeals from this order raising the following issues: ³

1. Whether Ind.Code 8-1-2-103 prohibits a targeted lifeline rate structure; and

2. Whether the Public Service Commission's decision not to adopt a general lifeline rate structure is supported by adequate findings of fact based on substantial evidence.

CAC first challenges the Commission's conclusion that a targeted lifeline rate is prohibited by Ind.Code 8-1-2-103. That section forbids a public utility from charging any customer "a greater or less compensation for any service ... than it charges ... any other person for a like and contemporaneous service." CAC contends that Ind.Code 8-1-2-103 must be read with Ind.Code 8-1-2-68, which prohibits rates that are "unjust, unreasonable, insufficient or unjustly discriminatory, or ... preferential or otherwise in violation of any of the provisions of this act ...." CAC argues that, when read together, these statutes do not prohibit rate discrimination as long as it is not "unjust" or "unreasonable." CAC's reading of these statutes is untenable. Ind.Code 8-1-2-68 permits reasonable differences in rates; that is, it allows different rates to be charged "for service rendered under different conditions and under different circumstances." Capital Improvement Board v. Public Service Commission, (1978) 176 Ind.App. 240, 264, 375 N.E.2d 616, 633. At the same time, however, it prohibits discriminatory rates which are in violation of other provisions of the Public Service Commission Act, including Ind.Code 8-1-2-103. Ind.Code 8-1-2-103 prohibits charging different rates for the same services under the same conditions. Thus, even when read together, the statutes prohibit charging different rates for "like and contemporaneous service." A targeted lifeline rate structure does precisely that. It charges customers receiving the same service under the same circumstances different rates. This violates Ind.Code 8-1-2-103. It does not matter that the group receiving the preferential rates is deserving. The statute prohibits such discrimination.

In Mountain States Legal Foundation v. Public Utilities Commission, (1979) 197 Colo. 56, 590 P.2d 495, the Colorado Supreme Court held targeted lifeline rates were discriminatory and unjustly preferential. The court stated:

Section 40-3-106(1), C.R.S.1973, prohibits public utilities from granting preferential rates to any person, and section 40-3-102, C.R.S.1973, requires the PUC to prevent unjust discriminatory rates. When the PUC ordered the utility companies to provide a lower rate to selected customers unrelated to the cost or type of the service provided, it violated section 40-3-106(1)'s prohibition against preferential rates. In this instance, the discount rate benefits an unquestionably deserving group, the low-income elderly and the low-income disabled. This, unfortunately, does not make the rate less preferential. To find otherwise would empower the PUC, an appointed, nonelected body, to create a special rate for any group it determined to be deserving. The legislature clearly provided against such discretionary power when it prohibited public utilities from granting "any preference." In addition, section 40-3-102, C.R.S.1973, directs the PUC to prevent unjust discriminatory rates. Establishing a discount gas rate plan which differentiates between economically needy individuals who receive the same service is unjustly discriminatory.

Id. at 59-60, 590 P.2d at 498. We agree with the appellees that those observations are applicable here. The Commission correctly concluded Ind.Code 8-1-2-103 forbids a targeted lifeline rate structure.

CAC next contends the Commission's decision not to adopt a general lifeline rate structure is not supported by adequate findings of fact based on substantial evidence. Pursuant to Ind.Code 8-1-3-1, we use a two-tier standard of review. At the first level, we determine whether the Commission's decision contains specific findings on all the factual determinations material to its ultimate conclusions. Office of Public Counsellor v. Indiana & Michigan Electric Co., (1981) Ind.App., 416 N.E.2d 161, 164. "This first level may be termed a 'question of law' as we ask whether the [Commission's] ultimate conclusions may be 'reasonably' inferred from its finding of basic facts." Id. The second level of review requires this court to inquire whether there is substantial evidence in light of the whole record to support the Commission's findings of basic fact. Id. "Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." L.S. Ayres & Co. v. Indianapolis Power & Light Co., (1976) 169 Ind.App. 652, 663-64, 351 N.E.2d 814, 823 (quoting Consolidated Edison Co. v. NLRB, (1938) 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126).

CAC first argues the Commission failed to make any finding on the issue of whether a lifeline rate structure was more equitable than the current declining block rate structure. ⁴ CAC contends their proposal was a "cost-based" lifeline rate which would be more equitable than the current rate structure. The language of Sec. 114 of PURPA requires the Commission to consider the desirability of instituting rates which are lower than cost-based rates. 16 U.S.C.A. Sec. 2624 (Supp.1982). Thus, lifeline rates are, by definition, lower than cost-based rates. The term "cost-based lifeline rates" is contradictory as it relates to PURPA requirements. The issue before the Commission was not whether another cost-based rate structure was more equitable than the current rate structure, but rather whether below-cost lifeline rates were desirable. If CAC...