Grindsted Products, Inc. v. Kansas Corp. Com'n

• Citation: 262 Kan. 294,937 P.2d 1
• Decision Date: 25 April 1997
• Docket Number: No. 76713,76713
• Parties: , 178 P.U.R.4th 444, Util. L. Rep. P 26,602 GRINDSTED PRODUCTS, INC., Appellant, v. KANSAS CORPORATION COMMISSION and Kansas City Power & Light Company, Appellees.
• Court: Kansas Supreme Court

Page 1

937 P.2d 1

262 Kan. 294, 178 P.U.R.4th 444, Util. L.

Rep. P 26,602

GRINDSTED PRODUCTS, INC., Appellant, v. KANSAS CORPORATION COMMISSION and Kansas City Power & Light Company, Appellees.

No. 76713.

Supreme Court of Kansas.

April 25, 1997.

Syllabus by the Court

1. When a motion to dismiss under K.S.A. 60-212(b)(6) raises an issue concerning 2. In considering a motion to dismiss for failure of the complaint to state a claim for relief, a court must accept the plaintiff's description of that which occurred, along with any inferences reasonably to be drawn therefrom. However, this does not mean the court is required to accept conclusory allegations on the legal effects of events the plaintiff has set out if these allegations do not reasonably follow from the description of what happened or if these allegations are contradicted by the description itself.

the legal sufficiency of a claim, the question must be decided from the well-pleaded facts of plaintiff's complaint. Dismissal is justified only when the allegations of the petition clearly demonstrate plaintiff does not have a claim.

3. Public utilities in this state are required to file their tariffs with the Kansas Corporation Commission. K.S.A. 66-101c.

4. Rates, fares, tolls, and charges imposed by a public utility upon its customers are required to be just and reasonable, not unjustly or unreasonably discriminatory and not unduly preferential. K.S.A. 66-101d.

5. Tariffs duly filed with the Kansas Corporation Commission (KCC) generally bind both the public utility and the customer and must comport with any conditions, schedules, and provisions authorized by the KCC; amended tariffs and schedules of rates are not effective unless approved by the KCC.

6. A legally established tariff should be construed in the same manner as a statute.

7. A legally filed tariff constitutes constructive notice.

C. Edward Peterson, of Finnegan, Conrad & Peterson, of Kansas City, MO, argued the cause, and Jeremiah D. Finnegan, of the same firm, was with him on the briefs, for appellant.

William G. Riggins, of Kansas City, MO, argued the cause and was on the brief, for appellee Kansas City Power & Light Company.

Janette W. Corazzin, Assistant General Counsel, argued the cause, and David J. Heinemann, General Counsel, was with her on the brief, for appellee Kansas Corporation Commission.

LOCKETT, Justice:

Plaintiff manufacturer claimed that it was eligible for economic development discounts in the price of electricity purchased from defendant public utility for electric service to a manufacturing plant. The defendant regulatory agency determined that (1) the manufacturer was not eligible for the economic development tariff; (2) the utility had no affirmative duty to disclose the economic development tariff to the manufacturer; and (3) no discrimination occurred. The district court granted the utility's motion to dismiss, finding that the manufacturer's complaint failed to state a claim for which relief could be granted, and affirmed the regulatory agency. The manufacturer's appeal to the Court of Appeals was transferred to this court. K.S.A. 20-3018(c).

FACTS:

Grindsted Products, Inc., (Grindsted) manufactures bulk food products at a facility located in Johnson County, Kansas. Kansas City Power & Light Company (KCPL), a certificated public electric utility, provides electric service to Grindsted. In 1989, Grindsted began planning and development of an expansion at the Johnson County location. An architectural firm retained by Grindsted discussed the expansion with KCPL and provided KCPL with specifications for the expanded facility. Although Grindsted states that thediscussions involved "rates," the only direct evidence in the record of these discussions is a letter dated December 9, 1989, from the architectural firm to KCPL relating to revised specifications for the "Ammonia Project." This document was apparently not part of the record at the Kansas Corporation Commission (KCC) but was appended to Grindsted's reply brief in the district court. However, since the case was decided on a motion to dismiss, the court would have considered only the allegations in the complaint. The complaint did not allege that Grindsted had direct discussions with KCPL in which it requested the most advantageous rate.

Grindsted completed the expansion and began receiving electric service in May 1990. KCPL initially placed Grindsted's expanded facility on the Primary Service--Large (PL) tariff. In 1991, KCPL reviewed usage at Grindsted's facility, determined it qualified for a lower tariff, General Service--Large (GL), and refunded the difference.

The Economic Development Rider (EDR) to which Grindsted claims entitlement was filed by KCPL with the KCC effective July 20, 1988. The stated purpose of the EDR was to encourage "industrial and commercial business development in Kansas. These activities will attract capital expenditures to the State, diversify [KCPL's] customer base, create jobs and serve to improve the utilization of efficiency of existing Company facilities." The EDR discount was 30% for year 1 of service, decreasing by 5% per year for 4 years to a final discount of 10% in the fifth year. The 1988 EDR stated that its discounted rates are only available in conjunction with government economic development programs where incentives have been offered to locate or expand facilities in the KCPL service area. With respect to applicability, the 1988 EDR stated: "Upon the request of the customer and acceptance by the Company, the provisions of this rider will be applicable to: 1) new industrial and commercial customers and 2) additional separately-metered facilities of existing industrial and commercial customers."

The 1988 EDR was later superseded by another EDR in December 1991. The 1991 EDR stated:

"New or expanded facilities under construction or otherwise committed to operation prior to the effective date of this Rider are ineligible for service under this Rider. The availability of this Rider shall be limited to industrial and commercial facilities not involved in selling or providing goods and services directly to the general public. Customers receiving service under this Rider must qualify under the criteria of this Rider or have been served under the superseded Rider on December 31, 1991."

Grindsted alleges it was unaware of the existence of the EDR until late 1993, although it had been filed with the KCC since 1988. In July 1993, Grindsted applied for service under the EDR. KCPL denied Grindsted's request because Grindsted had failed to apply for the EDR tariff prior to deciding to expand its facility. KCPL stated:

"The EDR is a tariff specifically designed to provide an incentive for prospective additional load where the customer decision to build, relocate or expand has not been made. It is the only tariff with a purpose clause, and its intent is to help the customer decide to locate within KCPL's territory, thus bringing value to the company. The Grindsted expansion was handled by the Austin Co. Engineering firm, who presented site specific plans to KCPL for service consideration. From these plans, it was apparent that the customer had already reached a business decision to expand the existing facility and no inquiry was made to KCPL concerning incentives, nor to indicate that the final site selection was in question. We believe that the steps taken by KCPL to ensure timely and effective service to this new building were proper and that the customer is not eligible for service under the EDR tariff."

In other words, since Grindsted had decided to expand its facility prior to learning about the EDR incentives, KCPL decided the provisions of the EDR did not apply to Grindsted.

On February 7, 1994, Grindsted filed a complaint with the KCC, Docket No. 190,097-U. Count I was styled "Qualifications for the EDR" and alleged that its facility had qualified for the EDR by its terms. The complaint does not allege that KCPL had a legal duty to inform Grindsted of the existence of the EDR or to inform Grindsted of the lowest available tariff. In the prayer for relief, Grindsted sought an order determining that KCPL had improperly failed and refused to apply the EDR tariffs to Grindsted and directing that Grindsted be served under the EDR tariff prospectively.

Count II of Grindsted's complaint was styled "Discrimination." It alleged that KCPL had unjustly, unreasonably and unlawfully discriminated against Grindsted in violation of K.S.A. 66-109 by failing to disclose Simultaneously, Grindsted filed an action in the district court of Johnson County against KCPL, requesting an interpretation of the EDR and damages pursuant to K.S.A. 66-176. The KCC intervened in that action for the purpose of addressing jurisdiction. The district court ultimately dismissed the action for lack of jurisdiction. Grindsted appealed, and the Court of Appeals affirmed the district court's dismissal in Grindsted Products, Inc. v. Kansas City Power & Light Co., 21 Kan.App.2d 435, 448, 901 P.2d 20 (1995), finding that the KCC had jurisdiction over issues of tariff interpretation.

and refusing to apply the EDR tariff to Grindsted. Grindsted requested that the KCC order KCPL to serve Grindsted under the EDR.

Subsequently, Grindsted filed a second action with the KCC, Docket No. 191,200-U. Grindsted requested that the KCC construe the EDR, determine that Grindsted qualified for the EDR, find that KCPL overcharged Grindsted, and order a refund. Grindsted also filed a motion to consolidate the two complaints before the KCC. KCPL filed motions to dismiss the complaints.

On November 21, 1994, the KCC issued its order consolidating the complaints and ordering their dismissal because Grindsted's complaint had failed to state a claim for which relief could be granted. First, the KCC found that Grindsted qualified neither for the 1988 EDR tariff nor the current EDR tariff, filed in 1991. The KCC...