Kentucky-Indiana Municipal Power Ass'n v. Public Service Co. of Indiana, Inc.

• Decision Date: 27 August 1979
• Docket Number: KENTUCKY-INDIANA,No. 2-676A217A,2-676A217A
• Parties: MUNICIPAL POWER ASSOCIATION for Itself and its Members and the Cities of Crawfordsville, Huntingburg, Washington, Tipton and the Town of Ferdinand, Indiana, Petitioners-Appellants, v. PUBLIC SERVICE COMPANY OF INDIANA, INC., Southern Indiana Gas and Electric Company, City of Anderson, Indiana, and City of Richmond, Indiana, Respondents-Appellees.
• Court: Indiana Appellate Court

Page 776

393 N.E.2d 776

181 Ind.App. 639

KENTUCKY-INDIANA MUNICIPAL POWER ASSOCIATION for Itself and its Members and the Cities of Crawfordsville Huntingburg, Washington, Tipton and the Town of Ferdinand, Indiana Petitioners-Appellants, v. PUBLIC SERVICE COMPANY OF INDIANA, INC., Southern Indiana Gas and Electric Company, City of Anderson Indiana, and City of Richmond, Indiana Respondents-Appellees.

No. 2-676A217A.

Court of Appeals of Indiana, Third District.

Aug. 27, 1979.

William S. Lett, Schneider, Lett & Verkamp, Huntingburg, for appellants; Wallace L. Duncan, Fredrick D. Palmer, Duncan, Brown, Weinberg & Palmer, Washington, D. C., of counsel.

Charles W. Campbell and Ronald J. Brothers, Plainfield, for Pub. Service Co. of Ind.

Fred P. Bamberger and Mark L. Phillips, Evansville, for Southern Ind. Gas & Elec. Co.

HOFFMAN, Judge.

On July 26, 1975, appellants filed a petition with the Public Service Commission of Indiana (Commission) which sought approval of the agreement which created appellant Kentucky-Indiana Municipal Power Association and sought other related declaratory relief. The Commission dismissed the petition for want of jurisdiction and this appeal followed. In 1957, the General Assembly enacted the Interlocal Cooperation Act, IC 1971, 18-5-1-1 et seq. (Burns Code Ed.), hereinafter referred to as the 1957 Act. IC 1971, 18-5-1-1 provides:

"It is the purpose of this act (18-5-1-1 18-5-1-7) to permit local governmental units to make the most efficient use of their powers by enabling them to cooperate with other localities on a basis of mutual advantage and thereby to provide services and facilities in a manner and pursuant to forms of governmental organization that will accord best with geographic, economic, population and other factors influencing the needs and development of local communities."

It empowers public agencies ¹ to enter into agreements providing for joint and cooperative action, specifies the essential elements of such agreements and authorizes the establishment of separate legal entities to conduct joint and cooperative undertakings. IC 1971, 18-5-1-4. ²

In 1972, IC 1971, 18-5-1.5-1 et seq. (Burns Code Ed.), hereinafter referred to as the 1972 Act, was enacted to supplement the 1957 Act. It enabled local governmental units ³ to make contracts with other local governmental units instead of merely authorizing cooperation. In 1975, the 1972 Act was amended to emphasize its supplemental nature:

"The provisions of this chapter (18-5-1.5-1 18-5-1.5-7) shall be supplemental to IC 1971, 18-5-1 (18-5-1-1 18-5-1-7) and to all laws on the subject of interlocal government cooperation. Local governmental units may use whichever law it deemed (deems) necessary to achieve their desired purpose."

IC 1971, 18-5-1.5-7.

Pursuant to these statutes, on February 7, 1973, the Indiana cities of Crawfordsville, Jasper, Huntingburg, and Washington in conjunction with the cities of Paris and Frankfort from the sister state of Kentucky, executed a Joint Agreement forming the Kentucky-Indiana Municipal Power Association (KIMPA). ⁴ This agreement authorized KIMPA to perform all functions necessary for the development and implementation of a viable bulk power supply program for its members. Specifically, the Joint Agreement provided that the purposes of KIMPA, as an agency and instrumentality of the cities which are or shall become members, are to construct, operate and maintain generating plants and transmission systems in order to deliver electrical power and energy to its members; to sell, deliver, exchange or otherwise dispose of the power and energy generated by said plants; to borrow money and to issue various types of securities; and to secure the payment thereof by indenture, agreement, contract or other evidence of indebtedness.

On April 17, 1975, KIMPA and its constituent members executed Bulk Power Supply Agreements which provided, Inter alia, the necessary security for KIMPA to finance the development of its bulk power supply program by the sale and the issuance of its own bonds. Under these agreements, KIMPA is to perform engineering, legal and financial consulting services for the development of the initial plans regarding generating plants and transmission systems. The costs incurred by KIMPA are to be funded by the issuance of KIMPA bonds, notes, bond anticipation notes or other obligations in an amount not to exceed $100,000. The members agree to guarantee KIMPA's financial obligations by making pro rata payments to KIMPA 30 days prior to the maturity dates of these obligations.

On July 16, 1975, KIMPA filed a petition with PSC for itself and on behalf of its Indiana members. ⁵ The "Conclusion and Prayer for Relief" portion of that petition reads as follows:

"IV. CONCLUSION AND PRAYER FOR RELIEF

Based on the foregoing, KIMPA concludes that it has the legal ability to carry out in all respects its bulk power supply program, and respectfully requests the following declarations and relief from this Commission:

1. A determination of the extent to which this Commission has jurisdiction over an Association formed under the Interlocal Cooperation Act for the purpose of developing and implementing a bulk power supply program and otherwise engaging in the business of providing electric power to its members;

2. Approval of the Joint Agreement forming KIMPA under the Indiana Interlocal Cooperation Act if the Commission has jurisdiction in the premises;

3. Approval of the action by KIMPA's Indiana members in entering into the Power Supply Development Agreements (Exhibits F1-F5) to the extent the Agreements may constitute contracts for the issuance of debt or evidence of indebtedness and to the extent the Commission has jurisdiction;

4. Assuming jurisdiction in the premises, a determination of the following questions:

(a) Under the Interlocal Cooperation Act of Indiana, may Indiana municipalities join together, and with municipalities of other states, to provide electrical power to themselves on a joint basis through the entity formed?

(b) May an Association formed under the Interlocal Cooperation Act of Indiana issue revenue bonds and/or bond anticipation notes in its own name, secured by bulk power supply contracts with its members, for the purpose of:

(i) Constructing its own electric generating facilities that will not be located within 6 miles of any of the Indiana municipalities' boundaries nor in the same county as any of the Indiana municipalities?

(ii) Purchasing equity ownership or unit participation in an electric generating facility constructed and operated by an investor owned utility or public agency not a member of KIMPA where the facility will not be within 6 miles of any of the Indiana municipalities' boundaries nor in the same county as any of the Indiana municipalities?

(c) Assuming an affirmative answer to the questions posed in (b), need KIMPA obtain the approval of this Commission for the issuance of debt and would this Commission have jurisdiction over rates established by contract between KIMPA and its members?

(d) Assuming an affirmative answer to the questions posed in (b), need KIMPA seek a certificate of convenience and necessity from this Commission for each component part of a bulk power supply program?

(e) Assuming an affirmative answer to (d) is KIMPA an entity that can qualify to hold a certificate of convenience and necessity under Indiana law?"

On May 27, 1976, the Commission entered its order dismissing the petition, concluding that it did not have the statutory authority to issue declaratory rulings.

The question presented by this appeal is whether, under the applicable statutes, the Commission had jurisdiction over the subject matter set out in appellants' petition.

It is a fundamental principle of law that the Public Service Commission, as an administrative agency of the State of Indiana, is a body of limited jurisdiction which derives its authority solely from the Legislature and thereby possesses only such powers as are conferred on it by statute. Ind. Bell Tel. Co., Inc. v. Friedland (1978), Ind.App., 373 N.E.2d 344; Town of Merrillville v. Lincoln Utilities, Inc. (1976), Ind.App., 355 N.E.2d 851; Boone Co. REMC et al. v. Pub. Serv. Comm. (1958), 129 Ind.App. 175, 155 N.E.2d 149. Unless a grant of power can be found in the statute, it must be concluded that there is none. Indiana Tel. Corp. v. Indiana Bell Tel. Co. (1976), Ind.App., 358 N.E.2d 218. Moreover, the functions vested in the Commission by the General Assembly are not judicial in nature but rather are of an administrative character. Indiana Tel. Corp. v. Pub. Serv. Comm. (1960), 131 Ind.App. 314, 171 N.E.2d 111.

That the Commission acted in accordance with these principles seems clear. Judging from the "Conclusion and Prayer for Relief" section of the petition, it is apparent that appellants sought declaratory rulings adjudicating the legality of the Joint Agreement and the extent of the Commission's jurisdiction over KIMPA and the activities contemplated thereby. But insofar as there is nothing in its enabling acts which authorizes the Commission to issue the declaratory relief requested, it must be concluded that appellants chose the wrong forum to litigate these questions. The Public Service Commission is primarily a factfinding body. Johnson Cty. Rural Elect. v. Public Serv. Co. (1978), Ind.App., 378 N.E.2d 1. It issues orders based on impartial findings of fact. The issues raised by appellants' petition involved a determination of their rights, status, and legal relations under various statutes. A declaratory judgment proceeding before a court of record would have been the appropriate method for adjudicating this controversy. See IC 1971, 34-4-10-1 (Burns Code Ed.).

Nevertheless, appellants maintain the Commission took too narrow a view of its jurisdiction and insist that the source of its jurisdiction cannot be found entirely within the four corners of its enabling legi...