Laclede Gas Co. v. Office of Pub. Counsel

• Decision Date: 14 January 2014
• Docket Number: No. WD 76509.,WD 76509.
• Citation: Pub. Serv. Comm'n of State v. Office of Pub. Counsel, 417 S.W.3d 815 (Mo. App. 2014)
• Court: Missouri Court of Appeals
• Parties: In the Matter of the Application of LACLEDE GAS COMPANY d/b/a Missouri Gas Energy, for Approval to Change its Infrastructure System Replacement Surcharge; Respondent, Public Service Commission of the State of Missouri, Respondent, v. The Office of Public Counsel, Appellant.

417 S.W.3d 815

In the Matter of the Application of LACLEDE GAS COMPANY d/b/a Missouri Gas Energy, for Approval to Change its Infrastructure System Replacement Surcharge; Respondent,Public Service Commission of the State of Missouri, Respondent,

v.The Office of Public Counsel, Appellant.

No. WD 76509.

Missouri Court of Appeals, Western District.

Jan. 14, 2014.

Marc Poston, Jefferson City, MO, for appellant.

Kevin Thompson, Shelley Brueggemann, Jefferson City, MO, for Resp., Public Service.

Todd Jacobs, Dean Cooper, Kansas City, MO, for Resp, Laclede Gas Co.

Before Division Four: JAMES EDWARD WELSH, C.J., CYNTHIA L. MARTIN, J., and PATRICK ROBB, Sp. J.

JAMES EDWARD WELSH, Chief Judge.

The Office of Public Counsel appeals the Missouri Public Service Commission's order approving the petition of Laclede Gas Company (“Laclede”) to change its “Infrastructure System Replacement Surcharge” (“ISRS”). The Office of Public Counsel contends that the Commission's order was unlawful because it approved an increase in the ISRS more than three years after Laclede's most recent general rate case, in violation of its statutory authority. We affirm.

Background

Laclede is a natural gas provider serving approximately 500,000 customers in Missouri.¹ It is a “public utility” and a “gas corporation,” as defined in sections 386.020(43) and (18), RSMo.² The Public Service Commission is a state administrative agency responsible for the regulation of public utilities, including gas corporations, in Missouri, pursuant to sections 386.040 and 386.250(1). State ex rel. MoGas Pipeline, LLC v. Mo. Pub. Serv. Comm'n 366 S.W.3d 493, 496 (Mo. banc 2012). The Office of Public Counsel is a state agency that represents consumers in all utility proceedings before the Commission and in all appeals of Commission orders. §§ 386.700 and 386.710; Pub. Serv. Comm'n of State v. Mo. Gas Energy, 388 S.W.3d 221, 224 (Mo.App.2012).

In 2003, the Missouri Legislature enacted sections 393.1009, 393.1012, and 393.1015 (“the ISRS statutes”) as part of House Bill 208. Those statutes provide a method, outside of a formal rate case, for a gas corporation to recover the cost of certain government-mandated infrastructure system replacement projects via a petition to establish or change an ISRS. On February 8, 2013, pursuant to the ISRS statutes, Laclede filed an “Application and Petition to Change Its Infrastructure System Replacement Surcharge” and a revised tariff sheet.³ Laclede sought the Commission's approval to adjust the rate elements on its already established ISRS rate schedule to recover an additional $1,741,862 in infrastructure system replacement costs that it incurred during the last seven months of 2012.

This was Laclede's fourth request to adjust its existing ISRS since its most recent general rate case was decided almost three years earlier, on February 10, 2010. Laclede's initial petition to establish an ISRS, filed in July 2010, was approved by the Commission and became effective on September 18, 2010. ⁴ The Commission subsequently approved three adjustments to that ISRS, with effective dates of May 17, 2011, February 14, 2012, and October 3, 2012.

On February 13, 2013, in response to Laclede's fourth petition to change its ISRS, the Commission suspended the proposed tariff change and directed its Staff to submit a recommendation. The Staff recommended an adjustment to Laclede's ISRS to increase the “incremental revenue requirement” by $1,741,740. ⁵ The Staff noted that, if the Commission approved the petition, Laclede's “total ISRS revenue requirement will amount to $6,343,452,” a “composite amount” of $1,741,740 from the instant case and the sum of Laclede's four prior ISRS rate increases.

The Commission, sua sponte, asked the parties to address whether the Commission had the statutory authority to approve Laclede's petition to change its ISRS in light of the time limitation in section 393.1012. Section 393.1012.2 provides that “[t]he commission shall not approve an ISRS for any gas corporation that has not had a general rate proceeding decided or dismissed ... within the past three years.” Noting that Laclede's most recent general rate case was decided on February 10, 2010, and its petition in this case was filed on February 8, 2013 (just under three years later), the Commission observed that section 393.1012.2 “does not clarify” whether the petition must be filed within three years of the most recent rate case decision or if the Commission's approval of the petition is the relevant date. Public Counsel responded with the contention that section 393.1012.2 prohibits the Commission from approving Laclede's petition because more than three years had passed since Laclede's last general rate case had been decided. Laclede and the Staff argued that the three-year limitation in section 393.1012.2 applies only to the approval of the initial ISRS rate increase, not to subsequent petitions to change an existing ISRS.

On May 1, 2013, the Commission issued its “Order Approving Change in Infrastructure System Replacement Surcharge, Rejecting Tariff, and Approving New Tariff,” essentially adopting the Staff's and Laclede's positions on the three-year limitation in section 393.1012.2. The Commission found that the statutory definition of “ISRS” ⁶ is “ambiguous” because it is unclear whether the term “an ISRS,” as used in section 393.1012.2, means the “initial” ISRS surcharge and “each subsequent change to the surcharge,” or if it refers only to the “initial” ISRS. Applying the rules of statutory construction, the Commission found that the three-year limitation on its authority to approve “an ISRS” applies only to the establishment of the initial ISRS, and not to subsequent changes or adjustments to the ISRS. The Commission concluded that it had the statutory authority to approve Laclede's petition to change its ISRS because the initial ISRS, approved in September 2010, “was within three years of the decision in [Laclede's] most recent general rate proceeding.” Both the Commission's order approving a change to the ISRS and the revised tariff sheet became effective on May 15, 2013.

The Commission denied Public Counsel's application for rehearing but granted its request that the Staff file a Reconciliation, as required by statute. The Commission approved the Reconciliation on June 6, 2013.

Discussion

Public Counsel argues on appeal that the Commission's order approving a change to Laclede's ISRS was unlawful because the Commission lacked the statutory authority, pursuant to section 393.1012.2, to approve the proposed ISRS rate increase more than three years after Laclede's last general rate case had been decided.

The Commission's order is presumed to be valid, and the burden is on the party attacking it to prove that it is invalid. State ex rel. Pub. Counsel v. Mo. Pub. Serv. Comm'n, 289 S.W.3d 240, 246 (Mo.App.2009); § 386.430. The Commission found that this was a “non-contested case,” in that no hearing was required, citing section 393.1015.2(3), and the parties do not dispute that. “In noncontested cases, we judge only whether or not the Commission's order was lawful.” State ex rel. Pub. Counsel v. Pub. Serv. Comm'n, 259 S.W.3d 23, 30 (Mo.App.2008). Moreover, the sole issue in this appeal involves the interpretation of a statute, which is matter of law. State ex rel. Office of Pub. Counsel and Mo. Indus. Energy Consumers v. Mo. Pub. Serv. Comm'n, 331 S.W.3d 677, 683 (Mo.App.2011). On issues of law, we do not defer to the Commission but, instead, address the matter de novo. MoGas Pipeline, 366 S.W.3d at 496. Although the “interpretation and construction of a statute by an agency charged with its administration is entitled to great weight,” in determining an order's lawfulness, we “exercise[ ] independent judgment and must correct erroneous interpretations of law.” Office of Pub. Counsel, 331 S.W.3d at 684. An order is lawful if the Commission had the statutory authority to act as it did. Id. at 682. The Commission “is a creature of statute,” and its “powers are limited to those conferred by [statute], either expressly, or by clear implication, as necessary to carry out the powers specifically granted.” ⁷MoGas Pipeline, 366 S.W.3d at 496. If a power is not granted to the Commission by statute, then the Commission does not have that power. Id.

This appeal involves the interpretation of section 393.1012. Our goal in construing a statute is to ascertain the intent of the legislature from the language used and, if possible, give effect to that intent. See State ex rel. Competitive Telecomms. v. Mo. Pub. Serv. Comm'n, 886 S.W.2d 34, 39 (Mo.App.1994). In so doing, we consider the plain and ordinary meaning of the words used in the statute. Office of Pub. Counsel, 331 S.W.3d at 683. We presume that the legislature intended for each word and phrase of a statute to have effect and that the legislature did not include “idle verbiage or superfluous language.” Id. at 684. If we find that the legislative intent is clear and unambiguous, then we are bound by that intent. State ex rel. Union Elec. Co. v. Pub. Serv. Comm'n, 399 S.W.3d 467, 479–80 (Mo.App.2013). We “look beyond the plain meaning of the statute only when the language is ambiguous or will lead to an absurd or illogical result.” Office of Pub. Counsel, 331 S.W.3d at 683. A statute is ambiguous if the language is subject to more than one reasonable interpretation. Union Elec. Co., 399 S.W.3d at 480.

As noted, the Commission found that the term “an ISRS,” as used in section 393.1012.2, is “ambiguous.” We are not bound by the Commission's determination of ambiguity. See Competitive Telecomms., 886 S.W.2d at 39 (“When there is doubt and ambiguity as to the meaning of a statute, the courts give consideration to the practical construction placed upon the act by the agency charged with its administration, although such construction is not binding on the judiciary.”). Nevertheless, in this case, we agree...