Markley v. Dep't of Pub. Util. Control, 18750.

• Decision Date: 24 May 2011
• Docket Number: No. 18750.,18750.
• Citation: 23 A.3d 668,301 Conn. 56
• Court: Connecticut Supreme Court
• Parties: Joe MARKLEYv.DEPARTMENT OF PUBLIC UTILITY CONTROL et al.

301 Conn. 56

23 A.3d 668

Joe MARKLEY

v.DEPARTMENT OF PUBLIC UTILITY CONTROL et al.

No. 18750.

Supreme Court of Connecticut.

Argued March 23, 2011.Decided May 24, 2011.

Doug Dubitsky and Peter C. Bowman, for the appellant (plaintiff).Mark F. Kohler, assistant attorney general, with whom was Robert L. Marconi, assistant attorney general, for the appellees (defendants).Mary J. Healey, consumer counsel, and Joseph A. Rosenthal, principal attorney, filed a brief for the office of consumer counsel as amicus curiae.ROGERS, C.J., and NORCOTT, PALMER, ZARELLA, McLACHLAN and EVELEIGH, Js.ROGERS, C.J.

The plaintiff, Joe Markley, an electric utility ratepayer, appeals from the judgment of the trial court dismissing his action against the defendants, the state department of public utility control (department) and its chairman, Kevin DelGobbo.¹ The plaintiff claims that the trial court improperly concluded that it lacked subject matter jurisdiction over the action because: (1) the plaintiff failed to exhaust his administrative remedies with the department; and (2) his claims are barred by the doctrine of sovereign immunity.² Because we agree with the parties' contention that the trial court improperly dismissed the action pursuant to the administrative exhaustion doctrine, the sole issue presently before this court is whether the plaintiff's claims are barred by sovereign immunity. We affirm the judgment of the trial court.

The plaintiff's action arose from a financing order issued by the defendants pursuant to No. 10–179 of the 2010 Public Acts (P.A. 10–179), requiring that the state's two investor-owned electric power companies, Connecticut Light and Power Company (CL & P) and United Illuminating Company (United) (jointly, distributors), continue to charge their rate paying customers a fee that would otherwise have expired, with the proceeds going to the state's general fund. The plaintiff alleged that the financing order constituted an illegal tax on the distributors' customers, issued in excess of the defendants' statutory authority and in violation of the customers' constitutional rights.

We begin with a brief overview of the relevant statutory scheme. Electric power is distributed to Connecticut customers both by the distributors and by a half dozen nonprofit municipal electric companies (municipal electric utilities) owned and operated by municipalities for the benefit of their residents.³ The department is primarily responsible for regulating the distributors; General Statutes § 16–6b; whereas municipal commissions perform key regulatory functions such as rate setting for the municipal electric utilities; General Statutes § 7–216; within the parameters set by the legislature. See, e.g., General Statutes § 7–222 (establishing minimum and maximum prices chargeable by municipal electric utilities).

In 1998, the General Assembly passed No. 98–28 of the 1998 Public Acts (P.A. 98–28), which deregulated the state's electric power market. Because deregulation left the distributors with certain “stranded costs,” based on past capital investments and contractual obligations, that they would be unable to recoup in a competitive market, P.A. 98–28, § 10, provided that the distributors could recoup these stranded costs by petitioning the department for the right to impose a “competitive transition assessment” fee (fee), through which their customers would recompense them over time for the stranded costs.⁴ Based on the different timetables under which the two distributors implemented their fees, the CL & P fee was slated to expire on December 31, 2010, whereas the fee on United customers does not expire until October 1, 2013. Under P.A. 98–28, customers who were served by municipal electric utilities as of 1998 were not required to pay a fee.⁵

In 2010, faced with a substantial state budget deficit, the General Assembly enacted P.A. 10–179, with the goal of expanding the state's present revenues without increasing the financial burden on individual taxpayers. See 53 H.R. Proc., Pt. 16, 2010 Sess., p. 5576, remarks of Representative Denise Merrill (explaining that P.A. 10–179 eliminates $700 million state budget deficit without raising anyone's taxes or electric bills); Decision and Order, Department of Public Utility Control, “Application of the Connecticut Light and Power Company and the United Illuminating Company for Issuance of Economic Revenue Recovery Bonds Financing Order,” Docket No. 10–06–20 (September 29, 2010) p. 5 (P.A. 10–179 “is a product of the financial crisis and the resulting economic downturn which has adversely impacted the [s]tate and its revenues ... [and] is intended to reflect an underlying policy that electric rates should not increase for customers of the [distributors], and thus generally does not affect [any] customers until respective stranded cost charges are substantially reduced”). Public Act 10–179, §§ 126 through 134, reconciled these conflicting objectives by amending General Statutes §§ 16–245f through 16–245k and 16–245m to authorize the state to issue “economic recovery revenue bonds” (bonds), proceeds of which will fund a transfer of up to $956 million to the state's general fund. P.A. 10–179, § 125(19). Principal and interest on the bonds will be financed by continuing to assess a portion of the fee on the distributors' customers past the time when that fee otherwise would have expired. P.A. 10–179, § 126(b). In addition, the distributors' customers will be assessed a $40 million economic transition charge for direct transfer to the general fund. P.A. 10–179, § 126(c). In order to implement the bond and economic transition charges (jointly, charges), P.A. 10–179, § 126(b) required the distributors to apply to the department for a financing order, under which the department would allocate the financial burden “equitably” between the distributors' customers. Accordingly, although P.A. 10–179, § 126(b), permits the charges to commence at different times for customers of CL & P and United to correspond to the different anticipated expirations of their respective fees, it also requires that the department ensure that “such charges are equitably allocated to the customers of each ... distribut[or]....” Specifically, P.A. 10–179, § 126(b) mandates that “the charges on a kilowatt hour basis assessed to the customers of the respective distribut[ors] have substantially the same present value....”

Turning to the present case, the record reveals the following undisputed facts and procedural history. On September 29, 2010, the department issued a financing order (order) pursuant to P.A. 10–179. The order provides, inter alia, that: (1) CL & P customers will shoulder the entire burden of the $40 million economic transition charge, to be paid between January 1 and June 30, 2011, and will then begin paying the bond charges on July 1, 2011; (2) United customers will begin paying the bond charges on October 1, 2013, when their fees are slated substantially to expire; (3) the allocation of the charges between customers of the distributors will be adjusted over time, with the goal that each will have paid approximately the same charge on a kilowatt hour basis by the end of 2016; and (4) the bond charges will expire at the end of 2018, leaving a two year “true-up” period—2017 and 2018—during which the department may further tweak the bond rate schedule to ensure that the customers of each distributor pay their equitable share of the charges over the life of the program. The order further provides that the distributors may collect a service fee to recoup their costs for calculating, billing and collecting the charges.

The plaintiff, who alleges that he is subject to the fee and is proceeding pro se,⁶ filed an action to enjoin the defendants from enforcing the order.⁷ In his initial complaint, the plaintiff alleged that the defendants exceeded their statutory authority in issuing the order, because the charges are, in effect, a tax, and, he further alleged, the department lacks the authority to impose taxes under its enabling statutes. See General Statutes tit. 16. The defendants filed a motion to dismiss, maintaining that the court lacked subject matter jurisdiction because, inter alia, the plaintiff's claims were barred by the defendants' sovereign immunity. In response, the plaintiff submitted an amended complaint, the third and fourth counts of which were new claims that the defendants, in implementing the order, violated his right to equal protection of the law. The plaintiff also filed an objection to the defendants' motion to dismiss in which he argued that his action was not barred by sovereign immunity because he was seeking injunctive relief based on allegations that the defendants had acted unconstitutionally and in excess of their statutory authority.

In response to the plaintiff's amended complaint, the defendants filed a motion to strike, in which they restated the sovereign immunity defense and averred that the plaintiff's statutory and constitutional claims both fail as a matter of law. Rather than take up the new issues presented by the defendants' motion to strike, however, the trial court granted the defendants' initial motion to dismiss.⁸ In its memorandum of decision, the court, sua sponte, determined that it lacked subject matter jurisdiction over the action because the plaintiff had failed to exhaust his administrative remedies. Specifically, the court noted that the plaintiff had not yet obtained a final decision from the department pursuant to General Statutes § 4–176(a), which permits any person to seek a declaratory ruling as to the validity of a regulation from the issuing agency. The court further concluded that the futility exception to the administrative exhaustion requirement did not apply, because the record contained no evidence that the department “would be unable or unlikely to provide the relief sought” by the plaintiff.

After concluding that ...