National Rural Utilities Co-op. Finance Corp. v. Public Service Com'n of Indiana, 93A02-8702-EX-58

• Docket Nº: No. 93A02-8702-EX-58
• Citation: 528 N.E.2d 95
• Case Date: September 12, 1988
• Court: Court of Appeals of Indiana

Page 95

528 N.E.2d 95 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, Appellant,
v.
PUBLIC SERVICE COMMISSION OF INDIANA, Wabash Valley Power
Association, Inc., Office of the Utility Consumer Counselor,
City of Fort Wayne, Indiana, Public Service Company of
Indiana, Inc., Fruit Belt Electric Cooperative, Jay County
REMC, United REMC, Warren County REMC, Boone County REMC,
Kankakee Valley REMC, and United States of America on Behalf
of its Rural Electrification Administration, Department of
Agriculture, Appellees. No. 93A02-8702-EX-58. Court of Appeals of Indiana,
Third District. Sept. 12, 1988.
Rehearing Denied Dec. 7, 1988.

Page 96

Fred E. Schlegel, Michael J. Huston, Mary M. Stanley, Baker & Daniels, Indianapolis, (Milbank, Tweed, Hadley & McCloy, New York City, of counsel), for appellant Nat. Rural Utilities Co-op. Finance Corp.

Bradley L. Williams, Deborah J. Daniels, U.S. Attys., Richard K. Willard, John R. Bolton, Asst. Attys. Gen., Jeffrey L. Hunter, Gerald A. Coraz, Asst. U.S. Attys., Indianapolis, for intervenor-appellant U.S., on behalf of its Rural Electrification Admin., Dept. of Agriculture.

Linley E. Pearson, Atty. Gen., Brenda Franklin Rodeheffer, Deputy Atty. Gen., Indianapolis, for appellee Indiana Utility Regulatory Com'n.

Don F. Morton, Parr, Richey, Obremskey & Morton, Indianapolis, for appellee Wabash Valley Power Ass'n, Inc.

Thomas E. Kieper, Consumer Counselor, James W. Burk, Asst. Consumer Counselor, Office of Utility Consumer Counselor, Indianapolis, for appellee Office of Utility Consumer Counselor.

Dykema Gossett, Albert Ernst, Margaret A. Morris, Dean Van Drasek, Lansing (John Coldren, Coldren & Frantz, Portland, of counsel), for intervenors-appellees Jay County REMC, United REMC, Warren County REMC, Boone County REMC and Fruit Belt Elec. Co-op.

William M. Evans, Bose McKinney & Evans, Indianapolis (Leo Clifford, Clifford, Clauden & Alexa, Valparaiso, of counsel), for intervenor-appellee Kankakee Valley REMC.

Page 97

GARRARD, Presiding Judge.

This is an appeal from the dismissal by the Public Service Commission of Indiana ¹ (Commission) of Wabash Valley Power Association's (Wabash) petition for a rate increase. The following issues are raised by this appeal:

1) Whether the Commission had jurisdiction of the petition for rate increase;

2) Whether the Commission abused its discretion by dismissing the petition on its merits rather than for lack of prosecution;

3) Whether the Commission erred in concluding that Wabash was not entitled to the rate relief it requested;

4) Whether the Commission erred in dismissing the petition without considering whether Wabash was entitled to emergency rate relief; and

5) Whether the Commission's dismissal of the petition violated Wabash's constitutional right not to have its property taken without just compensation.

We affirm.

Wabash is an Indiana not-for-profit utility corporation organized under IC 23-7-1.1. (1982) (amended 1986 P.L. 149). ² Wabash's stockholders are twenty-four REMCs or electric cooperatives. Wabash negotiates wholesale power rates with four investor-owned utilities on behalf of its stockholders and also represents its stockholders in the development of their own generation and transmission facilities. Wabash is owned by its stockholders and governed by a board of directors which consists of one director from each member system.

In January of 1978, when the Commission approved Wabash's request to own generation and transmission facilities, it also approved Wabash's request to invest borrowed funds in Public Service Company of Indiana's nuclear generation project, commonly known as Marble Hill. Subsequent to the Commission's approval to borrow funds, Wabash received approval of its application to borrow $360,684,000.00 from the Rural Electrification Administration of the United States government (REA). After borrowing the funds and pursuant to the Commission's original order approving the investment, Wabash twice applied and was granted approval for funds it expended on Marble Hill.

Due to construction delays and cost escalations, the Governor of Indiana appointed a task force to review the Marble Hill project and thereafter the task force recommended cancellation. Public Service Company of Indiana suspended construction and later announced it was financially unable to continue the project. After PSI discontinued construction, the REA notified Wabash that it could no longer continue to advance guaranteed funds on the project. Approximately two months later, however, the REA approved Wabash's request to use $12,017,000.00 of the guaranteed loan funds to pay interest due on the outstanding loan funds that had been advanced on the project. The REA also recommended that Wabash investigate other financial resources to meet future debt service payments until rates were sufficient to meet all of Wabash's revenue requirements.

On April 6, 1984, Wabash filed the petition in this case to increase its rates by

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fifty-one percent to pay debts it incurred through its participation in Marble Hill. The REA was permitted to intervene and recommended that Wabash be allowed to borrow additional funds from the National Rural Utilities Cooperative Finance Corporation (CFC) so that Wabash could repay its debts on a phased-in approach. The Commission approved the recommendation and pursuant to that approval, Wabash borrowed approximately $8,600,000.00 from CFC. CFC and several of Wabash's members were also permitted to intervene in the rate case.

Wabash presented its case in chief on September 27, 1984 and three weeks later the Office of the Utility Consumer Counselor (Consumer Counselor) requested a continuance on the grounds that Wabash was required to show that its decision to participate in the Marble Hill project was a prudent one. On December 6, 1984 the Commission established a new test year for the proceeding and directed Wabash to present evidence on the prudence of its involvement in Marble Hill and evidence on both rate of return and revenue requirement bases of setting rates. On January 31, 1985, Wabash requested leave to file a supplemental or amended petition for emergency rate relief and shortly thereafter, the Consumer Counselor filed its motion to dismiss the petition on the grounds that Wabash was not entitled to relief under this court's opinion in Citizens Action Coalition v. Northern Pub. Serv. Co. of Ind. (NIPSCO) (1984), Ind.App., 472 N.E.2d 938. In that case we held that the Commission could not permit an investor-owned utility to recover costs associated with a cancelled nuclear plant through rate increases. The Commission granted Wabash's request to file a supplemental petition for emergency rate relief but advised that any proceedings on the petition would be stayed until the Indiana Supreme Court ruled upon the NIPSCO case. Wabash did not file a supplemental petition but moved for a temporary stay of the proceedings on its original petition. The Commission granted this motion on May 23, 1985 and the same day Wabash filed for reorganization under Chapter Eleven of the United States Bankruptcy Code.

On November 19, 1985 the Indiana Supreme Court filed its opinion in NIPSCO, affirming this court's decision. (1985), Ind., 485 N.E.2d 610. On April 25, 1986, the Consumer Counselor once again moved to dismiss Wabash's petition and the parties to the proceeding, including the intervenors, filed briefs and memoranda in support of their positions. On January 14, 1987, the Commission entered an interim order dismissing Wabash's petition after noting that Wabash's only reason for requesting rate relief was to recover costs associated with Marble Hill and that under NIPSCO such costs were not recoverable through rates. The Commission granted Wabash ten days to amend its petition to seek relief on a basis not related to Marble Hill costs but Wabash did not file an amended petition. On January 28, 1987, the Commission issued its final order of dismissal and this appeal ensued. ³

The REA first contends that the dismissal order constitutes an advisory opinion or a declaratory judgment and the Commission therefore lacked jurisdiction to enter it. The REA first argues that the order constitutes an advisory opinion because Wabash did not strongly support its petition thereby causing no case or controversy to be before the Commission. We agree that jurisdiction requires an actual existing justicable controversy between parties having adverse interests. City of Evansville v. Grissom (1976), 169 Ind.App. 467, 469, 349 N.E.2d 207, 209. The requirement of adverse parties, however, is related to standing and that concept focuses upon whether the complaining party is the proper person or entity to invoke the court's, or in this case, the Commission's, jurisdiction. City of Indianapolis v. Indiana State Bd. of Tax Commr's. (1974), 261 Ind. 635, 638, 308 N.E.2d 868, 870. This case involved a request for a rate

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increase which could not have been granted without the Commission's approval. IC 8-1-2-42 (1982 & Supp.1987). The Commission thus not only had jurisdiction but had primary jurisdiction. Wabash was the entity which needed the rate increase and therefore certainly was the proper party to invoke the Commission's jurisdiction. "The judicial doctrines of justiciability and standing exist to insure that litigation will be actively and vigorously contested...." Indiana Educ. Employment Relations Bd. v. Benton Comm. Schools (1977), 266 Ind. 491, 496, 365 N.E.2d 752, 754. While Wabash may have had doubts as to the likelihood of its request being granted, this case was argued vigorously by the parties and the intervenors and the decision has an immediate impact upon the rights of Wabash and its creditors. This is the essence of a case or controversy and the Commission's order therefore does not constitute an advisory opinion.

The REA also contends that no factual record exists as to whether...