Northern Indiana Public Service Co. v. Citizens Action Coalition of Indiana, Inc.

• Decision Date: 13 December 1989
• Docket Number: No. 93S02-8810-EX-902,93S02-8810-EX-902
• Parties: NORTHERN INDIANA PUBLIC SERVICE COMPANY, Appellant, v. CITIZENS ACTION COALITION OF INDIANA, INC., et al., Appellees. CITIZENS ACTION COALITION OF INDIANA, INC., et al., Cross-appellants, v. NORTHERN INDIANA PUBLIC SERVICE COMPANY, Cross-Appellee.
• Court: Indiana Supreme Court

Page 153

548 N.E.2d 153

109 P.U.R.4th 386

NORTHERN INDIANA PUBLIC SERVICE COMPANY, Appellant, v. CITIZENS ACTION COALITION OF INDIANA, INC., et al., Appellees.

CITIZENS ACTION COALITION OF INDIANA, INC., et al., Cross-appellants, v. NORTHERN INDIANA PUBLIC SERVICE COMPANY, Cross-Appellee.

No. 93S02-8810-EX-902.

Supreme Court of Indiana.

Dec. 13, 1989.

Robert C. Hagemier, David J. Allen, Christopher A. Smith, Hagemier, Allen & Smith, Indianapolis, Frederick F. Eichhorn, Jr., Peter L. Hatton, Charles W. Webster, Eichhorn, Eichhorn & Link, Hammond, for appellant.

Michael A. Mullett, Columbus, James W. Burk, Office of the Utility Consumer Counselor, Indianapolis, for appellees.

DeBRULER, Justice.

This appeal is the third in a trilogy of cases that arose out of disputes concerning the legality of a utility charging its ratepayers for its sunk costs in a power plant which was abandoned before construction was completed. The first case arose when Northern Indiana Public Service Company (NIPSCO) petitioned the Public Service Commission of Indiana (now the Indiana Utility Regulatory Commission but referred to hereinafter as the commission) for a rate increase to recover the money it had invested in Bailly N-1, a nuclear power plant. NIPSCO had cancelled the project during construction. The commission granted the petition, and NIPSCO began collecting the amortized costs from its ratepayers. Citizens Action Coalition (CAC) and others who had intervened in the proceedings appealed the commission's ruling. The appeal culminated in our decision in Citizens Action Coalition of Indiana, Inc. v. Northern Indiana Public Service Co. (1985), Ind., 485 N.E.2d 610, cert. denied, 476 U.S. 1137, 106 S.Ct. 2239, 90 L.Ed.2d 687 (1986) (NIPSCO I ), in which it was held that charging these sunk costs to ratepayers was unlawful because Bailly N-1 had never become used and useful property, and therefore the increased rates were not based on service as required and defined by statute. The commission was ordered to vacate its order granting the rate increase. Id. at 617. While this first appeal was pending, two subsequent orders were issued by the commission adjusting NIPSCO's rates. Because the appeal had not yet been decided, these rate orders contained within them as a matter of course the rate hike attributable to the sunk costs of Bailly N-1. However, the Bailly costs were not an issue in those proceedings and no appeal was taken from those rate orders.

On remand, the commission issued an order directing NIPSCO to immediately excise from its rates that portion which reflected the illegal charges for the Bailly costs and set a hearing to determine the amount and manner of the refund due the ratepayers. NIPSCO refused to lower its rates and appealed the commission's order on the grounds that it was entitled to a hearing before any rate reduction took place. That appeal resulted in our decision in Northern Indiana Public Service Co. v. Citizens Action Coalition of Indiana, Inc. (1986), Ind., 493 N.E.2d 762 (NIPSCO II ), in which it was held that the initial hearing conducted when NIPSCO petitioned for a rate increase to cover its sunk costs in Bailly was all that was required by statute, and therefore NIPSCO was not entitled to an additional hearing on remand before the commission ordered a rate reduction pursuant to the mandate of this Court in NIPSCO I. NIPSCO then reduced its rates to remove the amortized Bailly costs from its rate base, and the commission heard evidence and testimony to determine the amount and manner of refund and whether interest and attorneys' fees could be recovered. That proceeding resulted in the commission order from which NIPSCO brings the present appeal and CAC cross-appeals.

The commission determined that NIPSCO owed its ratepayers $56,856,072, but it stayed repayment pending this appeal. It also ordered interest on the refund to accrue at a rate of six percent from the date of its final amended order, and it denied CAC's request to receive attorneys' fees out of the total refund.

NIPSCO raises two issues on appeal. First, it maintains that it owes a refund only for the amortized Bailly costs it collected from the time of the commission's initial order which authorized those costs to the date of the first interim order which adjusted rates while the Bailly cost authorization was being appealed. It argues that because those two interim orders, which contained a rate base that included the amortized Bailly costs, were not appealed, CAC and the other intervenors have waived challenging the costs that were collected under those orders and that therefore NIPSCO should be permitted to keep the funds it collected during that time. In so arguing, NIPSCO invites this Court to authorize the utility's retention of money it obtained through an administrative order that was declared unlawful. We decline the invitation. The recovery of Bailly sunk costs was not an issue in either of the two interim rate orders that were approved while NIPSCO I was pending. It is therefore difficult to surmise how CAC or any of the intervenors were to frame an appeal from such orders. Had they attempted to do so, they would have been appealing an issue not raised in the order appealed from and one that they already had pending before this Court. We hold that our decision in NIPSCO I pertains to all Bailly costs wrongfully recovered by NIPSCO from its ratepayers.

Second, NIPSCO argues that our decision in NIPSCO I authorizes it to charge its ratepayers for planning, analysis and investigation expenses and that it should therefore be permitted to retain from the refund the portion attributable to this expense. With this possibility in mind, the commission received testimony and evidence on the amount of money that was expended for these purposes. The calculations ranged from $1.5 million to $57 million. However, the commission found that our opinion in NIPSCO I did not "provide sufficient authoritative guidance to allow the recovery of those planning, analysis and investigation expenses" and therefore did not allow NIPSCO to offset such costs from its refund obligation. The commission's reading of NIPSCO I is correct. The majority opinion there does not provide for the retention of planning, analysis and investigation costs by NIPSCO. The issue of such costs was raised only in the concurring opinion of Justice Shepard which, in referring to their recovery, stated:

Unfortunately, this view has not attracted sufficient concurrence to make it an order of the Court, and I have joined the majority in its conclusions on the construction of the Public Service Commission Act.

NIPSCO I, 485 N.E.2d at 619. The conclusions reached by the majority as to the construction of the Public Service Commission Act are clear: none of the costs expended by a utility for a power plant that never became used and useful property because its construction was abandoned are chargeable to the utility's ratepayers. Neither the statute nor the opinion makes an exception for planning, analysis or investigation expenses.

Nevertheless, NIPSCO argues that because then-Chief Justice Givan and Justice Prentice would have allowed all costs to be recovered from the ratepayers, see NIPSCO I, 485 N.E.2d at 619-625 (Givan, C.J., and Prentice, J., dissenting), and because Justice Shepard's opinion, as NIPSCO reads it, would have allowed planning, analysis and investigation costs recovered, id. at 617, a majority of the Court favored allowing NIPSCO to set off such costs from the refund it owed its ratepayers. This is a seductive, but unpersuasive argument. Justice Shepard expressly joined the majority opinion in his concurring opinion, as indicated in the above quote. That majority opinion found that no costs associated with Bailly were recoverable from ratepayers. Neither the majority opinion nor either of the dissenting opinions excise for separate consideration the issue of planning, analysis and investigation expenses as recoverable sunk costs. Neither of the dissenters joined in Justice Shepard's concurring opinion in whole or in part, and both dissents refer to the lead opinion as the "majority opinion." The mere ability to construct, from various concurring and dissenting opinions, a common denominator of probable outcome on an issue addressed in only one of those opinions does not make for a majority holding of this Court. Where a specific issue or view fails to attract a majority of specific concurring votes, the threshold between dictum and rule of law is not crossed and no mandate is generated nor legal authority granted as to that issue or view. For example, in Bryan v. State (1982), Ind., 438 N.E.2d 709, a majority of this Court favored reversal of the appellant's conviction, but because there was not a majority favoring reversal on any specific issue, the conviction was affirmed.

The situation here is analogous to the denial of transfer in Peoples Bank and Trust Co. v. Stock (1980), 273 Ind. 342, 403 N.E.2d 1077. In that case, Justices Pivarnik and Givan voted to grant transfer. Justice Prentice expressed an intent to grant transfer on a separate issue, but, failing to muster a majority on that issue, reluctantly joined the majority in voting to deny transfer. Transfer was denied despite the fact that three of five justices favored granting it. This outcome was not altered by the fact that one of the votes denying transfer was made reluctantly. The outcome here should, likewise, not be altered by that fact. The system of appellate justice can work no other way. If the mandates of this Court are to have any meaning at all, they must be interpreted in a manner consistent with the traditional and long-adhered-to voting language of the Court. The majority opinion in NIPSCO I and the order incorporated therein represents the majority view and mandate of this Court. We reaffirm that holding here. The original order of the commission granting NIPSCO the...