United Tenants of Albany, Inc. v. Niagara Mohawk Power Corp.

• Decision Date: 27 November 1984
• Parties: UNITED TENANTS OF ALBANY, INC., Constance Reynolds, Gloria Brindisi Monaco, Plaintiffs, v. NIAGARA MOHAWK POWER CORPORATION, Defendant.
• Court: New York Supreme Court

Page 467

487 N.Y.S.2d 467

127 Misc.2d 957

UNITED TENANTS OF ALBANY, INC., Constance Reynolds, Gloria

Brindisi Monaco, Plaintiffs, v. NIAGARA MOHAWK POWER CORPORATION, Defendant.

Supreme Court, Special Term,

Onondaga County.

Nov. 27, 1984.

Sheldon V. Burman, P.C., New York City (Sheldon V. Burman, New York City, of counsel), for plaintiffs, United Tenants of Albany, Inc., and Reynolds.

LeBoeuf, Lamb, Leiby & MacRae, New York City (Mary Jo Eyster, New York City, of counsel), for defendant.

OPINION

JOHN P. BALIO, Justice.

The plaintiffs were consumers of electric power provided by the defendant utility. In 1977, defendant applied for an electric rate increase. Prior to the conclusion of proceedings before the New York Public Service Commission (PSC) on that request, Niagara Mohawk sought another rate increase. In 1979, plaintiffs intervened in the second rate case and were represented by the Public Utility Law Project (PULP) and the Legal Aid Society of Oneida County, Inc., both publicly funded law firms. ¹ During the rate proceedings, PULP actively participated in the presentation of expert testimony and cross-examination of experts presented by other parties. Upon conclusion of the proceedings, PULP sought, and received, a declaration from the PSC that it substantially contributed to the PSC's adoption, in part, of plaintiff's position on marginal cost pricing in fixing defendant's rate schedule. Plaintiffs then commenced this action to recover the costs of intervening in the rate proceedings.

This is the first opportunity of the courts of this State to consider the right of a consumer to recover the costs (for example, attorney fees, disbursements, expert witness fees) of intervening in electric power rate proceedings under section 122 of the Public Utility Regulatory Policies Act of 1978 [PURPA] (92 U.S.Stat. 3117). ² This section was enacted to provide some mechanism to assure the representation of electric consumer interests in state administrative proceedings. See House Conference Report No. 95-1750, 1978 U.S.Code Cong. & Ad.News, pp. 7816-7817. If a State, its regulatory authority or nonregulated utility provides a means for providing adequate compensation for persons having an interest in rate proceedings, the statute limits consumer intervenors to that method of compensation. If such an "alternative means" is not provided, PURPA imposes a liability upon the electric utility involved in the rate proceeding to compensate consumers for the costs of intervention if the intervenor's efforts substantially contributed to approval of the intervenor's position on certain rate standards. The intervention costs may be recovered in one of two ways. PURPA authorizes regulatory authorities (or nonregulated utilities) in each State to adopt procedures for the determination and award of fees and costs. If no administrative procedure is established, then an action may be instituted in a State court of appropriate jurisdiction.

The parties each seek summary judgment in their favor with respect to liability. Plaintiffs also seek the imposition of discovery sanctions.

ALTERNATIVE MEANS

The present action cannot proceed if the State or the PSC has provided an alternative means for the compensation of the costs of intervention.

At the outset, the Court observes that "compensation" may be supplied in the form of representation. While a literal reading of section 122 of PURPA suggests that "adequate compensation" is the means, it is clear that Congress intended that such compensation could be provided by actual representation of consumer interests. See House Conference Report No. 95-1750, 1970 U.S.Code Cong. & Ad.News, p. 7817.

The PSC has not created an alternative means in either form. Although the staff and counsel for the PSC are empowered to act on behalf of the people of the State (See Public Service Law, §§ 8, 12), defendant makes no claim that they constitute an alternative means as intended by PURPA. See also, in this respect, Re Costs of Participation in Electric Rate-Making Proceedings, 37 Pub.Util.Rep. 4th 259, 265-266 (Calif. PUC, 1980); Re Compensation to Intervenors in Electric Rate-Making Proceedings, DE 80-182 (New Hampshire PUC, September 8, 1981). Rather, it is defendant's contention that the State Consumer Protection Board (CPB) constitutes the alternative means.

The CPB was created in 1970, and its executive director was generally empowered to represent consumer interests before regulatory agencies. See Executive Law, § 553(3)(d). In 1974, the executive director was given the duty to intervene in rate proceedings before the PSC. L.1974, c. 650. During 1979, some $500,000 was budgeted specifically for the utility intervention program, exclusive of some federal grant monies for rate design research. According to Rosemary S. Pooler, then the CPB Executive Director and now a PSC Commissioner, her office was never adequately funded to fully represent all consumers, and inherent conflicts arose between the interests of various consumers (low income, small business, residential, industrial, environmental, pro and anti-nuclear) that required the CPB to advocate a compromise or concensus position and precluded representation of the significant interest of a particular consumer group.

The statute (16 U.S.C. § 2632[b][1][A] ) requires that the alternative means provide adequate compensation (representation) to persons having an interest "which would not otherwise be adequately represented in the proceeding ..." Hence, the existence of an alternative means can only be determined by reviewing the facts and circumstances of each proceeding as well as the interest to be represented in that proceeding. Although the Pooler affidavit speaks in general terms and is not related to the second rate case at issue here, the factors discussed by Commissioner Pooler--adequacy of funding and inherent conflicts--are relevant criteria which the Court must consider. An adequately funded office of public counsel, or in New York's instance, the CPB, may constitute an alternative means. However, due attention must be given to the particular interest the consumer seeks to advocate in a given case and the interest advanced by the CPB in that case to ascertain whether there is sufficient similarity for adequate representation. See Power v. Washington Water Power Co., 99 Wash.2d 289, 662 P.2d 374 (a 5-4 decision), affd. on reconsideration 102 Wash.2d 260, 684 P.2d 716 (also a 5-4 decision). If both advance the same position, then an alternative means exists regardless of the effort and quality of advocacy proffered. Id.

The evidentiary material before the Court on the issue of alternative means does not relate especially to the second rate case. Therefore, summary judgment is not warranted on that issue.

The Court additionally notes in passing that PULP's receipt of some $1462 from a subdivision of the State does not render such largesse an adequate alternative means. Defendant's suggestion to the contrary is ludicrous.

SUBSTANTIAL CONTRIBUTION BY CONSUMERS

Defendant does not seriously dispute plaintiffs' assertion that they (United Tenants of Albany, Inc., and Reynolds) are electric consumers as defined by PURPA (16 U.S.C. § 2602[5] ). The PSC has additionally determined that PULP substantially contributed to the adoption of certain rate standards. ³ Defendant has not sought any judicial review of that determination. Plaintiffs are entitled to summary judgment on those issues.

ELIGIBILITY OF PUBLICLY FUNDED LAW FIRMS

Defendant utility urges that the plaintiffs are not entitled to intervenor costs because they did not incur any expenses and would not suffer any significant financial hardship absent a fee award. Essentially, the defendant claims that publicly funded law firms are not entitled to fee awards under PURPA.

Any requirement that the consumer must actually incur an expense for which compensation is recoverable would effectively eliminate low-income consumers from relief under section 122 of PURPA. Defendant's construction of the statute is unreasonable and contrary to Congressional intent. A cursory review of section 122 reveals that it is designed to assure representation of persons who "cannot afford to pay" the costs of intervention. 16 U.S.C. § 2632(b)(2).

Further, this Court cannot subscribe to the view that Congress did not intend publicly funded law firms to be eligible for a fee award. Defendant bases this assertion upon the statutory language requiring a consumer to demonstrate that absent a fee award, the consumer may suffer significant financial hardship. Since the consumer who retains the services of a publicly funded law firm would not suffer any financial hardship, defendant theorizes that Congress did not intend that firms such as PULP be eligible for a fee award. This contention misses the mark.

First, the standard purportedly mandating that a consumer demonstrate financial hardship applies only to fee compensation procedures adopted by a State regulatory authority or nonregulated utility. No standards are prescribed for court awards.

Second, the statute (16 U.S.C. § 2632[a][3][A] ) states that the authority or utility may require a demonstration of significant financial hardship as a condition to compensation. It is, therefore, evident that Congress permitted each authority or utility to make its own policy determination on the inclusion of such a standard.

Third, the standard, if applied, is to be applied to preliminary proceedings held before any expenses are incurred. The Court's determination is made only after substantial fees or costs are incurred or generated.

Lastly, defendant cites as authority the determinations of Public Utility Commissions in five States that either expressly or impliedly deny compensation to consumers represented by publicly funded law firms. Each determination, ⁴ however, involves the ...